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Is the glass half-full? Or half-empty?

Mayor Tim Keller鈥檚 office says he and the City Council have a difference of perspective over how much money the city of sa国际传媒官网网页入口 should spend next year.

Keller said his proposed budget followed the pessimistic economic forecast, which assumes unpredictable funding and national economic headwinds. The council took the optimistic approach in its budget substitute, Keller said, by allocating $11.8 million more, mostly to raise city worker pay.

The council approved its version of the $1.47 billion budget this week on a 7-2 vote. Councilors Dan Lewis and Brook Bassan voted against it.

In all, the council signed off on about $882 million in general fund appropriations for the fiscal year that begins July 1, around $23 million, or 2.6%, more than fiscal year 2026 and about $7 million more than in Keller鈥檚 proposed 2027 budget.

The general fund, fueled primarily by gross receipts tax dollars, covers most basic city services, such as law enforcement and park maintenance.

The majority of the disputed $11.8 million, which makes up 1% of the general fund appropriations, was put toward city employee raises, with $4.5 million for a 1% cost-of-living increase and $3.7 million toward compensation adjustments. The leftover $3.6 million was used for other priorities, including traffic safety projects.

Councilor Renee Grout, who drafted the approved budget, said councilors achieved their No. 1 goal: employee salaries.

鈥淎nd then we also listened to constituents, and we increased funding where we heard people were concerned about 鈥� open space, animal welfare, solid waste, libraries, BioPark and transit,鈥� Grout said.

Keller said the council鈥檚 amendments fixed 鈥渟ome major issues鈥� in its original plan 鈥� including restoring funding the council had initially removed from traffic safety projects and halfway funding a diversion program to address those jailed in city code violations.

鈥淓verything about this year's budget is the normal budget argument, that's I think what is healthy,鈥� he said. 鈥淭he challenge is, for the first time in a long time, the forecast doesn't look good.鈥�

The approved total budget, which came in lower than the $1.5 billion 2026 budget, marked the first year the city鈥檚 budget has declined since 2024. In Keller鈥檚 proposed budget, city operating funds decreased by $35 million amid the challenges of inflation, higher healthcare costs and federal funding cuts.

To make those cuts, Keller鈥檚 proposed budget eliminated or deactivated 247 positions, many of which were restored by councilors in their budget substitute. Councilors also restored some funding to several public-facing departments, like transit, animal welfare and parks and recreation, that saw decreases in Keller鈥檚 proposed budget.

Councilors left many of the biggest budget items untouched, like the sa国际传媒官网网页入口 Police Department and Fire and Rescue, which made up 32% and 16% of the general fund appropriations and saw a 2% and 4% bump, respectively.

Councilor Tammy Fiebelkorn said she was 鈥渃ontinually dismayed鈥� by the amount put into the larger departments while others faced cuts.

鈥淲e are always willing to cut transit, we are always willing to cut parks and recreation and open space,鈥� she said. 鈥淭hese are also really important departments in our city, but we continue to just put more and more and more money into APD, and I just wonder at what point we're going to stop doing that.鈥�

Fiebelkorn saw the process as a 鈥済ive and take鈥� and she was happy the council could restore funding for transit, open space and animal welfare, the last of which saved six positions and covered the stray cat trap and neuter program. 

鈥淚 didn't get everything I wanted, but neither did anyone else, and I think that's to be expected when there are nine councilors and a mayor vying for resources,鈥� she said. 鈥淭his year, we had very limited resources, so I think the juggling of priorities was harder this year than in past years.鈥�

The City Council鈥檚 substitute budget was passed with $1.5 million in funding cuts to housing vouchers, one of the larger changes to Keller鈥檚 proposed budget. During Monday鈥檚 meeting, councilors passed more than a dozen amendments, including one clarifying the voucher cut and others funding priorities in their districts and addressing public concerns.

An amendment sponsored by Grout, Fiebelkorn and Joaqu铆n Baca restored $200,000 of the requested $400,000 to a diversion program tailored to the unhoused. Another addressed concerns over voucher cuts, clarifying that 2026 vouchers were not fully expended and if they run out mid-year 鈥渨ill be prioritized by the Council.鈥�

Another amendment undid council funding cuts to Vision Zero, allowing for millions to be made available for a list of projects like pedestrian crossing signals and a road diet on Lomas Boulevard, among others. 

Lewis said in a statement that he supported the amendments that gave raises to city employees and eliminated proposed fee increases, like a fee Keller had proposed for providing stormwater services. 

鈥淚 could not support the final budget because it will only increase projected deficits in future years,鈥� he said. 鈥淭his budget is filled with extravagant spending on the mayor鈥檚 pet projects and programs that have shown no measurable results in addressing the city鈥檚 crime, homelessness, and economic challenges.鈥�

鈥楾he most optimistic view鈥�

While the budget was largely buttoned up Monday night, the $11.8 million remained a sticking point.

Keller said the budget passed by council was 鈥渂uilt on shaky ground鈥� with assumptions on fund balances and an uncertain revenue forecast.

鈥淭hey essentially took the most optimistic view,鈥� he said.

Keller said he was concerned that in a few months鈥� time the city may have to go back and make major revisions, including budget cuts and addressing fund balance issues.

鈥淜nock on wood, hopefully we won't,鈥� he said.

Grout said council staff found the $11.8 million 鈥渄iscrepancy鈥� in Keller鈥檚 proposed budget and, initially, thought it was a mistake. She said they checked with the state Department of Finance and Administration, which told them the council鈥檚 assumption that the $11.8 million was available 鈥渨as reasonable.鈥�

Grout said the disagreement over the funding made for one of the most challenging budget processes she has been a part of.

鈥淚 don't want to say anything that's negative. I will just say that we have a really good budget staff. I can't say the same for the administration staff,鈥� she said. Grout said the administration鈥檚 staff was 鈥渘ot very forthcoming鈥� and sent budget changes to council after already releasing the proposed budget, including additional revenue sources from fees related to solid waste and stormwater services.

Both sides said they had spoken with DFA over the issue.

Grout said the DFA has to approve the budget and 鈥渋f they say 鈥榦h there鈥檚 a problem,鈥� then we鈥檒l have to come back and fix it, but we don鈥檛 think there is a problem.鈥�

Keller said, although the move may come to bite them later, he would be less worried if council hadn鈥檛 put the funds toward recurring appropriations like salaries. The administration, he said, at best views the funding as 鈥渙ne-time money.鈥�

鈥淚 think they did meet us halfway, in a sense that no one is arguing what to do if we have extra money,鈥� he said, referring to the raises for city workers. Keller said he would have preferred the reverse, to wait until the numbers for the rest of this fiscal year bear out before using any extra money.

鈥淚t was not common for the mayor to have a more conservative budget than council, but I think it's because we're worried about the actual checkbook, and I think they're still looking through overly rose-colored glasses," he said. "And that's ironic, because that's what they've said about me for the last eight years.鈥