Editor’s note: The city council was unable to discuss this topic as planned on Tuesday because it ran out of time before its mandated meeting end time of 11 p.m. and did not opt to vote on extending the meeting. The council plans to address it at its June 17 meeting.
This story was updated to reflect that the city has issued a subpoena to Chevron regarding its Measure U tax payments.
How will Richmond spend an additional $50 million in revenue — a boost mostly coming from its first Chevron settlement payment?
The answer depends on the decisions Richmond city officials will make as they start reviewing the city’s proposed $644 million 2025-26 budget on Tuesday amid looming federal funding threats.
The proposed budget includes $257.7 million in general fund expenses, a 3.4% decrease from the current year, while revenues are projected to increase 22.3% to $306.2 million. The revenue surge is largely thanks to the city’s first payment from its 10-year Chevron settlement.
The city’s primary revenue sources include: Property taxes ($58.3 million), sales and use taxes ($57.8 million) and utility users taxes ($64.9 million). However, council members at the May 6 meeting questioned the volatility of certain revenue streams, and a finance staff report attached to Tuesday’s council agenda attempts to answer their questions in preparation for this week’s meeting.
The Chevron refinery’s property tax payments to the city have fluctuated significantly over the past decade — ranging from a 12.9% drop to 12.8% increase year-over-year — due to changes in the property’s valuation, which city finance staff said depends on gas prices and production volumes, among other factors.
If you go
WHAT: Richmond City Council meeting
WHEN: 5 p.m., Tue. June 3
WHERE: 440 Civic Center Plaza
MORE INFO: See the full agenda here, including information about how to attend remotely.
According to staff, the refinery is valued at $3.3 billion for the upcoming year, but the city will not know the exact amount of property taxes this will generate until the first week of July.
Staff added that the Contra Costa County Assessor’s office does not share its methodology, so the city is conservative in its forecasting of this revenue source.
Regarding Measure U business license taxes, which the city has said it suspects the company is underpaying, District 6 council member Claudia Jimenez had asked whether revenue projections include payments from Chevron. Staff confirmed the budget includes an estimate for Chevron under the gross receipts calculation, noting that a legislative subpoena was issued to the company May 29 because Chevron didn’t respond to the city’s April request to comply with its tax payment audit. The city has said it hasn’t been able to audit the payments due to a disagreement with Chevron about a non-disclosure agreement.
Vice Mayor Cesar Zepeda concerned about federal tariffs, loss of subsidized housing funds
In response to Vice Mayor Cesar Zepeda’s concerns about how federal tariffs might affect city revenues and capital projects, the city’s sales tax consultant reports that the city is preparing for this by conservatively forecasting its sales tax growth, to account for a potential slowdown in consumer buying due to tariff-related price increases, particularly for electronics, travel, clothing and groceries.
The conservative sales tax growth forecast also factors in other economic challenges, including rising unemployment, high housing costs, and increased energy prices.
For capital projects, staff said that tariffs have created “increased pricing volatility and reduced predictability,” particularly affecting lumber prices and construction materials. The California Construction Cost Index shows uncertainty about future price impacts, as a recession could decrease such prices while tariffs increase them.
The city’s Capital Improvement Plan (CIP) budget, which pays for critical infrastructure and public safety improvement, totals $170.7 million for the first year, with several projects remaining unfunded. Staff identified $104.8 million in unfunded capital needs for 2025-26, including $40 million for the Martin Luther King Jr. Community Center renovation, $2.6 million to rebuild fire stations 66 and 67 and $11 million for the road paving program.
Multiple council members had requested clearer context for the 10-year capital forecast and how annual budgets intersect with the five-year CIP. Staff said a formal facility needs assessment is underway and that additional details are expected to be shared at Tuesday’s meeting.
In regard to federal funding threats, City Manager Shasa Curl and the city’s finance officials on Tuesday will present three options: Hold a significant portion of the $50 million in additional revenue for six to 18 months amid “economic uncertainties;” invest it in unfunded capital projects; or establish a $19.5 million contingency fund to protect against potential federal funding cuts. The contingency fund would be separate from whatever unspent funds the city has set aside in recent years.
The contingency option references President Donald Trump’s April 28 executive order threatening to withhold federal funding from sanctuary cities. The Department of Homeland Security had initially posted a list of jurisdictions last week that was then removed over the weekend due to pushback from the National Sheriffs Association, according to a Reuters report. Richmond, which recently strengthened its law protecting undocumented residents, is among cities named on the list, which is still available via the internet archive.
Zepeda also asked about how a loss of federal funding could impact Section 8 housing vouchers. Staff reported they’re working with the Housing Authority of Contra Costa County to assess potential cuts and risks to ongoing development projects at the Nevin, Richmond Village, and Nystrom complexes.
The budget funds the equivalent of 800 full-time city positions, with an 11% job vacancy rate, up from 6%. Jimenez questioned the increased vacancy rate — there are 135 total vacancies, including 23 sworn police positions. The city faces particular challenges filling public safety roles, which recently was the subject of a Contra Costa County Civil Grand Jury report recommending that the city hire more police officers.
Other notable budget challenges include the city’s unfunded pension liabilities of $396 million and increasing utility costs, with electricity and water expenses projected to increase 50% and 27.4% respectively. In late March, the city council asked staff to explore using the incoming Chevron settlement funds, which will be paid in annual lump sums over the 10-year period, to help pay off the city’s pension debt faster.
According to the California Policy Center, a nonprofit that grades cities based on their financial health, Richmond’s overall financial risk in 2024 got a “D” grade, with the city either close to failing or failing in the individual categories of pension costs and obligations. The city, however, scored an “A” for both its general fund reserves and access to liquid assets.
