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# Budget: City cuts its way to recovery
- URL: https://www.smdp.com/budget-city-cuts-its-way-to-recovery/
- Published: 2004-05-19T15:00:00.000Z
- Updated: 2026-10-23T04:20:43.000Z
- Author: John Wood
- Tags: Government & Politics, Santa Monica, #archive-import

*Financial forecast is ‘cautiously optimistic’*

CITY HALL — There’s light at the end of the tunnel, but getting there will require yet another year of cutting programs and jacking up fees at City Hall.

That’s the financial prognosis for the coming year, as outlined by City Hall in its proposed $377 million budget, released on Tuesday. The proposed spending plan goes before the City Council next week and a final budget must be adopted in June.

City Manager Susan McCarthy’s plan calls for eliminating more than a dozen staff positions and creating new fees, while raising other fees and the local hotel tax in order to fill a $4.1 million deficit, as well as raise new money for schools.

Funding for social service groups, capital improvement projects, and landscaping and recreation programs will take a hit under the proposed plan, officials said. Seven of the 13 positions proposed to be cut are now vacant and officials said at least some of the workers in the other slots may be reassigned rather than laid off.

City Hall has slashed its budget for the last three years. This year, officials credited a recovering local economy and prudent financial planning with what they called a “cautiously optimistic” outlook the city’s finances will improve.

“Santa Monica has appeared to have finally recovered from the significant impacts of the Sept. 11th attacks on the local economy,” reads the proposed 2004-2005 budget, which says City Hall has earned more than anticipated this year in revenue from sales tax, the hotel bed tax and the business license tax.

> “Santa Monica has appeared to have finally recovered from the significant impacts of the Sept. 11th attacks on the local economy.”

McCarthy said she hopes to begin restoring cut programs by 2005, adding that although previous cuts were selected to have a minimum impact on the community, over time the loss of services will become more and more apparent.

“I refer to it as an erosion,” McCarthy told reporters in a private press conference last week. “It’s a slow process, not a high-drama process — and if it continues for long enough, we’ll end up seeing the results of it.”

The proposed budget calls for the elimination of 13 jobs in City Hall — the equivalent of 7.4 full-time positions and 5.6 temporary or overtime positions in terms of hours worked. However, no one will be laid off. The positions to be eliminated are either vacant or will not be filled when they become vacant. Some employees will be reassigned to other departments.

And while some areas of City Hall will have fewer employees, several departments are actually adding employees and, overall, City Hall will add the equivalent of 2.4 positions under the proposed budget.

The city attorney’s office will add six full-time positions, the planning department will add one full-time position, community and cultural services will add just more than the equivalent of three full-time positions, and the environmental and public works division will add three full-time positions.

Budget documents show the city manager’s office, library and Big Blue Bus will each lose one full-time position, while police will lose just more than four full-time positions. Some departments will offset their losses by hiring temporary employees.

In general, the proposed budget for 2004-2005 requires City Hall to constrict its costs. Finance director Steve Stark said the plan calls for reductions in landscape maintenance, recreation programs at the parks and elsewhere, a cut in social service funding, as well as a reduction of money invested in ongoing maintenance of capital improvement programs, like street repairs.

Still, there are several areas of increased spending in the proposed budget.

An additional $270,000 will be set aside for the skate park at Virginia Avenue Park, Stark said, while between $70,000 and $100,000 is earmarked for the police department, which will have to shoulder the cost of transporting prisoners to the Airport Courthouse near LAX starting next month, when the local criminal court closes.

Another $230,000 in additional funding has been set aside to offset various ongoing costs, like the rising cost of utilities, which cost some $6 million each year, and another $300,000 was set aside for temporary workers, Stark added.

The budget proposal also calls for $500,000 to be set aside pending the results of an outside audit of the planning department, which has been criticized for being overly bureaucratic and difficult for businesses to navigate. McCarthy said she’s hoping that expense will pay off if it’s used to hire new staff.

“It’s very possible that, ultimately, we’ll be able to retrieve (that money),” she said.

No extra funds were set aside for a proposed living wage that would force City Hall and large government contractors to pay their workers at least $10.50 an hour. Officials did research the matter, however, and concluded the increased wage would cost City Hall an additional $1 million to $1.25 million, budget documents show.

City Hall expects to earn $1.4 million this coming year in new fees, and an additional $2 million from the hotel bed tax, assuming voters approve a 2 percent hike to the tax this November. Other key revenue streams are expected to be up, too.

Stark said the hike in the hotel bed tax from 12 percent to 14 percent would generate about $3.5 million a year after the coming 2004-2005 fiscal year, once the higher rate is applied to hotel rooms for an entire year.

Most of that money would go to local schools. The proposed budget calls for City Hall to give the district nearly $11 million for various school-based programs, including the community use of school grounds. Under pressure from CEPS (Community for Excellent Public Schools), an activist group who threatened to try and change the city charter in order to force the city to pay the school district a minimum of $6 million a year, officials recently agreed to give schools an extra $3 million each year for the next five years.

The other $500,000 in anticipated revenue from the hotel tax has been set aside for the local visitor bureau, to help market Santa Monica as a tourist destination. With the hotel tax rising, local hoteliers will be in a more difficult marketing position — especially when dealing with travel agents who buy hotel rooms in bulk.

McCarthy said new fees also have been proposed for some services that benefit the individual over the community as a whole. Fees for recreation services like renting an athletic field or attending a summer camp, as well as a new fee for advanced life support from paramedics, are expected to bring in an additional $1.4 million.

Meanwhile, projections for the main sources of City Hall revenue are almost all up over the current year. While property taxes are expected to go down 2 percent, sales tax is projected to be up 3.5 percent, the utility users tax up by 4 percent, the hotel bed tax by 5 percent and various other taxes up by 6.4 percent.

Additionally, City Hall anticipates raising $3 million more in the coming year than they did this year in increased parking meter rates, another $430,000 by increasing business license taxes, $690,000 more in inspection and code enforcement fees, $150,000 in extra parking pass sales, $53,000 in valet fees, and another $57,000 in various licenses and permits.

With a myriad of other revenue sources factored in, City Hall anticipates earning a collective $4.6 million more in 2004-2005 than in the current budget year. That number would be larger, but City Hall earned $4.5 million in unexpected payments this year — a $3 million settlement from Adelphia Cable and another $1.5 million payment from developers working on the Playa Vista project, budget documents show.

The biggest uncertainty in City Hall finances remains Sacramento, and officials have budgeted $4.2 million to deal with that uncertainty — the same amount that was set aside last year, but never used.

“Our greatest concern remains the state’s propensity to divert and meddle with local revenues,” reads the proposed budget. “While voters recently approved Proposition 57, which authorized the issuance of up to $15 billion in bonds to help finance the budget deficit, there is still a possibility of the ‘taking’ of local revenues by the state, particularly if tax increases are not enacted, which now seems unlikely.”

A recent proposal by Gov. Arnold Schwarzenegger to provide local governments long-term protection in exchange for helping California now would take an estimated $2.7 million from City Hall in each of the next two fiscal years. After that, City Hall would receive a $1.6 million “backfill” in vehicle license fees and — assuming a proposed ballot measure is approved by voters this November — be protected from further state takeaways.

McCarthy said the proposal is a continuation of the “venerable tradition” of California “sucking back” money from City Hall. Still, McCarthy said officials are prepared for that eventuality, should it come to pass.

“We are cautiously optimistic things are on the right trajectory,” she said.

*Originally published in the Santa Monica Daily Press print edition on May 19, 2004.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/051904.pdf?ref=smdp.com)