DEL MAR — The Del Mar City Council is finalizing its capital and operations budget for the upcoming 2026-27 fiscal year, which will include additional allotments for the city’s new shared fire management agreement, annual paving, and more.
Del Mar leaders originally adopted a two-year budget for 2025-26 and 2026-27 last year. With the 2025-26 fiscal year coming to an end, city staff recommended adjustments to the 2026-27 budget based on current trends, receipts, and work plan goals recently shared by the City Council.
The 2026-27 fiscal year begins on July 1. For the General Fund, the city estimates total revenue of $26.3 million and expenditures of $21.2 million for the upcoming year.
These totals include an additional $2.1 million in expenditures and $1.7 million in revenues, approved by the City Council on Tuesday, compared to last year’s original two-year budget.
“At the time that some of the other agencies in the county are facing enormous challenges with their next fiscal year budget, I’m happy to report that the proposed budget update still maintains a strong financial position for our city,” City Finance Manager/Treasurer Marco Camacho said.
The final budget will come back for adoption later this month.
Top revenue sources for the General Fund are property tax, sales tax, and transient occupancy tax, or TOT.
City staff said TOT revenue from short-term rentals (STRs) will be lower than expected for the upcoming year. This is partly because the city did not gain Coastal Commission approval of its STR ordinance until February, and after that approval, only 99 of the 150 existing STRs in the city actually registered to be “grandfathered” in.
A significant amendment to the planned budget comes from spending on the city’s cooperative fire management services agreement with the city of Solana Beach. In April, the two cities approved an interim agreement for a seven-person shared fire management structure, following the dissolution of a previous shared management agreement between Del Mar, Solana Beach, and Encinitas.
Del Mar will pay $1.2 million in the upcoming fiscal year for fire management, including its $830,000 annual share of the position costs as well as reimbursements to the city of Solana Beach. However, factoring in funds already allocated this year and reimbursements owed to Del Mar, the total budget impact for fire services next year will be around $500,000. 
City Councilmember Dan Quirk voted against the proposed budget, saying he wanted more time to review costs for the fire management agreement.
City Manager Ashley Jones reminded the council that the two cities are still negotiating a long-term arrangement for fire management, and that the current agreement had to come together somewhat quickly to ensure Del Mar had coverage.
“We were kind of put into a situation outside of our control, unfortunately, that forced our city along with Solana Beach to have to make some very quick decisions to make sure we had management coverage for our communities and for our fire departments, because we didn’t get a lot of notice from the city of Encinitas about their exit,” Jones said.
City leaders also added $3 million to Del Mar’s budget for pavement improvements, including $2.09 million for annual pavement rehabilitation and $910,000 for Stratford Court pavement improvements.
The city also has the option of amending the budget in the future to add further pavement rehabilitation work in $1 million increments. However, each additional $1 million will lower the city’s General Fund Contingency, which currently sits at 19.9%, by 4.5%.
“It’s really a pleasure to be able to sit here and talk about infrastructure investment, and not talk about deferred maintenance, like some of our neighboring cities. And I think we should keep in mind, even if we only did $3 million, that’s $3 million more than anybody else in Southern California is gonna do on paving,” said City Councilmember John Spelich.
The cost for paving will depend on the bids the city receives. Public Works Director Joe Bride said the market is a bit unpredictable right now, partly due to fuel prices.
“It’s very volatile. The price of fuel is really making the price of equipment go up, and the price of asphalt has grown 10% in the last three months,” Bride said.
Capital projects
The city’s capital improvement project (CIP) budget for the upcoming year totals $19.9 million.
Planned capital projects still lacking funding are the $15 million Camino Del Mar Bridge replacement, which has a $1.2 million gap, and the Riverpath Del Mar project, which still needs $465,000.
Jones said the city plans to contribute $9.2 million to the Camino Del Mar Bridge project and that, if outside funding does not come through, the city could fill the gap from its reserves.
The budget also includes $1.9 million from the San Dieguito River Park Joint Powers Authority and the National Oceanic and Atmospheric Administration for the city’s San Dieguito Lagoon Levee, Habitat Enhancement and Trail Project, which will support habitat areas along the San Dieguito River and prevent future flooding.
Other capital projects include the 29th Street Seawall and Beach Access Project, with $1.3 million allocated, $595,000 for storm drain improvements, and $55,000 for a hydrology analysis along Coast Boulevard.
Last year, the city had optimistically budgeted $2.5 million in Smart Growth funds for the development of affordable housing on city-owned land. However, these funds were removed from the budget after the city did not receive the award.
Del Mar will also need to proactively plan for future equipment replacement, which is expected to total $2.5 million over the next five years. The balance of the city’s equipment replacement reserve account is expected to reach $513,000 by the end of the 2026-27 fiscal year.
Pensions are another area that requires attention over the coming years. Del Mar’s current unfunded accrued pension liability sits at $17.8 million.
In May, the Finance Committee recommended revising the city’s pension reserve policy to extend the timeframe for funding 100% of the pension liability from 2032 to 2037. This allows the city to allocate around $475,000 to the pension reserve annually for the next 10 years versus $1.35 million annually for the next five years.
In 2026-27, the city will allocate just $250,000 to the pension reserve.
“The reserve policy continues to allow flexibility in order not to impact the City’s ability to fund other critical or important projects. Given the high prioritization of public safety and City street paving among other competing priorities, an additional transfer to the Pension Reserve is not included in the Budget Update,” a staff report states.
