The Irvine City Council has directed staff to continue studying a plan to address a projected structural deficit in the city’s budget, which could reach $47 million by 2030. The council voted 5-2 on Tuesday to advance the budget adjustment proposal, known as “Target ‘28,” after a special meeting that began at 1:30 p.m.
City staff estimate that Irvine's budget could face an annual $37 million deficit by July 1, 2028, the start of the next fiscal year. This figure is projected to grow to $47 million by the end of the decade if current spending trends persist.
Target ‘28 aims to eliminate this projected structural deficit by June 2028. The plan recommends decreasing spending by $27 million and increasing revenue by $10 million by that same deadline. Key components of the proposal include eliminating vacant city positions as employees retire or resign and reassigning staff to ensure essential services remain covered. Staff also plan to increase a series of fees and enhance cost-recovery measures for certain city services.
Councilmembers Mike Carroll and James Mai cast the two dissenting votes. They had previously supported a separate motion that proposed reducing city council member stipends and eliminating office budgets, an idea that was rejected by the majority of the council.
Councilmember Mai acknowledged the severity of the situation, stating, “When I learned about this (deficit), I immediately went into cost-cutting mode.” He added, “When I asked for the structural deficit analysis, it was because I believed we had a structural problem that needed to be addressed before our choices became more difficult. Unfortunately, this report confirms that concern.”
While Target ‘28 does not include new tax increases, Councilmember Carroll expressed concern about the impact of increased fees on residents. “What we have had presented to us is a three-year bandaid,” Carroll said. He contended, “Sure, there’s a technical difference between a tax and a fee, but this is a $10 million tax on our residents, and residents are living through a severe affordability crisis.”
The need for budget adjustments comes as city Hall has seen significant growth in its workforce. According to a staff presentation, 276 full-time positions have been added since 2019, marking a 28% increase in full-time staff. During the same period, Irvine’s population grew by 3%. The presentation also noted that costs for salaries and benefits have increased by 79% since 2019, nearly doubling. Currently, salaries, benefits, and overtime account for approximately 69% of the city’s general fund budget, which is the most flexible pool of money available to the city.
City Manager Sean Joyce, who returned to the city earlier this year after retiring in 2018, commented on the staffing levels. “I also believe the organization has become too tall and too wide over those six years or so,” Joyce said at the meeting. He outlined an opportunity through Target ‘28 to “look more closely at our organizational structure — including reducing layers of management, spans of control and how functions are organized — and determine where we can streamline and right-size the organization, while continuing to protect core services.”
Joyce expressed confidence that the city can achieve up to $17 million in payroll savings, primarily through natural attrition as employees retire, resign, or are terminated, alongside the elimination of certain vacant positions. He clarified that this is not a hiring freeze but a selective and thoughtful review process for each vacancy. The city currently has 66 full-time position vacancies, a number estimated to grow to 123 by June 30, 2028.
Additionally, Joyce suggested that some city events might be duplicative, presenting another area for potential spending reductions. “I would humbly suggest we’re doing too much,” Joyce stated, pointing to potential overlaps with the new district system.
Mayor Larry Agran described Target ‘28 as “a good plan” and requested that staff provide periodic status updates as they continue to study the long-term budget and structural deficit. Joyce noted that previous city leaders were not proactive enough to address the budget issue, leading to situations where it was too late to avoid relying on reserves.
Staff are directed to return to the City Council in October with more specific details regarding the budget plan. Further updates are expected in February, covering sales tax revenue, property tax revenue, and progress on employee retirements to assess if targets are being met. If the targets are not achieved, staff may be compelled to use one-time budget transfers from city reserves to cover the gaps.
