Fire Station 3 Cut by Redding City Council to Close Huge Budget Gap
REDDING — After a meeting that ran more than seven hours on Tuesday, the Redding City Council cut 13.5 vacant police positions, voted to close Fire Station 3, and reset the city’s general-fund plan around flatter sales-tax growth and a goal of restoring a 10 percent reserve by fiscal year 2029. The same night, the council adopted a state-mandated turf-watering ordinance and heard that Redding Electric Utility’s cash position is being propped up by one-time money that will not last.
Mayor Michael Littau opened the Oct. 6 regular meeting. Interim City Manager Michael Webb told the council that expenses are outpacing revenue. The budget shortfall has been described as roughly $8 million and came about after overly optimistic forecasts of sales tax revenues and increased spending on salary adjustments and raises under the prior City Manager, Barry Tippin, who retired last year. The general fund ended fiscal year 2025–26 with about $4.9 million in cash, which becomes the starting balance for 2026–27, along with about $1.1 million in carryovers and $1.5 million in encumbrances that will show up as spending this year. Without changes, Webb said, the fund would likely finish 2026–27 about $120,000 in the red and could go negative by 2027–28.
Police cuts, 3–2 Vote
The Police Department has 114 authorized sworn positions and 47 professional positions. Uniformed patrol is authorized at 88 sworn officers. The city has been operating with 82 filled patrol positions over the past year.
Staff asked the council to eliminate 13.5 vacant police jobs and keep patrol at the level the department has actually staffed. The list was one captain, one lieutenant, one detective, four officer positions funded by the American Rescue Plan Act that expire Dec. 31, two general-fund officer positions, and 4.5 professional positions. The bike team would drop from four officers to two. The neighborhood policing unit, traffic team, school resource officers, and DUI officer would stay. The bike team would drop from four officers to two. Webb also said a two-person search team would be retained. The plan shifts funding for the remaining community-work-program officer to the solid-waste utility, and the city has signed a Shasta Union High School District contract that pays three-quarters of a sixth school resource officer. Staff put the annual savings at about $2 million.
Interim Police Chief Hank Schreeder backed the plan. “I spent a lot of time working on this plan with City Manager Webb, and I agree with the recommendations proposed,” he told the council. He said patrol is the department’s primary around-the-clock job and that specialty assignments are the first places the department pulls from when patrol has to be filled. He said the department is already operating in a similar structure and has not seen a meaningful rise in response times.
Councilmember Tenessa Audette opposed cutting jobs that support detectives, specialized teams, and proactive policing. She said the city had already reduced police staffing and should look first at other vacancies and administrative savings. Councilmember Erin Resner also voted no.
The council split the police action into two 3–2 votes, both with Audette and Resner opposed. The first eliminated the vacant captain, lieutenant, four ARPA officer positions, and 4.5 professional positions. After a recess, the council eliminated the vacant detective and two vacant general-fund officer positions. All 13.5 jobs in the staff proposal are gone. No current police employees lose their jobs. The council did not approve any plan to restore the positions later.
Fire Station 3 closes, 5–0
The council then voted unanimously to close Fire Station 3 and keep three-person engine companies. Webb and Interim Fire Chief Jason Foley said dropping engines from three firefighters to two would hurt operations more than closing one station.
The department has eight stations and 84 firehouse personnel — 27 firefighters, 27 engineers, and 30 captains — plus four battalion chiefs, two deputy chiefs, a fire chief, and nine prevention and administrative positions, for 100 authorized positions.
Closing Station 3 removes nine station-assigned jobs: three captains, three engineers, and three firefighters. Webb said the closure could be made without layoffs or demotions by using seven current firehouse vacancies, transfers into prevention, and attrition. The department has since said no current employee will lose a job. The approved plan eliminates three firefighter positions, three engineer positions, and one fire-prevention officer position. A second fire-prevention officer shifts from the general fund to Zogg Fire funding. Three captains stay on as citywide rovers to cover captain vacancies and limit overtime at the remaining seven stations. Staff will watch whether that rover setup actually controls overtime.
Savings were estimated at about $1.5 million for the rest of this fiscal year and $2 million a year after that, not counting overtime and compensatory-time savings that staff said were too uncertain to count. Modeling showed about a 90-second increase in response time in the Station 3 area, which would be covered by Stations 1, 2, 4, and 5.
