By Jonathan Friedman
Associate Editor

May 20, 2014 -- The Santa Monica government’s financial future could be better than City staff had previously projected, according to the latest report that will be presented to the City Council at its Tuesday meeting next week.

City staff told the council at a budget discussion in February that the City was headed on a path toward a structural deficit of $2.5 million by the 2015-16 Fiscal Year and $3.2 million by 2017-18. The latest projections show the structural deficit would be lower than the previous prognosis for each of the next several years, including $2.3 million in 2017-18.

A major reason for the change is due to an increase in projected revenues, staff wrote.

“[This includes] higher than anticipated increases in parking revenues, utility user taxes, transient occupancy taxes and business license taxes,” the report says. “Additionally, the implementation of the new living wage rate is less costly than initially projected.”

The City Council last week voted to increase the so-called living wage, or minimum wage, for its employees from $14.08 per hour to $15.37 per hour.

Staff has also proposed using surplus money from the current fiscal year for its Workers’ Compensation Fund.

“This action is in response to a new actuarial analysis noting that the City’s increased workers’ compensation claims require higher levels to cover future liabilities,” staff wrote.

Also included in the report is a request by the staff for $2.6 million in adjustments to next year’s budget, including a net increase of 3.1 full-time employees to comply with the new national health care law.

“As a large employer under the Affordable Care Act, the City must provide healthcare to all employees working an average of 30 hours a week over the period of a year,” the report says. “As a result, staff has identified as-needed positions throughout the organization that must be converted to permanent employees receiving healthcare benefits.”

The report continues, “In addition, additional staffing is required to monitor and report on all eligible employees’ healthcare status; failure to monitor the status of healthcare coverage could result in significant penalties.”

The council is expected to vote on the final budget proposal at its June 24 meeting. The next fiscal year begins July 1.