Pacifica, CA Faces Fiscal Crisis, Evaluates $371M Bond for 2026 Ballot

The City of Pacifica is facing a mounting financial crisis that threatens the sustainability of its municipal operations. Despite years of balancing budgets through short-term fixes and deferred investments, Pacifica’s fiscal structure is showing strain. A recent staff report prepared for a Council Study Session outlines the depth of the challenge and the urgent need for long-term corrective action.

At the core of Pacifica’s challenges are three structural imbalances—operational, organizational, and capital—that have compounded over time.

Mounting Deficits and Deferred Investments

Operating Deficit: The City projects a General Fund deficit emerging in FY 2026–27, widening to $3–6.6 million annually through FY 2034–35. Without intervention, reserves could fall below the Government Finance Officers Association’s minimum recommendation of two months’ expenditures ($8.8 million) by FY 2026–27, and be fully depleted by FY 2028–29.

Staffing Shortfall: Pacifica operates with staffing and compensation levels significantly below regional benchmarks. The City would need approximately 25 additional full-time positions and an estimated $7–9 million annually to reach competitive labor market standards and restore service capacity.

Infrastructure Deficit: The most severe challenge lies in the capital portfolio. The City has identified 38 unfunded infrastructure projects totaling $371.4 million, including $95 million in urgent street repairs. Pacifica’s Pavement Condition Index (PCI) of 47 ranks among the lowest in the Bay Area, with costs escalating by 8–10% annually as maintenance is deferred.

Exploring Bond Financing

To address the backlog, City staff are evaluating long-term financing strategies, including a potential General Obligation (G.O.) Bond to fund critical infrastructure investments. G.O. Bonds are repaid through property tax levies and require two-thirds voter approval.

Comparable precedent includes San Bruno’s Measure Q, which secured 73% voter approval for a $102 million G.O. Bond in 2022 to address stormwater, fire station, and road infrastructure needs.

Pacifica’s potential bond measure could range from a partial issuance to cover priority projects to a comprehensive package addressing the full $371 million need. The City Manager’s Office has indicated the proposal could advance to feasibility and polling phases for possible placement on the November 2026 ballot.

Alternative Financing Tools Under Review

City financial advisors are also weighing non-voter-approved mechanisms to finance smaller-scale or immediate capital needs:

• Certificates of Participation (COPs) or lease-revenue bonds, secured by City assets, could generate roughly $17 million with $1 million in annual debt service.

• Direct Bank Loans, more efficient for limited projects in the $5–7 million range, offer short-term capital without voter approval.

• Parcel Tax-Secured Bonds provide flexibility for operational and capital uses but still require a two-thirds supermajority.

Next Steps

The Council will consider staff recommendations on advancing a General Obligation Bond, Utility User Tax, or Parcel Tax to the next phase of financial feasibility and voter research. The decisions made in the coming months will shape Pacifica’s fiscal trajectory—and determine whether the City can stabilize its finances while addressing decades of deferred public investment.