Santa Monica
Traditional Reporting for A Digital Age

Santa Monica Real Estate Company, Roque and Mark

Home Special Reports Archive Links The City Commerce About Contacts Editor Send PR

City Manager Delivers Optimistic But Cautious Budget Message

Bob Kronovetrealty
We Love Property Management Headaches!

Santa Monica

Santa Monica Apartments

Santa Monica College
1900 Pico Boulevard
Santa Monica, CA 90405
(310) 434-4000


By Jorge Casuso

Editors note: This article has been updated to clarify that some of the statements attributed to Interim City Manager Lane Dilg were excerpted from the FY 2017-19 budget report.

May 12, 2021 -- Santa Monica is facing a "bright future ahead," although the city's economy has already been "nearing a point of diminishing returns."

That was the optimistic, yet cautious message, delivered by Interim City Manager Lane Dilg in her letter to the City Council presenting the proposed $1.3 billion Fiscal Year 2021-23 Biennial Budget on Tuesday.

The proposed budget, which is impacted by the major economic blow dealt during the coronavirus shutdown, "reflects no deficit -- either now or in the associated five-year forecast," Dilg wrote.

Major revenue streams from hotel bed taxes, sales taxes and parking fees that have been diminished during the shutdown "will replenish" as tourists, shoppers and workers return, she said.

The City also retains a "rare" AAA bond rating, "broad community partnerships," a "dedicated and talented" municipal workforce and an "envy-invoking" location.

"Such key assets secure Santa Monica’s full recovery and bright future ahead," Dilg wrote.

Still, she warned that even before the COVID-19 pandemic, "Santa Monica’s 'exceptionally strong economy and tax base' (was) nearing a point of diminishing returns."

All major revenue sources "are seeing either slowing growth or (in the case of utility taxes) an actual decline" at a time when "pressure on expenditures is accelerating," then City Manager Rick Cole wrote in his FY 2017-19 budget letter.

Workers’ compensation and medical benefits costs "continue to outpace our revenue growth," Cole wrote, and "pension costs are scheduled to begin a dramatic rise in the second year of our two-year budget cycle."

The City's long-term pension liability, which stood at $387 million in FY2017-19, was recently calculated at $466 million, Dilg said.

The proposed budget for FY 2021-22, which begins July 1, is $705.5 million, which includes $163.7 million for Capital projects, and $597.7 million for FY 2022-23.

The General Fund -- which represents the largest portion of the budget and is used to deliver municipal services -- is proposed at $349.5 million in FY 2021-22 and $375.3 million in FY 2022-23.

By comparison, the General Fund budget adopted for FY 2018-19 -- before the COVID-19 shutdown -- was $440.2 million, or nearly $91 million more than this year's proposed budget.

This year's budget means that "a disconnect will remain between City resources -- which have been reduced as a result of the pandemic -- and community expectations -- which have not," Dilg cautioned.

"This gap between revenues and desired expenditures will require united leadership and communication to avert ongoing frustration," she said.

The City has already confronted the economic crisis triggered by the coronavirus pandemic with drastic measures.

Last May, the Council tapped a total of $117 million in one-time funds to fill a gap in a budget that slashed Capital program funding in half and reduced operating expenditures by 20 percent.

To help achieve a balanced budget, the City eliminated 299 full-time positions and 122 as-needed positions and cut back on programs and services.

"These fiscal measures enabled the City to maintain essential and emergency operations during the pandemic while preserving the City’s financial resilience to the greatest extent possible," Dilg wrote in her letter to the Council.

Back to Lookout News copyrightCopyright 1999-2021 All Rights Reserved. EMAIL Disclosures