Cerritos Adopts $152 Million Budget, Taps $10.6 Million in Reserves as Fiscal Pressures Mount

Cerritos Adopts $152 Million Budget, Taps $10.6 Million in Reserves as Fiscal Pressures Mount

June 25, 2026

By Brian Hews

CERRITOS — The Cerritos City Council unanimously adopted a $152 million Fiscal Year 2026-27 budget Monday that relies on a $10.6 million draw from General Fund reserves to balance spending, while warning that reserves could be depleted within six years if new revenues are not generated or additional service reductions are not made.

The adopted budget, which takes effect July 1, follows months of public workshops and community meetings examining the city’s financial outlook.

For decades, Cerritos enjoyed a reputation as one of SoCal’s most financially stable cities, supported by strong retail activity, automobile sales and redevelopment-era revenues. City officials now acknowledge those traditional revenue sources are no longer keeping pace with rising operating costs, infrastructure needs and inflation.

“We also acknowledge that balancing our budget by transferring millions of dollars from our General Fund reserves is not sustainable,” Mayor Lynda Johnson said following the council’s vote. “My City Council colleagues and I remain committed to pursuing cost-effective budgeting, efficient practices, and revenue-generating strategies to improve our future fiscal position.”

City forecasts show that, absent new revenues and additional expenditure reductions, General Fund reserves could be exhausted within six years. Officials cautioned that reserves could decline even faster depending on the outcome of a pending initiative seeking to repeal recently adopted water and sewer rates.

According to the budget report, overall revenue growth has remained relatively flat during the past four years. Fourth-quarter sales tax receipts declined 2.2 percent year over year, largely because of slowing automobile sales.

While revenues have slowed, expenditures continue to rise. Operating expenditures increased by approximately $2.7 million while capital project spending increased by approximately $8.6 million.

The adopted budget includes a limited hiring freeze, deferred infrastructure and maintenance projects, reduced operating hours at several city facilities and service reductions. Several community events were restored following public feedback, while others remain suspended.

Despite the spending reductions, the final budget deficit increased after the council delayed the next scheduled water and sewer rate increase until July 2027. The city continues to face more than $225 million in long-term infrastructure needs while acknowledging that relying on reserve funds to balance future budgets is not a sustainable long-term strategy.