Proposed 2026-27 Budget

Overall Budget Summary

The Capital Projects program does not maintain dedicated full-time equivalent (FTE) positions; project management and administration are provided by staff within General Services and Parks, Open Space, and Cultural Services. The Proposed Budget recommends no change to this staffing structure.

Total appropriations for the Capital Projects program are $18,267,869 in Fiscal Year (FY) 2026-27, funded by revenues of $13.827,946 and a use of prior-year fund balance of $4,439,923 to support various ongoing active projects and replacements of HVAC systems at critical government facilities.

Revenue sources include $11,352,169 in Other Financing Sources, primarily $5,772,415 in loan and bond proceeds, largely from new Lease Equipment Financing, and $1,937,803 in intergovernmental revenues including grants and State park bond allocations.

The Proposed Budget reflects a decrease of $25,392,030 in total expenses compared to the 2025-26 Adopted Budget, largely from a reduction in major grant-funded capital projects appropriated in prior years that advance toward completion. Revenues decrease by $22,674,842 from the Adopted Budget, primarily due to a corresponding reduction in intergovernmental revenues as one-time grant allocations associated with completing projects. The net use of fund balance of $4,439,923 is in support of current active projects.

The figures above, and the changes described in the Major Changes, reflect a net new contribution to the capital budget in FY 2026-27. Unspent appropriations and unrecognized revenues associated with active FY 2025-26 capital projects are not included in these totals; those balances are carried over and rolled into the FY 2026-27 budget to support continuation of in-progress work.

Long Lead Times for Critical Equipment and Construction Cost Escalation: Lead times for major building systems and specialty equipment — including packaged HVAC units, emergency generators, electrical switchgear, and building controls — continue to run well beyond historical norms, with some components requiring 40 to 60 weeks from order to delivery. Construction materials and labor costs have also continued to escalate over successive budget cycles, outpacing the contingency assumptions built into original project budgets. These conditions affect the capital program in three ways. First, procurement decisions must occur earlier in the project lifecycle to avoid delivery gaps that extend schedules and increase financing and escalation cost. Second, project budgets established in prior years increasingly require augmentation to deliver the same scope, a pattern reflected in several of the Major Changes in this budget. Third, consolidating related scopes — such as the FY27 HVAC Replacement Program, which packages four separate site needs into a single procurement — provides better pricing leverage and more predictable delivery than project-by-project buying. Staff anticipates these conditions will continue into FY 2026-27 and recommends that future CIP updates incorporate realistic lead time and escalation assumptions.

Aging Infrastructure and Deferred Capital Needs: More than 70% of County buildings were constructed before 1990. Aging building envelopes, mechanical systems, and utility infrastructure continue to produce deferred maintenance needs that frequently emerge mid-project, when walls are open and conditions can be directly observed. The Juvenile Hall renovation is a current example, where unforeseen conditions encountered during active construction have required a substantial augmentation to maintain project schedule and avoid re-mobilization costs. Similar conditions are likely present in other aging facilities across the portfolio. As the CIP continues to advance, staff anticipates that scope adjustments and augmentation requests are a recurring feature of capital project delivery, and that a disciplined approach to condition assessment, prioritization, and contingency planning is necessary to manage risk at the portfolio level.

Capital Contingency for Emergent Needs: Recent experience indicates that unforeseen conditions and emergent capital needs arise with sufficient frequency that the program benefits from a dedicated contingency reserve. The Proposed Budget establishes a capital contingency funded from reallocated CERTS bond interest earnings, providing defined response capacity for emergent facility needs that may arise mid-year. Establishing this reserve supports timely response without requiring one-off Board actions for modest emergent allocations and improves the predictability of the CIP.