Council Confronts $14M Deficit as Sales Tax Bleeds to Neighboring Cities

Antioch's City Council spent more than six hours on March 24 wrestling with a $14 million structural budget gap, receiving a sobering sales tax leakage study showing residents spend three-quarters of a billion dollars a year in other cities, and hearing a $2 billion plan to bury an 80-year-old water canal running through town. The meeting laid bare the tension between a city that needs more police officers, better infrastructure, and economic growth — but can't currently afford any of it without deep cuts or new revenue.

• $14M budget deficit forces council to direct staff to model $5M in cuts — before any employee raises are factored in

• Zero lateral police officers in the recruitment pipeline because the police union contract is expired; chief says only 9 of 12 planned hires are realistic

• Sales tax leakage study reveals Antioch loses $726 per capita to neighboring cities while its mall shed 80% of taxable sales over a decade

• $2B canal replacement plan unveiled by Contra Costa Water District to bury the earthquake-vulnerable, drowning-prone open canal through Antioch by 2032

• AI-assisted police dispatch contract deferred after council raises sole-source and civilian oversight concerns

• Zero deed-restricted affordable homes permitted in 2025; city is only 5% toward its very-low-income housing target

• Stormwater fee unchanged for 33 years — council demands staff return within a month with a plan to raise it

$14M Deficit Looms Over Budget Season

The basics: The FY 2026-27 baseline budget carries a $14.1 million deficit before any cost-of-living raises or union contract enhancements are added. The city's budget stabilization fund can cover roughly $5 million of the gap, but the remainder must come from cuts, deferrals, or new revenue.

Why it matters: Antioch is heading into union contract negotiations with nothing budgeted for employee raises, a police department that can't attract experienced officers because its contract is expired, and a vehicle replacement fund that's been raided two years running.

Where things stand: Finance Director and Acting City Manager Dawn Merchant walked the council through follow-up items from a March 10 study session, including a roster of active grants totaling approximately $38.8 million, a Section 115 OPEB trust with a $30.4 million balance against a $42 million total liability, and detailed maps showing that many streetlight and landscape maintenance district assessments haven't been raised since Proposition 218 votes in the late 1990s.

The sharpest exchanges came over police staffing. Merchant detailed the cost structure: $61,904 per trainee through the six-month academy, approximately $201,000 annually per officer at Step A, and a full-year cost of $2.42 million once all 12 proposed new hires are sworn.

"If you do add the additional positions and we can get to the 117 in fiscal year 28, even fiscal year 29, we have a $14 million deficit here that's going to bring that up to $17 million," said Merchant.

Staff disclosed that zero lateral police officers are in the recruitment pipeline because the city is out of contract with its police union — a significant obstacle to attracting experienced officers from other departments.

The other side: Councilmember Louie Rocha pushed back on the aspirational hiring numbers, reporting that the police chief told him only nine new hires are realistic, not 12, and that reaching the 117-sworn-officer target would take 18 to 24 months.

"I think we should project our numbers based on what we believe can happen within that window of time. Otherwise we're misleading the community and we're misleading each other on what that really looks like," said Rocha.

He also made clear his priority is the existing workforce:

"I really am most interested in taking care of the employees we have right now, here and now, versus looking at hiring positions that maybe aren't absolutely necessary in this next calendar year."

Councilmember Tamisha Torres-Walker warned the council against repeating last year's budget process, pushing for a dedicated grant writer and raising the issue of dispatcher vacancies — four of roughly 13 positions unfilled — and underpayment relative to the demands of the job.

Mayor Pro Tem Donald Freitas advocated for a purchasing officer position and a full accounting of the city's consultant contracts, arguing those expenditures could yield savings. He also pushed for creative revenue generation strategies.

Decisions: Mayor Ron Bernal directed staff to return with a budget scenario cutting $5 million in costs.

"I'd like to see the staff come back with a budget that cuts $5 million in costs from the current budget and see what that would look like from staff's perspective," he said.

Bernal also requested a program-level breakdown of general fund contributions by department.

The vehicle replacement fund set-aside of $1.78 million was again proposed for deferral — the second consecutive year, bringing the cumulative shortfall to $3.4 million. ARPA funds are fully obligated and must be spent by Dec. 31, 2026. The council adjourned the study session on a 5-0 vote.

