St. Helena’s $3.9M Underspend Sparks Budget Clash Before Council Turnover

St. Helena ended its fiscal year with general fund spending about $3.94M under budget and reserves near 76% of operating costs, more than double the city’s 30% target. The City Council received the unaudited report 5-0 on Nov. 10, but only after a Finance Committee leader and the interim city manager clashed over whether the numbers show sound management or broken forecasting. The council also advanced downtown sidewalk bids over merchants’ objections and heard that brown water complaints are still reaching state regulators.

• 76% general fund reserve against a 30% target; council presses for spending explanations
• Downtown sidewalk bids approved 5-0 as Main Street owners contest street trees
• Brown water persists: about 10 of 46–47 miles flushed; state visit set for December
• Director pay ranges pass 4-1; Vice Mayor Michelle Deasy objects to raises above inflation
• Water neutrality fee for 1360 Main Street goes to a roll call; the policy faces review

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Flush Reserves, Sharp Questions

The basics: The unaudited year-end report is staff's first look at actual revenue and spending before auditors finish their review. "Unassigned net position" is the money not set aside for a specific purpose.

Why it matters: The city spent about $21M from the general fund against a roughly $25M adjusted budget. That gap, plus a large reserve, will shape the mid-year and biennial budget work the new council inherits.

Where things stand: “This net position actually gives you 76% of your annual operating expenditures,” said Susan Casey, Interim Director of Administrative Services/Treasurer. She said Public Works and Planning and Building drove the $3.94M underspend, with vacancies and delayed contracts contributing. The water fund closed with a $7.5M net position, or 12.6 months of costs. The wastewater fund closed with $4.1M, or 9.7 months.

Casey also flagged a structural problem. “Your accounting system does not have a standard general ledger,” she said of the city’s Springbrook software.

Councilmember Scott Diaz asked about $1.487M in operating transfers into the general fund. Casey said the transfers reflect a new cost allocation plan. Diaz also noted last year’s hiring freeze.

Vice Mayor Michelle Deasy asked why budgets were adjusted upward and then left unspent. Interim City Manager Jim McCann said the on-hold Downtown Specific Plan contract, about $400,000, explains much of the Planning savings.

Council members wanted department-level accountability. “We should have a better handle on the variance,” said Councilmember Aaron Barak. Mayor Paul Dohring looked ahead: “Certainly the next council will need to drill down on that and why that is and how we can get better, more efficient use of our funds.”

The other side: Chris Warner, acting chair of the Finance Committee, spoke as an individual. He praised staff for identifying system improvements. He also said city forecasts have been consistently wrong, noting the actual reserve came in at 76.4%, and called for timelier, more credible financial reporting.

McCann pushed back. “The suggestion that we need to get our house in order, I think, is incorrect,” he said. He noted the city has had clean audits for about 10 years and said the report's timing is typical.

Decisions and stakeholder impacts: The council voted to receive and file the report. For: 5 (Barak, who made the motion; Diaz; Kate Spadarotto; Deasy; Dohring). Against: 0. Absent: 0.

Taxpayers gain a deep cushion. Departments face pressure to explain unspent money, and the Finance Committee's call for credible forecasting now sits with the new council.

What's next: New council members take their seats Dec. 8 and will begin mid-year and biennial budget work.

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Sidewalks Move Forward, Trees Still Disputed

Why it matters: The council authorized bids for the R26-81 Downtown Sidewalk Rehabilitation Phase 1B project, aiming for a winter construction start. Where street trees go, what the project costs and how construction affects businesses remain unresolved.

Where things stand: Public Works Director Joseph Leach said the project covers both sides of Main Street from Adams to Mitchell. Measure U and a state safety improvement grant fund the work, which went through years of community process. The council also found the project exempt from the California Environmental Quality Act (CEQA).

Project Manager Mario Traverso said earlier designs ran $6M to $15M. “After visiting the trees, they’re due to come out. And so we have to amend the project to be able to stay within our available funding,” he said.

Barak noted the debate has come up repeatedly and asked staff to confirm the safety purpose. “We’re redoing the sidewalk to address liability concerns and health concerns,” he said. Staff responded that the sidewalks need replacement and the trees are near the end of their lives.

The other side: Property owner Anthony McKelly organized a petition among owners on the Adams-to-Mitchell stretch opposing street trees. He cited sewer backups, clogged roof drains, mold, liability and cost. He asked for pavers instead of concrete and for the historic buildings to stay visible.

Anna Putman, owner of 1205 Main Street, said a deteriorating tree in front of her bar must come out. She also raised concerns about a raised crossing, garbage cans and benches near her business. The council also received written comment from Daniel Hale.

