“Not a great pill to swallow” is how Guadalupe Mayor Ariston Julian described the city’s budget for next year, which currently sits at a $3.6 million deficit. 

The city adopted a $9.76 million budget for the 2026-27 fiscal year, which began July 1 and marks the beginning of a four-year plan. The plan includes seven permanent layoffs that will save nearly $1 million annually, and reductions toward several departments, including finance and building and planning, along with a $500,000 cut to the police department.

Finance Director Eli Martinez described the budget reductions as “cut[ting] a finger to save the body.”

As it stands, the city earns about $6.15 million in revenue but is committed to $9.76 million in expenditures. Trujillo said it’s “10 years worth of miscalculations” that have created the $3.6 million deficit.

According to Trujillo, if the city had continued its current spending trajectory, it would’ve become completely inoperational in 12 months. The city currently has a finite amount of cash in the bank, much of which is designated toward the nearly $12 million Royal Theater restoration project. Currently, the city has spent nearly $2.4 million on the project.

The city began the Royal Theater project with a $3 million deficit, but Trujillo stated that it didn’t include the added $2.1 million in “soft costs,” which are one-time expenses such as inspections and utility fees. Despite $10.5 million being secured by federal grants, these soft costs pushed the project up to the nearly $12 million cost. Trujillo warned that soft costs are likely to double as construction ensues, which may raise the funding gap to $6 million. 

With the project funded by federal grants, the city is unable to stop construction. Trujillo noted that once the money toward the project is gone, Guadalupe wouldn’t be functional.

“Once you take all that project money away, the city shuts down within 12 months. No stipend for council. No paychecks for any staff,” Trujillo said. “We can’t pay power in 12 months. Period. So, if we don’t take action, nobody’s here.”

The budget also includes plans to continue generating revenue, such as the Guadalupe Greens Festival, which was approved earlier in that meeting.

Councilwoman Christina Hernandez said that while she doesn’t want to lay off any positions, she believes there aren’t “any other options.” 

Councilman Eugene Costa Jr. expressed discontent that in order to fix the budget, they are having to “affect services offered to the city.”

The city approved the budget in a 4-1 vote, with Costa the sole opponent.