What's next: Staff will return with the $5 million cut scenario, a list of all vacant positions with dollar amounts and hiring status, and a detailed inventory of consultant contracts. Union negotiations will proceed in parallel, with no raises currently budgeted.

Antioch Loses $726 Per Capita in Sales Tax to Neighboring Cities

Why it matters: While Antioch households spend roughly $1.1 billion annually on retail goods — about $9,800 per capita — much of that spending is happening in Brentwood, Concord, and Pittsburg. The resulting sales tax leakage weakens the city's ability to fund basic services at a time when every dollar counts.

Where things stand: Interim Community Development Director David Storer and consultants David Zehnder and Peter Cheng of Economic and Planning Systems presented the city's first quarterly economic development report and a draft retail and sales tax leakage analysis. The numbers tell a story of decline and opportunity in the same breath.

Antioch leaks $726 per capita in sales tax revenue, compared with surpluses of $1,500 in Brentwood and $4,200 in Pittsburg. The Somersville Towne Center mall's taxable sales collapsed by 80% over the past decade. The auto center dropped from $1.7 million to $1 million in annual sales tax generation. Slatten Ranch Shopping Center, by contrast, has no vacancies and recently sold for $31 million.

The brightest spot: "Downtown Antioch has more than doubled its taxable sales over the past decade," reported Cheng, noting the growth spans a broad spectrum of businesses.

Business-to-business sales — which don't depend on consumer foot traffic — also doubled and now represent roughly 70% of Antioch's non-retail taxable sales, far above the statewide average of one-third. Antioch's median income rose 30% between 2019 and 2024.

The consultants recommended retention and expansion outreach to top sales tax generators, maintaining broker relationships, pursuing housing at the mall site to boost spending power and image, downtown place-making, exploring missing auto dealership brands, and hotel development for transient occupancy tax revenue. Storer outlined six near-term initiatives from the 2022 Natalson Dell strategic plan, including impact fee waivers, development agreements, a one-stop permitting shop, and creating a 501(c)(3) Antioch Economic Development Corporation.

Mayor Pro Tem Donald Freitas pushed the conversation beyond retail:

"Economic development for our community is to get people off of Highway 4 to have jobs that are well paid with benefits and career oriented versus most jobs in retail."

He urged the city to leverage its deep water port and industrial base for business-to-business growth.

What's next: Council directed quarterly economic development report-backs starting June 3, direct outreach to major businesses and commercial brokers, and exploration of Enhanced Infrastructure Financing Districts, fee deferral strategies, and detailed follow-up on the Natalson Dell strategic plan's nine initiatives.

$2 Billion Plan to Bury Canal Through Antioch

The basics: The Contra Costa Canal — an open, unlined waterway built in the 1930s — carries 99% of the Contra Costa Water District's (CCWD) untreated water supply, delivering 82 million gallons per day to more than 550,000 customers. The canal runs directly through Antioch.

Why it matters: The open canal averages one drowning death per year, loses roughly 7,000 acre-feet of water annually to evaporation — about 2 billion gallons, enough to serve 31,000 residents — and is vulnerable to earthquakes, algae blooms, and stormwater contamination.

Where things stand: CCWD Vice President Antonio Martinez and General Manager Rachel Murphy presented the district's 90th anniversary update and detailed the canal replacement program.

"We are now advancing a strategy to replace the canal with a buried pipeline to ensure safe water delivery for the next 100 years," said Vice President Martinez.

The first four miles of earthen canal have already been replaced with 10-foot-diameter concrete pipe. The Antioch segment will require up to 11-foot-diameter pipeline installed in phases. Total program cost is upward of $2 billion, funded through a combination of rates and state and federal grants and loans.

The timeline: preliminary geotechnical investigations in fall 2026 or spring 2027; 30% design by 2028; programmatic environmental review by 2028; construction target of 2032. Once complete, the canal fencing will be removed, and the right-of-way will be opened for trails and community use in coordination with East Bay Regional Parks District.

