Benicia passes two-year budget amid uncertainty over possible Valero closure

BENICIA – Benicia approved a citywide budget for the next two years on Tuesday, despite the mayor and vice mayor’s concerns that multiple departments will soon face deficits in the face of its largest employer Valero potentially closing its refinery.

The Benicia City Council voted unanimously Tuesday to adopt an amended biennial budget which the city will begin using starting in July, through June 2027. The posted budget plans for the city to spend $119.6 million in 2025-26 and $120.2 million in 2026-27, with the general fund rising from $65 million to $68 million during those years. 

Benicia’s budget process requires the City Council to adopt a biennial budget to use for two fiscal years. City Manager Mario Giuliani said in Tuesday’s report that this general fund budget is balanced between revenues and expenditures and does not include the use of reserves. But it also did not account for the potential impact of Valero’s closure, which contributes a substantial amount of the city’s tax revenue and 10% of its budget. 

Valero in April said it will close its Benicia refinery by mid-2026 following the city’s adoption of an ordinance regulating businesses like the refinery, though state officials are negotiating to try and keep the refinery open for longer.

Mayor Steve Young implored staff to consider more ways to prepare for potential fiscal troubles in the future, such as if the city’s major businesses leave. 

“If it gets to the point where Valero closes and we end up with serious budget cutting … I hope to take advantage of your expertise in how we approach it, and some of the impacts you would see,” Young said.

Young also disagreed with the city manager’s assurance that the budget is balanced. He said that even if the general fund is balanced on its own, numerous other department funds, such as the water department, lighting and landscape district and wastewater enterprise fund – which manages the city’s sewer and wastewater treatment systems – are expected to face shortfalls. 

He added that he only saw the budget subcommittee’s report on its work from the last several months on Tuesday, and said that the information from the report isn’t useful so late in the process.

Vice Mayor Trevor Macenski said that it’s clear from the budget subcommittee’s report that Benicia is in a deferred maintenance crisis across the city due to “long-term neglect.” 

There’s no structural maintenance planning, making it difficult to prioritize different projects, Macenski said. He blamed the city’s lack of centralized spending management, as each department essentially manages its own budget, and a lack of investment in economic development. 

The council first considered the proposed budget on June 3, and told staff that the draft contained an inconsistency in the budgeting of Industrial Safety Ordinance revenue, a new revenue stream following the city’s adoption of the ordinance to regulate businesses like refineries. 

In response, the city’s new draft included the anticipated revenue from the ordinance, totaling $320,000, in the 2026-27 estimates.

Giuliani wrote that “This budget is transitional in nature. Staff will begin the implementation of Priority Based Budgeting, which will be used in the development of the next budget cycle and will assist in necessary changes to address the city’s long-term liabilities and create [a] path for sustained fiscal health.” He added that without the council adopting the budget as proposed Tuesday, the city would not have had appropriations to continue operations beyond June 30.

Young said he received some concerned emails from residents about the budget proposal, although none addressed the council in person Tuesday. He had staff read aloud questions from resident Greg Gartrell about the wastewater enterprise fund, which could be short $10-$15 million within the next two years.

“Making up the shortfall on rates would amount to about $100 to $150 per billing cycle for water and wastewater ($600 to $1,000 annually) per household, which would be a substantial increase, and it is not clear if that increase would even begin to cover the cost of the necessary future capital improvements for both systems, improvements that are quite expensive and will be needed over the next 25 years,” Gartrell wrote in his email. “It also does not appear to include the possible loss of Valero's payment for raw water.”