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City Council to Take Up Belt-Tightening Budget Wednesday
By Jorge Casuso
June 4 , 2019 -- Santa Monica City Hall is tightening its fiscal belt under a proposed biennial budget the City Council will consider Wednesday that slashes spending and begins paying down a rapidly growing pension debt.
The overall annual budget proposed for the upcoming fiscal year is $712.1 million for the upcoming fiscal year starting July 1 and $755.9 million for fiscal year 2020-21.
The proposed budget for the 2019-20 Fiscal Year represents a dramatic decrease in funding for capital improvement projects and features cost-cutting measures that include leaving some 28 vacant full-time positions unfilled and cutting back on underutilized community programs.
The budget earmarks $136.4 million for capital projects, $49.8 million less than the $186.2 million in the adopted budget for the current fiscal year.
The money will be used to tear down Parking Structure 3 in the Downtown, replace the City's network infrastructure, retrofit rooftops and replace the glass in public parking garages, among other improvements that need to be immediately addressed, according to staff's report to the Council.
Previous budgets bankrolled major capital improvements, including a $77 million bond for a new City Hall annex, a $38 million bond for a new Downtown Fire Station and $114 million for the designed-related phase of the City Yards Modernization Project.
The proposed budget also begins paying down the City's $448 million unfunded pension liability ("City Should Immediately Boost Annual Pension Payments, Report from Top Finance Official Recommends," April 23, 2019).
The proposed biennial budget calls for a general fund payment of $16.6 million, instead $2.6 million.
The City would pay $9.3 million in the first year and $7.3 million in the second year, instead of the $1.3 million per year it has been paying.
To bring down the cost of doing business, the proposed biennial budget leaves a total of 28 full-time-equivalent positions open for a total savings of $17.3 million over the budgeted two years.
The staffing cutbacks "will have limited impact on the community, are within our current contractual obligations, and require little or no policy change," staff said..
The proposed biennial budget also makes changes in programs offered by the City -- particularly by its Community and Cultural Services Department -- that could save a total of $6 million in the 2020-21 fiscal year, staff said.
The program changes include phasing out underutilized programs and streamlining or shifting them to other providers ("City Officials Propose Trims to Community Programs," May 29, 2019).
The budget also outlines ways to increase revenues by hiking parking fees and charging for credit card transactions to recoup the cost, as well as recovering the full cost of such events as the LA Marathon.
In addition, the Council could explore placing new taxes on the November 2020 ballot ("New Budget Strategy to Result in Better Government at Lower Cost, Officials Say," April 24, 2019).
Examples could be the rideshare service tax San Francisco is pursing, the increase to New York's "mansion tax" and the vacant property tax approved by Oakland voters.
The proposed biennial budget is the first phase of a ten-year strategy to tackle a projected General Fund shortfall that, if unchecked, could grow to between $34 and $47 million over the next ten years.
The proposed plan would -- which includes annual pension paydowns and cutbacks initiated in the proposed budget -- would lower the projected shortfall by 50 percent over the 10-year period, staff said.
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