Murphy also addressed the shelved Los Vaqueros Reservoir expansion, explaining it was set aside due to increased costs, reduced benefits from permit restrictions, and the inability to guarantee a backstop water supply during construction.

What's next: CCWD will return with updates as the canal replacement program advances through design and environmental review.

Zero Deed-Restricted Affordable Homes Permitted in 2025

Why it matters: Antioch is three years into its state housing element cycle and severely behind on affordable housing targets, with over 40% of renters spending more than a third of their income on rent.

Where things stand: The 2025 Housing Element Annual Progress Report was pulled from consent for discussion. Joey Flegel-Mishlove of East Bay Housing Organizations told the council that Antioch permitted 131 above-moderate-income homes but only 30 low- and very-low-income units — all accessory dwelling units with no deed restrictions — and 14 moderate-income homes.

"Three years into the housing element cycle, the city is 70% toward above-moderate goals but just 5% toward very-low-income goals," said Flegel-Mishlove.

Public commenter Andrew Becker advocated for mixed-income development rather than concentrated low-income projects and urged better use of the city's down payment assistance program, particularly for investor-heavy condo complexes.

Councilmember Tamisha Torres-Walker connected the dots to a recent council failure:

"An inclusionary housing ordinance would have met the needs of those mixed-income communities. But it died at the last council meeting."

Decisions: The report was approved 5-0. The city currently has no policy tool requiring affordable units in new market-rate developments.

AI Dispatch Contract Pulled for Oversight Review

Mayor Pro Tem Donald Freitas raised pointed concerns about a proposed AI-assisted call-taking system for police dispatch that appeared on the consent calendar as a sole-source, two-year contract with a three-year option.

"I do believe this is an item that should be discussed with the Annie Clease oversight committee. I think this is controversial," said Freitas, questioning why the city went to Texas for reference sites and objecting to the potential five-year contract term without competitive bidding.

The police department agreed to bring the item back for a full presentation at a future regular meeting. The motion to continue passed 5-0.

Stormwater Fee Frozen for 33 Years

The council approved the existing National Pollutant Discharge Elimination System (NPDES) stormwater drainage fee of $25 per equivalent residential unit for FY 2026-27 — a rate that has not changed since it was established.

Mayor Pro Tem Donald Freitas, who authored the original state legislation enabling the fee, was blunt:

"It has been stagnant for 33 years. That's not acceptable. There should be no pride in that. And I am asking that within a month for staff to come back and tell us what they're going to do with this particular fee."

Finance Director and Acting City Manager Dawn Merchant confirmed staff is investigating authority to raise the rate, noting the county flood control district must approve any increase, which could trigger a Proposition 218 vote. The resolution passed 5-0.

Minor Items

• Proclamations approved 5-0: Fair Housing Month, Autism Awareness Month, recognition of boxer Julian Bridges, and commendation of retiring Fire Chief Louis Burchard of the Contra Costa County Fire Protection District.

• Faith Gaither-Davis appointed to the Contra Costa County Advisory Council on Aging (term expires Sept. 30, 2027), approved 5-0.

• Republic Services contract amendment approved 5-0; Freitas questioned a prior $1 million community impact fee and signaled the city will push for stronger terms when the waste franchise expires in 2028.

• Measure W sales tax oversight committee report accepted in written form; council requested an in-person presentation during budget season.

• New employee introductions approved 5-0 with 18 hires or promotions listed; council directed staff to present new employees in person at future meetings.

• Streetlight and landscape maintenance district engineer's report initiated, approved 5-0; Freitas reiterated concerns that fewer than half of city parcels are assessed for landscape maintenance, shifting costs to the general fund.

• Consent calendar (remaining items) approved 5-0 after seven items were pulled for individual discussion.

• A public commenter identified as Catherine, the mother of Milad Baldwin, described years of alleged police abuse of her son connected to the Antioch police texting scandal, culminating in his death in March 2021. She stated her complaints were never investigated.

• Torres-Walker reported that Antioch lacks adequate representation in the Green Empowerment Zone and is not positioning itself to capture clean industry jobs and state resources.

• Bernal flagged increasing state legislative encroachment on local control, citing a proposed bill that would mandate 20 mph speed limits on arterial streets serving designated bicycle hubs.