Decisions and stakeholder impacts: The council approved the plans and bid authorization. For: 5. Against: 0. Absent: 0.

Councilmember Kate Spadarotto summarized her understanding of the motion: “Let’s move forward with sidewalk project and allowing Mario to continue speaking with the businesses regarding trees.” Traverso assured merchants that “nothing is set in stone that we can’t pivot from.”

What's next: The contract award will return to the council. McCann said the stalled Downtown Specific Plan “really does need to be revisited” early next year.

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Brown Water: Flushing Slow, Regulators Watching

Why it matters: Discolored water complaints keep reaching state regulators. Meanwhile, the city is weighing a pipeline condition assessment and more rebate money for residents.

Where things stand: Contractor Hydrologics began closed-loop flushing Oct. 26. Crews covered about 17,000 feet in the first week and 35,000 feet in the second, just under 10 of roughly 46–47 planned miles.

“We did have a fairly significant brown water incident last Friday,” Leach said. The incident, near Madrona, led staff to pause flushing and open a hydrant. Divers removed debris from the bottom of Tank 1A.

Camera work and a third-party AI review of the Bell Canyon transmission main raised concerns about high-velocity flushing. As a result, the city plans to hire Hazen & Sawyer for a condition assessment. Asbestos samples from the first flushing loop showed none detected, and more results are pending.

The state Division of Drinking Water plans a December visit and an order requiring more iron and manganese sampling. “It’s not punitive. It’s not a notice of violation,” Leach said.

Deasy asked, “Is there anything we know now that we didn’t know before we started?” Leach said the city's records on pipe materials and valves have proven of varying reliability.

What's next: The filtration rebate program has drawn nearly $80,000 in applications. Staff will ask for up to $150,000 more on Dec. 8.

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Water Neutrality Policy Under Scrutiny

Why it matters: The fee debate exposed gaps in a policy staff expect to review within about six months. The policy could be reworked or dropped.

Where things stand: The owner of 1360 Main Street, next to Steve’s Hardware, plans to demolish and rebuild. That project is moving through the Planning Commission, and water neutrality is handled separately. City code lets applicants pay an in-lieu fee, here $63,817.60, instead of funding water-saving retrofits. Leach said the fee calculation is consistent with the policy.

Dohring asked how the city would respond years later if “the water use is dramatically over or even significantly over the amount that was determined when the policy was developed and implemented.” Leach conceded that “the policy does not reflect a post-development monitoring and accounting of actual use.”

The other side: Public commenter Gary Rose, speaking personally, said the item follows policy. However, he said the policy's metric, which is based on replacing toilets, is wrong and the policy needs substantial work.

Decisions and stakeholder impacts: Barak moved adoption. Four yes votes were heard on the roll call, but the vice mayor's response was unclear and no result was announced.

What's next: Deasy asked that the Water/Wastewater Advisory Committee's view come to the council. Leach said the committee could add that to its work plan.

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Director Pay Ranges Draw Lone Dissent

Where things stand: Deasy pulled Item 10.2, which sets salary schedules for the Library Director and the Parks and Recreation Director, from the consent calendar. She said the Parks and Recreation director's new minimum is up 27.9% and the maximum up 55.4% since 2022, against 16.7% inflation.

“Especially with having passed Measure S, I want us to be really thoughtful and careful about how our salaries are increasing,” she said.

The other side: McCann said the ranges were set years ago, before departments were combined, and were updated with cost-of-living adjustments given to other positions. “We did look at the comparator cities that we use for informing salary schedules, and we found that in both cases, these positions were in line,” he said.

Decisions and stakeholder impacts: The council approved the schedules on Barak's motion. For: 4 (Barak, Spadarotto, Diaz, Dohring). Against: 1 (Deasy). Absent: 0.

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Minor Items

• Bell Canyon Dam: The council approved a roughly $1.1M–$1.2M Haley & Aldrich geotechnical contract 5-0, work state dam-safety regulators require amid seepage concerns.
• Consent calendar: A 5-0 vote approved a Caltrans maintenance agreement for the Elm Tree Tunnel, a Lewis Station Park capital project and an AB 1572 water conservation ordinance.
• Continued: The Upper Valley Community Center donation awaits final details; the council rules of procedure update is left to the incoming council.
• Closed session: The council unanimously authorized the city attorney to defend a federal lawsuit filed by Reed Woodson.
• Farewell: Congressional, state, county and city representatives honored Dohring, who served on the council since 2014. “Over time the small steps become the path,” he said.

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Looking Ahead

New council members and a new mayor take their seats Dec. 8, 2026, at 6 p.m. This was the only regular November meeting. McCann said the sales tax measure appears to be trending positive.