City Manager Presents "Aggressive” Budget

By Olin Ericksen
Staff Writer

May 24 -- In an effort to get back to basics, Santa Monica officials Tuesday unveiled a $444.8 million proposed budget, the largest in the city’s 120-year history and an increase of nearly $34.5 million over the current fiscal year.

The record budget, which comes after several years of fiscal belt-tightening, marks an 8.4 percent hike buoyed by an extra $14 million in projected revenues during the 2006-07 fiscal year.

And with the State entering the final year it can borrow money from cities under Proposition 1A, Santa Monica officials are replacing last year’s “cautious optimism” with a new catch phrase – “aggressive.”

Flexing the renewed fiscal muscle, Santa Monica City Manager Lamont Ewell, -- who took over the day-to-day running of City Hall just six months ago -- said he will seek to add 25 full-time employees to tackle the city’s upkeep and continue to meet community priorities, including education and programs that target the homeless and at-risk youth.

At the same time, the City will continue paying off such public projects as the New Main Library, which was unveiled earlier this year, and Airport Park, which is in the early stages of construction. Those projects and others account for an $18.2 million jump in the proposed budget, while the rest of the operating budget would increase by $16.3 million.

With a book on city governance aptly titled “Execution” under his right hand, Ewell -- who stood watch over San Diego’s worst financial crisis in history -- preached a return to fundamentals during a press briefing with reporters Tuesday.

“This will be a refocusing on core services,” said Ewell, noting a need to increase street maintenance, trim and replace trees, remove graffiti and maintain and staff new capital projects, such as the new library, skate park and Virginia Avenue Park.

Included in the core services is a commitment for improved customer service in the Building and Safety Division and the departments of Finance and Human Resources.

“We were struggling three years ago,” Ewell said. “We believe we are coming out of it.”

In his presentation to the council Tuesday, Ewell outlined four areas where the City should focus on providing “core services” -- safety and security, deferred maintenance, operation of facilities and improved customer service. The budget reflects a 4 percent pay increase for police officers that took effect in January.

With the City’s diverse array of key revenue streams -- including property, hotel (Transient Occupancy Tax or TOT), sales and utility taxes -- continuing to climb by millions of dollars, Ewell said he hopes the council will endorse his office’s new vision of how to best structure municipal finances.

According to the proposed budget, property taxes are projected to rise $4.2 million (a 15.1 percent increase), sales taxes should rise by $1.6 million (5 percent) and the TOT will likely jump $1.7 million (6 percent)

“We need to refocus on what cities are supposed to do,” Ewell told the press. “If I can get the City Council to approve the budget within one percent,” then it will be a success.

That evening, Ewell was more blunt in his assessment.

“This is an aggressive budget” compared to the previous five years, Ewell told the council, cautioning that it left little room for tampering.

Focusing on core services will help protect the City’s revenues, keeping “taxes low for residents,” while providing a pleasant Santa Monica experience for visitors, Ewell said.

But by fully staffing the City and refocusing on services, council members will not have as much money to pass on to community groups, leaving only $100,000 to be used for discretionary funding.

“We’re going to have to disappoint” the council members, Ewell said during the press briefing. “There won’t be any additional money.”

There remains some bumps in the fiscal road ahead, both in the short and long term, Ewell cautioned.

In the short term, as gas prices continue their dramatic assent, the City’s enterprise funds, such as Big Blue Bus and Solid Waste Management – or funds that should be self-sufficient – are taking a serious hit.

For the first time since rolling into operation 78 years ago, the City’s Big Blue Bus faces its first deficit, although the County’s Metropolitan Transportation Authority is expected to keep it out of the red with a one-time infusion of cash totalling $278,528. Traditionally, the Big Blue Bus has been subsidized with State and County funds.

The City will hire consultants to assess the Big Blue Bus' long-term budget options, Ewell said.

Only last week, Big Blue Bus officials were considering asking the council to increase fares for students, seniors and the disabled for the first time in 15 years, although the item was pulled from the June 13 meeting agenda by the City Manager’s office. (see story)

Approving the fare hikes could hurt the chances of securing additional funding from the state or county, Ewell said.

Rising gas prices could also take a toll on solid waste management, which faces a 7 percent rate increase, 2 percent above the consumer price index, “as a result of the careful review of the fund’s projected revenues and expenditures and direction from council,” according to Ewell’s budget statement.

Other enterprise funds -- which are not part of the $239.5 million proposed general fund budget -- include the storm water and cemetery funds. A recent survey suggests Santa Monicans would be willing to pay more to upgrade storm water drains, a major source of bay pollution.

Long-term hurdles, including ongoing funding for the new library, are also looming, Ewell said. “Mixed signals” in the national economy, operational expenses, bringing new facilities online, the airport park expansion and an increase in employee benefits are all expenditures that have lead to a cloudy forecast, Ewell said.

At the current rate, budget expenditures are on pace to outstrip revenues in the third projected year of the long-term budget, although City officials will “make adjustments” over the long haul, Ewell said.

“Budgets are not a science,” he said. “They are an art.”

While the proposed budget focuses on core services, the City remains committed to community priorities, including a renewed focus on the gang prone Pico neighborhood, homeless programs, and programs that promote sustainability and active living, Ewell said.

The proposed budget, Ewell said, is “right on target” with what the community has requested through public input and his many meetings with civic, business and community groups.

Aside from asking for an additional year’s salary of $200,000 for regional homeless coordinator, Ed Edelmen, Ewell did not outline any further financial commitments from the City to combat homelessness, Santa Monica's top priority.

With an eye towards halting youth violence in the Pico neighborhood – Santa Monica's poorest and most diverse area – several positions will be funded at Virginia Avenue Park,where many services are being located for at-risk youth.

As for education, the City will continue to fund the local School District in a unique agreement that carves out at least $6 million dollars a year. Two years into the agreement, funding stands at nearly $6.5 million, but if the consumer price index continues to rise, it could “possibly” reach $7.5 million by next year, according to City financial analysts.

After three days of input from staff and the public, the City Council will have a chance to make changes before approving a final budget.