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Council Passes $1 Billion Two-Year Budget; Shifts More Than $150 Million in RDA Money
By Ann K. Williams
June 27, 2011 – The city council approved a scaled-back two-year budget for Santa Monica that still tops $1 billion, though its architects warned that forces beyond their control dictate caution and the figures may still change.
Budget deficits at the state level and a shaky national economy render revenues uncertain and redevelopment agency (RDA) funds – counted on for a number of the city's proposed capital improvement projects – less than a sure thing.
“This budget meets community needs and provides for substantial civic progress, yet it is prudent,” City Manager Rod Gould told the Council Tuesday.
The largest change from the draft budget presented in May ("Two-Year Santa Monica Budget Tops $1 Billion," May 27) is due to an accounting shift in RDA funds, some moved forward into the current 2010-11 budget and some put off to future years as yet unbudgeted.
Largely as a result of these shifts, expenditures dropped from $647.1 million to $523.7 million in Fiscal Year (FY) 2011-12 and from $624.2 million to $570.8 million in FY 2012-13. As things stand now, the FY 2011-12 budget, adopted Tuesday, has revenues outstripping expenditures by more than $12 million, while the FY 2012-13 budget, approved Tuesday, is almost $32 million in the red.
In May, the Council approved $76.5 million of RDA funding that's now been moved into this year's budget – including money for the Palisades Garden Walk and Town Square Parks and the Civic Auditorium renovation, contracts for both of which are on this Tuesday's agenda.
Tens of millions of dollars – including RDA funding for affordable housing and for improvements to Memorial Park – have been removed from the biennial budget, to be “appropriated as necessary.”
Gould explained to the Council that two bills likely to be part of the California budget when it eventually passes eliminate city redevelopment agencies and then “resurrect” them for cities who pay a share of $1.7 billion to the state.
He quoted Senator Rod Wright of Inglewood who said “In South Central L.A. we call that a shakedown.”
If the bills pass, Gould said the city would be on the hook for $27 million in the first year and $19 million in the next year.
“These ransom demands are likely to increase each year if the state succeeds,” he said.
Although the League of California Cities has promised to bring legal action against the state if the bills pass, Gould said “we would have to delay some of the council's approved redevelopment priority projects at least until the litigation is resolved.”
“During the stalemate in Sacramento, Santa Monica's wisest course of action is to continue moving forward with priority capital projects,” he added.
Also gumming up the budget, though to a lesser degree, is uncertainty surrounding state funding for social agencies and the schools.
The budget includes $300 thousand that the council traditionally doles out to deserving social agencies and the city has also saved $103 thousand in discretionary funds to add to that.
But staff recommended holding on to most of that money in case it's needed for early childhood development programs which are likely to be shortchanged by the state budget.
Despite last minute appeals from a number of Meals on Wheels supporters and other agencies, the Council agreed with staff, giving $72.9 thousand to the Urban Forest Master Plan, the local Red Cross chapter and Buy Local projects, and leaving $330 thousand to be appropriated later.
Because of looming deficits, Gould warned the Council that the City is going to have to find new ways to reduce costs, including cutting back on pay and benefits.
“We will need to bring the increasing costs of compensation more in line with projected revenues in order to avoid such deficits,” he said. The City is now in negotiation with its employees' representatives.
In addition to a $500,000 increase in police overtime for 2010-11, a number of city positions were axed, changed and added in a resolution attached to the budget.
Money was shifted in the FY 2010-11 budget to pay down the city's slice of the CalPERS pension fund to the tune of $10 million. Staff claim that the city will save $800 thousand a year as a result.
A good part of the discussion Tuesday revolved around whether the Council's deliberations Tuesday were even meaningful.
Councilmember Bobby Shriver called arguing over how to spend $300 thousand when the overall budget topped $500 million a year “a farce” and said there wasn't enough public or council input debating the hard “trade-offs” the budget process demands.
The council makes the policies that dictate the budget in a process that goes on all year, Councilmember Kevin McKeown countered.
And Gould went on at some length describing the ways the public is able to weigh in on the budget and on city policies throughout the year.
“This is a $523 million budget and if we wanted to do line-item budgeting so that you would know exactly where every dollar was in every account in every program in every department in the city, we would be here many nights,” Gould said. “In fact you would eat up all of your council meetings throughout the year.”
But Shriver wasn't satisfied.
“The key point is...this sort of hard trade-offs point,” he said, referring to a comment by Councilmember Terry O'Day.
“(W)hen you make your family budget you can only put in for a one pair of shoes because that effects the amount of movies you're going to go to, that's the real hard trade-off and that's where it gets interesting because that's where people's real priorities are revealed,” said Shriver.
“We don't do that up here,” he said.
The argument dominated the debate, in spite of City Attorney Marsha Moutrie's interjection that the budget process wasn't on the agenda, and if the council wanted to discuss it, they should agendize it.
Ultimately, the Council adopted the FY 2011-12 budget and approved the FY 2012-13 budget, as well as a slew of resolutions and motions related to fees, grants and employee classifications and salary rates.
Shriver voted no; the rest of the council voted yes.
The Council also passed a motion alloting $72.9 thousand to various social agencies by a vote of six to one, with Shriver casting the dissenting vote. Several attempts were made to add appropriations to the motion, but they failed.
The next City Council meeting this Tuesday, June 28. The public portion of the meeting begins at 6:30 p.m. in the City Council Chambers at City Hall, 1685 Main Street.
“These ransom demands are likely to increase each year if the state succeeds.” Rod Gould
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