Santa Monica Spent Less Than Expected in 2012, Report Says

October 23, 2012 -- The City Council will get some good news Tuesday when staff presents them with an overview of the year's budget, showing some $3.6 million in savings to the General fund.

Departments not paid out of the General Fund have saved almost $8 million, as a result of lower costs and higher than expected revenue, according to the report.

“At the end of the year, we have some savings,” said Director of Finance Gigi Decavalles-Hughes.

“Savings for most departments were primarily achieved as a result of position vacancies,” the report reads. “Staff will examine vacant positions when preparing the FY 2013-15 Biennial Budget this coming spring.”

Even so, Decavalles-Hughes credits the City departments for the savings.

“Departments are really looking at their operations to make sure they are working as effeciently as possible,” she said. “We're very cognizant of the cliff that lies ahead.”

That cliff is a projected $$3.6 million budget deficit will kick in during the 2014-2015 fiscal year.

The projected deficit is a result of the end of Redevelopment Agencies throughout the state and rising pension costs.

When the courts approved a law that ended Redevelopment Agencies in California in February, Santa Monica -- along with many other municipalities -- lost millions of dollars that had been slated for public projects and affordable housing.

Retirement costs to the General Fund have increased by $2.8 million beginning in fiscal year 2013-2014 as a result of expected low returns to the CalPERS investment fund. Pension costs in Santa Monica have risen from $10 million to $40 million over the past ten years.

Though staff haven't yet calculated the impact that these savings will make on the projected deficit, Decavalles-Hughes is optimistic.

“Right now, we're in a good position and we hope to stay there,” she said. “It really relies on our economy doing well.”

The savings in the General Fund reflect “greater than anticipated sales taxes ($2.4 million), Measure Y Transaction and Use Taxes ($1.5 million – 50 percent of which was paid to the Santa Monica/Malibu Unified School District), additional property taxes primarily from residual payments related to dissolution of the former Redevelopment Agency ($1.9 million), and $1.0 million in additional Real Property Transfer Taxes,” the report reads.

“Overall, tax revenues have returned to pre-recession levels,” staff wrote.

Decavalles-Hughes said that the City is waiting on updated numbers from CalPERS, which will impact how much the savings will change the projected deficit.