Station 3 dates to the 1930s. The newest station, Station 8, opened in 2006. Foley said the building may be boarded up, reused for prevention staff, or used for storage. No reuse decision was made. He told the council the station sits in a rough part of town and that break-ins and vandalism are a concern if it is simply mothballed. Littau asked staff to keep seasonal reopening on the table during fire season. Webb said he and Foley are looking at whether operations should differ in fire season.
Reserve target moved up
The council also reset the revenue assumptions in the 10-year general-fund plan.
Sales tax came in at $30.261 million in 2025–26, under the adopted assumption of $31.368 million and above the February 2026 amended estimate of $29.648 million. The council held 2026–27 flat at the 2025–26 actual and approved 1.5 percent annual growth from 2027–28 on, rather than a later staff suggestion of 2 percent. Audette supported the more conservative sales-tax path and said the forecast can be revisited in the next two-year budget.
Property tax was $31.069 million in 2025–26. The council approved a 4 percent increase for 2026–27, to $32.312 million, then 3.5 percent a year after that. Audette said property-tax receipts lag the economy by about two years, which made that forecast reasonable.
Interest earnings had been planned at a 1 percent return. The pooled-cash yield is 3.92 percent. The council approved staff’s recommendation of 3 percent in 2026–27, 2.5 percent in 2027–28, and 2 percent from 2028–29 on. Interim finance staff said that adds about $1 million over 10 years, roughly $100,000 a year, allocated by each fund’s share of reserves.
Webb’s original transition plan aimed at a reserve near 5 percent in the near term and a return to the existing 10 percent standard by fiscal year 2031. If the staff package were fully adopted, he projected year-end cash would improve from about negative $120,000 to positive $5.7 million in 2026–27. Audette argued the city should not lower the 10 percent standard and should use every available tool to get there faster. Littau warned that hitting the target sooner could mean further public-safety cuts. The council set a goal of reaching the existing 10 percent reserve policy by fiscal year 2029, on a 3–2 vote with Jack Munns and Littau opposed. The reserve policy itself was not changed. Webb said staff will update the plan and see what else, if anything, is required. One option under study is excluding gas-tax and street spending from the reserve calculation.
The council also approved the rest of the transition package: continued priority-setting, organizational changes tied to the ongoing Circle Six assessment, talks with labor groups on cost savings, work on the city’s Oracle accounting system, and continued review of the reserve policy.
Circle Six’s assessment is about two-thirds done, with material expected in six to eight weeks. The plan assumes about $500,000 a year in restructuring savings starting in 2027–28. No furlough program, salary cut, or labor-savings target was approved. Audette wanted a target of $3 million to $5 million a year in general-fund savings and said the council should pursue furloughs. Munns and Resner wanted more information before setting a number.
Year-end report pulled
Littau pulled the fiscal year 2026 year-end budget review, Item 9.10(a), so it can return Oct. 20, or sooner, with a complete public record, supporting data, and resolutions. He said the year-end cash figure in the report was correct, which let the council move ahead on the transition plan. Webb agreed the delay was appropriate. He said the numbers were in the presentation but should also be in the staff report, and that the end figures are not expected to change.
The city is also changing how it reports cash so the year-end figure matches the proof-of-cash and treasurer’s reports. Under the old method, carryovers reduced reported ending cash even though the spending happens the next year.
Credit-card fees and remaining vacancies
The council told Webb to study a credit-card processing-fee recovery program. He said it could be stood up in about three months and might recover as much as $400,000 a year for the general fund, or about $200,000 this year if it starts midyear. Finance staff stressed that the fee would recover the cost of taking cards, not create a new tax. If customers switch to checks, fee revenue and processing costs would both fall. Departments use different software, so the city has at least half a dozen merchant arrangements.
A general-fund hiring freeze began in January 2025, and a citywide freeze followed in January 2026. The city had 91 vacant positions at the time of the analysis, about 50 of them funded wholly or partly by the general fund. Staff had identified 22.5 vacant public-safety positions for possible removal, with estimated savings of about $3.5 million for the rest of this year and about $4 million a year after that. Roughly 27.5 other general-fund or partly general-fund vacancies were proposed to stay empty until the 2027–29 budget, saving about $1.25 million this year, with finance and personnel treated as mission-critical. The council did not decide which of those remaining jobs to eliminate. It asked Webb for a citywide vacancy list, split by general-fund and non-general-fund funding, for discussion Oct. 20.
