The Irvine City Council voted 5-2 at a recent Tuesday meeting to direct staff to continue studying a long-term budget plan designed to avert a significant structural deficit. Dubbed "Target '28," the initiative proposes a series of adjustments aimed at eliminating the city's projected financial gap by June 2028, just before the start of the next fiscal year. City staff recommendations include decreasing spending by $27 million and increasing revenue by $10 million by 2028.
According to staff projections, Irvine's budget is estimated to face an annual $37 million deficit by July 1, 2028. This shortfall could expand to $47 million by the end of the decade if current spending trends persist. Councilmember James Mai indicated that he had sought the structural deficit analysis because he believed a structural problem needed addressing, and the report confirmed his concerns.
Key to the spending reductions is a focus on staffing. The plan recommends eliminating vacant positions as employees retire or resign, alongside shuffling existing staff to ensure essential services are maintained. City Manager Sean Joyce, who returned to the city after retiring in 2018, indicated a need to "right-size" the organization, noting his belief that the organization had grown too large and complex over the past six years. Joyce stated the city aims to streamline its organizational structure, including reducing management layers and spans of control, while safeguarding core services. He projected up to $17 million in payroll savings, primarily through natural attrition and the elimination of specific vacant roles. Joyce clarified that this approach is not a hiring freeze but a selective, thoughtful review of each vacancy on a case-by-case basis. Irvine currently has 66 full-time position vacancies, a number estimated to reach 123 by June 30, 2028. Additionally, the plan suggests addressing duplicated city events to further reduce costs, with Joyce suggesting the city might be undertaking excessive activities in this regard.
Staff data presented at a special meeting revealed that since 2019, 276 full-time positions have been added at city hall. During this period, full-time positions increased by 28%, while the city's population grew by only 3%. Over the same timeframe, costs for salaries and benefits surged by 79%. Salaries, benefits, and overtime currently account for approximately 69% of the city’s general fund budget, which is the most flexible funding pool available to municipalities. Joyce expressed confidence that the number of positions could be reduced without materially impacting existing services.
To increase revenue by $10 million, staff proposes an increase in various city fees and enhanced cost-recovery mechanisms for certain services. The "Target '28" plan does not include any new tax increases. However, Councilmember Mike Carroll criticized the fee increases, arguing that they would impose additional costs on residents already experiencing a severe affordability crisis. Carroll described the proposed plan as a "three-year bandaid."
Councilmembers Carroll and Mai cast the dissenting votes on the 5-2 motion. They had previously supported an alternative motion that included reducing city council member stipends and eliminating office budgets, which was rejected by the majority. Mayor Larry Agran expressed that he considered the plan to be good, while also suggesting there might be areas to strengthen or improve it. He requested periodic status updates from staff as they continue their analysis. City Manager Joyce noted that previous city leaders had not been proactive enough in addressing budget issues, leading to reliance on reserves.
Staff is scheduled to present more specific details of the budget plan to the council at a meeting in October. Furthermore, staff will monitor the plan's implementation and provide updates in February regarding sales tax revenue, property tax revenue, and progress on employee retirements and other targets. If the financial targets are not met, the city may need to utilize one-time budget transfers from funds, such as city reserves, to cover any remaining gaps.
