Final Operating and Capital Budgets for the American Canyon Fire Protection District for the Fiscal Year 2026-2027.

Hold a Public Hearing and adopt a resolution approving the Final Operating and Capital Budgets for the American Canyon Fire Protection District for Fiscal Year 2026-2027.

Cliff Campbell, Acting Fire Chief

Pursuant to Section 13890 of the Health and Safety Code, fire districts in California must adopt at least a preliminary budget by July 1 of each year and, after having done so, must then adopt a final budget by October 1. 

On June 23, 2026, the American Canyon Fire Protection District Board of Directors conducted a public hearing and adopted a preliminary operating and capital budget for fiscal year 2026-2027 (FY27). The Fire Board of Directors also reviewed and approved an Appropriations Limit for the 2026-2027 Fiscal Year Budget at the June meeting. 

A public hearing has been noticed for September 29, 2026, in anticipation of the Board’s review of a proposed final budget, and their adoption of the Final Operating and Capital Budgets for the American Canyon Fire Protection District for Fiscal Year 2026-2027.

SIGNIFICANT CHANGES IN FINAL BUDGET
The Final Budget includes several significant changes from the Preliminary Budget adopted in June. These changes include: 

•  Increase in Property Tax Revenues of $98,152 in the General Operating Fund based on a) final FY26 Property Tax revenue results in Current Unsecured (+$12,405) and Homeowners Exemption (+$2,672) and b) increase in the Secured Property Tax Roll valuation from the Napa County Assessor (+$83,075 – increase initial 3% growth projection from HdLCC to 4.4% growth).

•  Increase in General Fund Expenditures of $265,000 due to increases in a) Overtime Expenses of $250,000 and b) Legal Services ($15,000).

•  Updated General Operating Fund Revenues and Expenditures show an increase in the projected budget deficit from $1,173,765 to $1,340,602 – an increase of $166,837. General Operating Fund revenues are $8,415,385 and General Operating Fund expenditures are $9,755,987. The deficit will be covered by funds in the Fire District’s reserve, reducing the balance in that reserve.

•  Transfer for Fleet, Facilities & Equipment The FF&E Fund is projected to have a deficit fund balance of $268,409. It will be necessary to include a budget transfer to this fund to offset the projected deficit. 

FINAL BUDGET DETAIL 
The District’s General Operations Fund accounts for the day-to-day expenses associated with providing fire and life safety services to the citizens of the District. In addition, a portion of the annual operating funds received by the District are set aside as needed to meet future capital maintenance and replacement needs and to fund the benefits promised to District employees upon retirement. 

General Operating Fund
Total FY27 General Operating Fund revenues are projected to be $8,415,385, a decrease of $141,005 from the previous fiscal year’s $8,556,390 final unaudited revenues. The total General Operating Fund final operating revenues estimate for FY27 increased by $98,152 over the preliminary FY27 budget presented to the Board in June. This increase reflects final property tax revenues received during the prior fiscal year and projections of Secured Property Tax values based upon Napa County’s property tax roll. 

There has been a recalibration in the expectation of property tax revenue growth from new development across the FY25 through FY27 fiscal years, revising the pace of development downward. A strong market for existing real estate has offset some of this impact on property tax revenues, however. 

Expenditures in FY27 operating budget reflect increases in several costs over which the District has limited control. As discussed during the June preliminary budget meeting, fuel, electricity, and required safety equipment, including turnout gear, have become more expensive. Overtime costs are affected by fire activity and staff absences. CalPERS, health insurance, and property and liability insurance costs have also increased.

Total FY27 General Operating Fund expenditures are projected to be $9,755,987, a $987,575 increase from the previous fiscal year’s $8,768,412 final unaudited expenditures. Total General Operating Fund expenditures for FY27 were increased by $265,000 over the preliminary FY27 budget presented in June; this increase reflects revised projections for overtime wages (+$250,000) and legal services (+$15,000). 

The overtime wage increase reflects projected costs associated with firefighters on leave and vacancies. As of September 18, 2026, posted overtime wages totaled $286,789.02: $72,494.92 in July, $107,663.68 in August, and $106,630.42 during the first half of September.    

The projected June 30, 2027, ending Fund Balance of the General Operating Fund is $3,673,250. 

Fire Mitigation Fee Fund

The Fire Mitigation Fee Fund collects funds from new development to help defray capital costs associated with maintaining fire and life safety services as new development occurs within the District. Mitigation fees are solely dependent upon the level of development activity and can vary widely from year to year. 

Projected revenues and the proposed use of mitigation fees remain unchanged from both the preliminary FY27 budget and the June 30, 2026, projections.

There is an update to the Fire Mitigation Fee assumptions for the Watson Ranch project. Under the District’s agreement with the developer, the fee applies to Artisan (Parcels 14 and 15), Harvest (Parcel 10), Lemos Pointe (Parcel 24), and the Napa Valley Ruins & Gardens and Hotel portion of the project. The remaining residential lots covered by the agreement are exempt from the one-time Fire Mitigation Fee and are instead subject to the District’s Community Facilities District special tax. Accordingly, development of those remaining lots will not generate Fire Mitigation Fee revenue.

Mitigation fee revenue of $275,000 was originally projected for FY25 based on a rolling average of the actual collections over the previous five-year period, with an additional $200,000 expected from development activity associated with the Watson Ranch project for a total projected fee revenue of $475,000. Collections for FY25, however, were only $310,000 as actual permits issued were less than anticipated. 