Webb also said the city added 168 authorized full-time positions over the prior five to six years, including 41 in public safety, 32 in public works, and 27 in community services. He said most of that growth was not charged directly to the general fund. The amended 2025–26 general-fund budget was $125.3 million. About $43.7 million was non-discretionary, leaving about $81.5 million discretionary. Of that discretionary share, police accounted for 51 percent and fire for 33 percent.
Electric utility: one-time cash, structural gap
Redding Electric Utility Director Nick Settle reported operating revenue of $166 million in fiscal 2026, $2.5 million over budget. Wholesale trading gains and interest on bond proceeds offset weaker retail sales tied to milder weather and a paused rate increase. Power costs were $4 million under budget and system operations and maintenance were $6 million under budget, after cuts to overtime, elimination of nine vacancies, and less contracted line work. Capital spending was $19.8 million, including replacement of more than 240 poles, removal of nearly 20 miles of deteriorated underground cable, and a power-plant gear overhaul that included a $500,000 tariff on a European-made gearbox.
Unrestricted cash finished at $44.7 million, equal to 111 days of cash on hand. Policy calls for a 75-day floor and a 150-day target. That balance included $22.4 million in one-time money: $19.6 million in bond-proceeds reimbursements and $2.8 million in cap-and-invest proceeds used for renewable-energy credits. Without those funds, Settle said, cash on hand would have been about 55 days. Utility equipment costs have risen far faster than consumer inflation, which he put at 22.4 percent over five years. Bond reimbursements have about 18 months left. He plans to return in two weeks to start a rate-hearing discussion. Without a rate change and a recalibrated capital plan, he said, REU would have to cut system investment sharply and reliability would suffer over time.
Settle also flagged state and federal pressure: reliability rules aimed at large computing loads, an extended cap-and-invest program linked with Washington and Quebec, and the Advanced Clean Fleets rule requiring new fleet vehicles over 14,000 pounds to be zero-emission starting in 2030. Resner and Settle both questioned whether that fleet rule is workable for emergency operations and heavy trucks in multi-day storms. REU has executed one energy-storage contract and bought short-term renewable credits to bridge the end of the Bighorn Wind contract on Sept. 30. Tariffs on polysilicon panels and the loss of federal tax credits are complicating other renewable deals.
Call center may come back in-house
Settle also asked the council to consider bringing the utilities call center back inside the city. The center, covering electric, water, wastewater, and solid waste, is contracted at about $1.269 million a year after vendor changes from Vertex to Faneuil to Everise. The contract is indexed to inflation with a 6 percent cap and has grown about 20 percent in five years. Agents are busy only 38 to 48 percent of the time, and city staff still correct vendor errors — 36 in a recent month. Invoice Cloud has cut call volume, which works against a vendor paid in part on volume.
An in-house model of one workflow coordinator and seven customer-service representatives was estimated at about $909,000 in first-year personnel costs, with roughly $50,000 in net savings after overlap and about $300,000 a year after that, or about $1.5 million over five years. Finance staff said those figures include pension unfunded-liability allocations the city would pay anyway, and that the real ongoing pension cost for a new employee would be closer to 8 percent of pay. On that reading, annual savings could be nearer $450,000.
Audette opposed adding eight employees at a projected $925,000, about $115,000 each, and said future labor agreements could raise that cost. She favored a new request for proposals. The last one was issued in 2019. Vice Mayor Paul Dhanuka said he would rather keep the work in Redding, either on the city payroll or with a local firm, than keep supporting call-center jobs in Nebraska. Settle said any outside vendor would need utility-class experience, and that existing solid-waste and water customer-service staff may not be free to move into a central call center without affecting dispatch and field work. Webb called the idea a possible first step toward one place where residents could handle city business. Staff will verify costs, including pension impacts, and return with a comparison and a transition plan.
