Palm Springs officials balancing budget caution with economic development
To address challenges, city officials are developing an economic development strategic plan focused on diversifying revenue sources beyond tourism.
Palm Springs city officials are preparing the 2025-26 budget with measured optimism while simultaneously developing a strategic economic plan to ensure future fiscal stability amid concerns about potential tourism fluctuations and a possible deficit in two years.
Mayor Ron deHarte outlined the challenges during this month’s Organized Neighborhoods of Palm Springs (ONE-PS) meeting on May 13, noting the city has $3.2 billion in infrastructure and commercial projects planned.
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“We’re asking a monumental task of our city employees to accomplish these projects on top of 70 some odd capital improvement projects and thousands of daily tasks,” deHarte said. “We’ve got to go forward and in the budget planning process we have to be prepared for that unknown.”
City Manager Scott Stiles reinforced the cautious approach, stating that the city’s heavy reliance on tourism creates uncertainty.
“We’re a big tourism city. How does our tourism outlook look for the next couple years? Are we going to see all the international visitors coming here that we have seen in the past?” Stiles asked. “We’re seeing fewer homeless people than we had two and a half years ago. That’s a wonderful thing. But the navigation center costs us almost $5 million a year to operate.”
To address these challenges, city officials are developing an economic development strategic plan focused on diversifying revenue sources beyond tourism, according to Wayne Olson, the city’s economic development officer.
“We’ve got 46,000 people in our community. We’ve got a lot of visitors that come in and pay TOT and sales tax. But it’s unusual for a community of this size to have this level of investment happening,” Olson said.
The strategic plan is organized around five principles: expanding economic development capacity, reinvigorating the business climate, bolstering existing industries, nurturing emerging clusters, and strengthening community assets.
One key focus is building a robust technology ecosystem. “We have a tremendous amount of technology experts in our community,” Olson said. “We have former executives from all of the big companies.”
Councilmember Jeffrey Bernstein emphasized that while the budget will include many positive projects, challenges remain.
“We don’t know what’s coming tomorrow. We don’t know how the market is going to react tomorrow. We don’t know how tourism is going to be impacted next season,” Bernstein said. “When the hurt comes, as the budget is prepared, we all understand.”
The city must approve a balanced budget by July 1.
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