The FY26 preliminary budget included a five-year average mitigation fee estimate of $226,000, and $200,000 for Watson Ranch, for a total of $426,000, a reduction of $49,000 from FY25. Collections for FY26 again fell short of projections, with $403,000 total revenue resulting in $23,000 less than projected, as actual permits issued were again less than anticipated, although improved over FY25. 

The FY27 preliminary revenue budget included mitigation fees of $310,291. The projected revenues and proposed use of mitigation fees remain unchanged as of this final budget report.   The total Fund revenue projection inclusive of the Fund’s other revenue source, interest earnings, is $338,554.
  
The FY27 final expenditure budget is comprised of a transfer of $500,000 from the Fire Mitigation Fee Fund to the Fleet, Facilities & Equipment Fund.

The projected June 30, 2027, ending Fund Balance of the Fire Mitigation Fee Fund is $990,277.

Fleet, Facilities & Equipment Capital Fund
Capital expenditures are accounted for in the Fleet, Facilities & Equipment Fund (FF&E), which is funded primarily through transfers from the General Operations Fund and the Mitigation Fee Fund. The FY27 budget projects zero transfers from the General Operations Fund and a $500,000 transfer from the Fire Mitigation Fee Fund.

The FF&E Fund also accounts for proceeds from capital financing transactions, grant funded expenditures, proceeds from the sale of surplus assets, and any one-time funding sources. 

The projected June 30, 2027, ending Fund Balance of the Fleet, Facilities & Equipment Fund is $16,215.

State and Federal Grants Fund
Grant-funded expenditures are accounted for in the State and Federal Grants Fund, which is funded primarily through grants received from other governmental entities, and if matching funds are required, through transfers from the General Operations Fund and/or the Mitigation Fee Fund. 

The projected June 30, 2027, ending Fund Balance of the State and Federal Grants Fund is $5,891. 

OVERALL FINANCIAL CONDITION

General Operations Fund - The District’s FY 2026-27 Final Budget reflects a structural deficit in the General Operating Fund. Projected operating expenditures of $9,755,987 exceed projected operating revenues of $8,415,385 by $1,340,602.  Funding this deficit will require spending $1,340,602 or 27% of the General Operating Fund’s fund balance to balance the budget.

As of June 30, 2026, the General Operating Fund’s total fund balance of $5,013,852 was divided into two categories: a Reserve for Contingency of $1,649,122 (33%) and the remaining fund balance $3,364,730 (67%). It can be anticipated that as of June 30, 2027, the General Operating Fund’s total fund balance of $3,673,250 will be divided into two categories: Reserve for Contingency of $1,649,122 (45%) and the remaining fund balance $2,024,128 (55%).  Very roughly calculating that, if the FY28 final budget runs a deficit equal to the $1,340,602 FY27 deficit and all other things remain equal, the remaining fund balance on June 30, 2028, would be $2,024,128 – $1,340,602 = $683,526.

The District will use operating reserves to cover this shortfall, but continued reliance on reserves to fund ongoing expenses is not sustainable. Rising personnel and operating costs, together with revenue growth that has not kept pace, will require the District to evaluate both expenditures and revenue options to maintain services and protect its long-term financial stability.

All District Funds - Total fund balances across all Funds are projected to be $6,415,868 as of June 30, 2026, subject to audit.

Balancing the FY27 budget will require spending $1,730,234 in total fund balances across all Funds, which will result in remaining fund balances of $4,685,634 as of June 30, 2027. The Fire District will be spending 27% of its total fund balances.

STRATEGIES TO ADDRESS BUDGET DEFICIT
In light of the Fire District’s structural budget deficit in the General Operations Fund, the District will need to take steps to address this shortfall. Options will include: 

•    Battalion Chief Position Unfunded - The FY 2026-27 Final Budget does not include funding for a third Battalion Chief position. While the need for additional chief officer staffing continues to be identified in the District's Long-Range Master Plan, current fiscal constraints require the District to defer implementation and focus on maintaining existing service levels and reserve targets.

•    Use of Operating Reserves - The Preliminary Budget includes the use of available operating reserves to support ongoing operations. While reserve levels remain sufficient to meet current operational needs, projected expenditures continue to exceed recurring revenues in the long-range forecast. Staff will continue to monitor revenues, expenditures, and reserve balances and will evaluate strategies to improve long-term financial sustainability.

•    Status Quo Budget in Current and Upcoming Budget - The Fire District Mid-Year Budget Review will need to continue a status quo / no increased expenses budget for the current 2026-27 fiscal year and the upcoming 2027-28 fiscal year. 

•    Review Annual Fire Assessment - Explore an updated Annual Fire Assessment Fee ($945,000 in FY 2026-27 revenues) on the November 2028 ballot to cover the annual costs of the Fire District. 

The FY 2026-27 Final Budget projects General Operating Fund revenues of $8,415,385 and expenditures of $9,755,987, resulting in a $1,340,602 operating deficit to be funded from the General Operating Fund balance. Across all District funds, the budget projects a total reduction in fund balances of $1,730,234, leaving a projected combined balance of $4,685,634 as of June 30, 2027. The budget also includes a $500,000 transfer from the Fire Mitigation Fee Fund to the Fleet, Facilities & Equipment Fund.