State turf rules changing
The council voted 4–1 (Dhanuka voted No) to introduce an ordinance amending Title 14 to define and restrict irrigation of “non-functional turf” as required under Assembly Bill 1572. The city attorney said the action covered introduction of the ordinance, preparation and publication of a summary, and the finding that the change is exempt from the California Environmental Quality Act. A second reading may still be required before the ordinance takes effect. Non-functional turf is mowed grass that is not used for recreation or community gatherings. If the only time people walk on it is to mow it, it is non-functional. The ban applies to irrigation with treated drinking water. It covers commercial, industrial, and institutional property, and common areas of homeowners’ associations and similar developments. It does not cover single-family homes, and cemeteries are excluded. Drip irrigation of non-turf plantings is still allowed. Sprinkler irrigation of non-functional turf is not.
State property must comply by Jan. 1, 2027; commercial, industrial, and institutional property by Jan. 1, 2028; homeowners associations by Jan. 1, 2029; and local agencies in disadvantaged communities by Jan. 1, 2031, or sooner if the state pays for the work.
Redding qualifies as disadvantaged because median household income is at or below 80 percent of the state median. Staff said enforcement will start with education and conversion plans, not fines. Council members said Redding is not short of water and that the mandate will cost property owners, add staff work, and can reduce water-utility revenue.
Consent Calendar
The consent calendar was approved, including an application for up to $1.2 million from the state’s Extreme Heat and Community Resilience Grant for weatherization and HVAC work at the Caldwell Recreation Center and Redding Sports Park, as described in the agenda. A separate turf-replacement grant is to come back later.
Public Comment
Dale Ball and Lance Stern During Public Comment
Several speakers focused on the Henderson Ditch, a man-made stormwater canal draining about 275 acres of streets, parking lots, schools, shopping centers, and part of Interstate 5. They described flooding documented since at least 1963, including 1978, the late 1990s, and 2017, and a Dec. 21, 2025, storm they said caused about $330,000 in neighborhood damage, contaminated four wells with E. coli, and forced one homeowner to leave. They described debris, overgrowth, and encampment material, and a split among city, county, and private easements before the ditch reaches the Sacramento River. Lance Stern cited a $100,000 bid from A-1 Tree Service to clear 1,500 feet and proposed a three-way split among the city, the county, and neighbors before an El Niño winter. Dale Ball said there is a known drug house in that area and doesn't understand why nothing has been done to arrest the drug dealers. He also said it is ludicrous for the Council to cut the budget without complete financial statements.
Motorsport groups, including Shasta Supermoto and the Shasta Kart Club, said unclear access, keys, and scheduling have canceled races, and they asked the council to speed up the track lease and request-for-proposals process.
Anthony Spangler of Games and Brews LLC said a stop-work order tied to a building permit landed after he already had a health permit, a wastewater waiver, and a city business license, and that the added cost threatens the business. The Small Business Development Center director urged a no-cost pre-application meeting so owners get a permit roadmap before they spend money. Spangler was directed to meet with Development Services Director Jeremy Pagan and report back if the issue is not resolved.
Another speaker, Elise Ramirez Sloan, who is a candidate running for Redding City Council, questioned a $300,000 no-bid contract with Circle Six, two-thirds of it from enterprise funds and reserves, and a $78,000 reorganization study the speaker said was signed under the city manager’s authority. Sloan questioned the firm’s credentials for municipal audit work.
Assessor’s report
Shasta County Assessor-Recorder Leslie Morgan presented the 2026–27 annual report. She said the assessment roll is the county’s largest source of discretionary income and produces more than $262 million from the basic 1 percent property-tax rate. The county roll rose 4.59 percent. Redding’s net assessed value rose 3.75 percent. About one-third of properties, roughly 33,000, carry the homeowners’ exemption, a $7,000 reduction worth about $70 a year. The office plans fraud-notification mailings in January 2027 when a deed or mortgage is recorded, and it has recorded 316 modifications stripping illegal restrictive covenants. Morgan said the office also assesses business and personal property, not only land and buildings. That includes equipment used by businesses, from trucking companies to insurance offices, along with boats, aircraft, and certain equipment such as tractors. A March 2023 State Board of Equalization review of Shasta County's assessments put assessment accuracy at 99.76 percent.
The year-end budget report, the remaining vacancy list, and an updated path to the 10 percent reserve are scheduled to return Oct. 20. Settle is expected back in about two weeks on electric rates.
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