TEMECULA, CA — Temecula officials announced this week that the city has eliminated its remaining long-term municipal debt, a milestone they say will allow more taxpayer money to be directed toward public safety, infrastructure and other city services.
The city has paid off its final $6.7 million in long-term liabilities that remained outstanding at the end of 2025, according to city officials.
Temecula now carries no facilities debt, unfunded CalPERS pension liability or other post-employment benefit obligations associated with retiree health care, according to the council and the city manager's office.
City leaders also asserted that Temecula is the only debt-free city in California. Patch has not independently confirmed that statewide distinction.
“Becoming debt-free is one of the most significant financial milestones in Temecula’s history,” Councilmember Brenden Kalfus told Patch. “It means more of our tax dollars can be invested directly back into our community instead of paying interest on long-term debt.”
Kalfus said the milestone gives the city greater flexibility to fund priorities including public safety and infrastructure.
“It’s an accomplishment every Temecula resident can be proud of,” he said.
City Manager Aaron Adams and Finance Manager Jennifer Hennesy presented their announcement during a City Council meeting this week.
“I’ve been looking hard to find a city in California to accomplish what we accomplished, that we can look at you and declare that we are debt-free,” Adams said during the council session. “This didn’t happen overnight.”
Adams said the city’s definition of debt includes mortgages, facilities loans and pension obligations.
“Debt-free means you’ve got a mortgage, facilities, loans, pension obligations; we consider that debt,” he said.
Temecula carried approximately $61.3 million in debt in 2012 and 2013, Adams said. That figure increased to approximately $64 million three years later, before the city borrowed additional money to build the Margarita Recreation Center.
By 2022, city administrators presented the council with a seven-year plan to eliminate the climbing debt while continuing to complete parks, facilities and other capital projects, Adams said.
“We wanted to do parks and capital projects while 'paying off the credit card' over seven years,” Adams said. "We have saved over $47.7 million in interest with this plan.”Ultimately, the city paid off approximately $78.6 million in principal and related obligations, according to Adams during the meeting.
“This council’s discipline to the plan has shaved years off the debt repayment plan,” Adams said. “You paid it off; I signed the final CalPERS wire transfer."
Current council members credited decades of financial planning by previous councils, city managers, finance employees and other city staff for the milestone.
“This is rare air,” Councilmember Zak Schwank said during the session. “It speaks to how we can work together as a council. We are fully funded in general fund reserves. Irrevocable pension trust. The city has never been in a better fiscal position than today! A huge thank you to city staff and my council colleagues for making this a reality."
Mayor Jessica Alexander said the city’s financial policies were based on limiting expenses while continuing to invest in public services.
“Every taxpayer dollar is treated with care, ensuring we live within our means while continuing to invest in the services and infrastructure our community deserves,” Alexander said.
Councilmember Kalfus discussed the achievement reflects the responsibility city leaders have to taxpayers.
“Most importantly, it reflects the trust our taxpayers have placed in us to be good stewards of their dollars,” he said. “We believe government should live within its means just as families and businesses strive to do, and reaching this milestone demonstrates that commitment.”
The city has also fully funded its general fund reserves and placed $10 million into an irrevocable pension trust intended to help protect future operating budgets, according to Adams.
Councilmember James “Stew” Stewart said Temecula eliminated its facilities debt while continuing to build recreational amenities.
“All while building a recreation center, 17-court pickleball facility, a world-class roller skating rink and a brand-new skate park,” Stewart said. “And we have multiple reserve accounts. It’s really rare when you have politicians and city staff do the right things with your tax dollars.”
Mayor Pro Tem Matt Rahn credited Temecula’s finance director, city manager and current and former council members.
“A huge thank you to our finance director and city manager, and my City Council colleagues,” Rahn said. “Your hard work, ingenuity and perseverance have made Temecula the only city in California that carries no long-term debt, no mortgages and zero long-term pension liability.”
Rahn recalled asking the city manager what significant long-term goal the city could accomplish.
“Both (Aaron) and Jennifer shared their idea, which was a huge commitment on behalf of the council, foregoing what we wanted in favor of being debt-free,” Rahn said. “I can’t thank you enough for doing what you’ve done for the city of Temecula; this is huge. Congratulations!”
Mayor Alexander said the city intends to preserve its financial position.
“We are grateful for the trust our residents place in us and remain committed to protecting the strong financial foundation that makes our city exceptional,” she said.
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