Visalia City Hall plans to spend $409 million during the 2026-27 fiscal year and $359 million in fiscal year 2027-28 according to a two-year budget approved unanimously by the City Council on Tuesday night, June 15.
The spending plan includes a $110.4 million allocation for the general fund in its first year, and $110.8 for the general fund during the second year. The city’s Finance Department expects a combined surplus of about $7.8 million in the general fund when the books close at the end of June 2028.
City Leaders Declare City Coffers Strong
In presenting the proposed biannual budget, the city’s financial staff promised more of the fiscal stability that’s been the hallmark of City Hall’s approach to budgeting in recent decades.
“Overall, the city is in good financial shape,” said city financial analyst Jana Ferguson. “Revenues are up in all categories and are projected to continue. Development continues throughout Visalia. Departments are controlling expenses.”
The biannual budget includes spending for all the separate spending accounts maintained by the city: the General Fund, as well as various special revenue funds, capital funds, enterprise funds and internal service funds.
“The largest category is the business-type funds at 41% (of the entire budget), and that consists of 14 funds,” Ferguson said. Business-type funds include money earmarked for wastewater treatment, airport maintenance and solid waste disposal. “And the next one is our general fund at 27%. That’s our largest fund that we have.”
Planned spending for the next two years includes investments in our city infrastructure, including maintenance and replacement projects, she said, and the general fund has a healthy reserve balance. Both upcoming budget years are projected to end with a surplus: $2.6 million in 2026-27, and $5.6 million in 2027-28.
Reserve Cash, Low Debt Keep Visalia Solid
The city has reserves worth $27.4 million as the current fiscal year (July 2025 to June 2026) comes to a close. That nest egg should increase to $29.6 million in 2026-27, and climb to $30.6 million during the 2027-28 budget year. City policy requires a cash reserve equal to 30% of the general fund budget, and Mayor Brett Taylor said the city is within “several hundred thousand dollars” of meeting that goal.
Keeping the city ready to handle economic downturns with a large reserve fund, combined with saving for big projects to avoid borrowing, has given Visalia a solid financial footing most cities don’t have, Taylor said.
“Financially, our city is doing really, really well,” he said. “So many other cities are looking at ‘Which employees are we letting off?’ We’re looking at some of our school districts letting go of some employees. Visalia is in a strong position because we spend within our means.”
The city is almost nearly debt-free compared to most municipalities. Since Visalia has avoided borrowing to fund capital projects, like large construction projects, it has only $4.9 million in debt at the end of the 2025-26 fiscal year. The debt should be completely off the books by the end of the 2028-29 fiscal year.
Currently, repaying outstanding loans accounts for less than 1% of city spending.
“Any other city of our size or of any decent size, they’re putting out millions and millions of dollars a year in debt,” Taylor said. “And we don’t live off that, so we’re not having to pay off that debt, which is huge.”
The city’s low debt service and its large reserve keep Visalia in a unique position among California’s cities.
“No other city is in that position,” Taylor said. “That really speaks volumes about our community and what we do.”
City Manages Expectations in Budgeting
Caution and precaution have been key to the city’s financial wellbeing, according to finance director Renee Nagel. Her department’s policy is to avoid being overenthusiastic when predicting the city’s incomes and pessimistic about expenses.
“We’re conservative with our revenues, and we’re overly conservative with our expenditures,” she said. “We do that for several reasons. For the revenue side, we always hope that they will come in higher. If the economy starts to turn, we would have some wiggle room there because we weren’t overshooting it. You never know. The slightest economic change, it could be foreign or domestic changes, or a policy that can affect your revenues.”
Council member Brian Poochigian credits the wisdom of past elected city leaders for setting the stage for Visalia’s ongoing strong financial footing.
“Previous councils should be applauded for this,” he said. “We are in such a good financial state and very stable compared to a lot of other cities because of the conservative nature of what the (finance department) does and the long-term planning, that if something really bad happened, the residents could rest easy because we’re covered because we’ve been saving for years in case of emergency.”
An example of how this thinking has benefited the city shows up in the difference between the 2026-27 budget and the lower 2027-28 budget, which is $50 million smaller.
“Those large differences, those are heavier in capital projects for the first year of the budget,” said Ferguson. “So they have more projects and more money being appropriated for those capital projects in the first year of the budget.”
The money for those projects, including construction of Fire Station 51 and the expansion of the wastewater treatment system, was banked during previous budget cycles. And the projects and the payouts are happening now.
The city has a six-year capital improvements plan in place, but so far funding for only the first two years of projects is secure. The entire six-year list of capital projects is included in the 500-plus-page electronic copy of the city budget available at the city’s website:
http://www.visalia.gov/DocumentCenter/View/3095/Proposed-2026-27–2027-28-Budget-Document-PDF
“In that six-year capital plan were the first two years of proposed projects,” said Nagel. “Some of those were projects (with) continuing phases that we’ve started, and then some of them are starting new projects, with the heavy lifting being maybe in the first year.”
City Hall Now Hiring
City Hall plans to add 21 new full-time personnel over the next 12 months under the new budget. Most will be new police officers. The parks and recreation, finance and public works departments will also see new hires.
“(Adding) these 21 positions brings our full (count of) full-time allocated positions to 722 for fiscal year ‘27/’28,” said city finance and technology director Negal. “At any given time, the city, which includes full-time and hourly, on average we have about 950 employees.”
The single largest fund in the city budget is the General Fund, which receives 27% of the entire allotment in 2026-27 and 31% in 2027-28. The General Fund will spend $110.4 million in 2026-27, and another $110.8 million in 2027-28, and most of that cash will cover labor costs.
The largest expenditure from the general fund covers salaries and benefits for staff. It makes up 76% of total spending. In 2026-27, the city will shell out $84 million on labor. That’s an increase of 8% from the previous budget, and that mainly covers hiring more staff. But it also covers a 4% wage adjustment for current staff members. The cost of labor should increase another 4% in 2027-28, rising to around $87.5 million, depending on how wages adjust.
General Fund Spending, Income Expected to Rise
General Fund spending will increase by 7% in 2026-27, and by 3% in 2027-28 under the current budget.
Ninety percent of the General Fund comes from taxes. Sales tax is the largest source, making up 44% of the General Fund money. Property tax supplies 19% of the General Fund, a state scheme that uses property tax money to replace lost vehicle licensing fees makes up another 16%, and the rest of the General Fund money comes from franchise taxes, transit taxes, business license taxes and other sources.
City staff is predicting a 2-3% for all six tax revenue sources during the next two years. During the last 20 years, sales tax income in Visalia has increased by 3.9% on average, with a 5.5% average increase in the last 15 years. It increased 3.5% in 2025-26; and 2.5% increases are projected for 2026-27 and 2027-28.
But, of course, the budget is only a very thorough plan. Expenditures and revenues can change unexpectedly, but the city has prepared as well as it can for any financial surprises.
“We try to plan for everything, but things do come up throughout the year or two years,” Nagel said. “You try to plan for every foreseeable future, but you just never know what’s going to happen.”