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# City budget deficit swells by another $2M
- URL: https://www.smdp.com/city-budget-deficit-swells-by-another-2m/
- Published: 2003-02-27T16:00:00.000Z
- Updated: 2026-10-23T01:40:00.000Z
- Author: John Wood
- Tags: Government & Politics, Santa Monica, #archive-import

*It’s only going to get worse*

City officials are bracing for a budget deficit that appears to be growing by the month.

It was announced on Tuesday that the city’s $9 million deficit for this year has grown by more than $2 million and it could get worse before the end of the year.

In January, city officials estimated Santa Monica would be short at least $9.1 million. But worsening economic conditions has led to higher payments to the city employees’ retirement system and a severe loss in local sales tax revenues.

Millions of dollars in cuts for capital improvements already have been made and more are expected. Departments throughout City Hall have cut their budgets back by at least 3.5 percent.

More cuts are likely as officials warn of tougher times ahead.

City Finance Director Mike Dennis projects that the city’s deficit will climb to $21.3 million next year.

Revenue from sales taxes, business licenses and the hotel bed taxes are down, Dennis said. The city had estimated to bring in $18.4 million, but it appears that figure will be off about $1.6 million. Sales tax revenue, which was projected to be $25.6 million, is expected to be $24.6 million.

Meanwhile, the cost of public pension funds, health insurance and worker’s compensation claims are on the rise, forcing the city to pay its employees much more than what was estimated last year.

And if those scenarios aren’t bad enough, the state is expected to cut $4.1 million from the city’s budget in motor vehicle license fees. The VLF is a tax paid to the state when a vehicle is registered and later distributed to California cities based on their population size.

Gov. Gray Davis has proposed that the state keep that money in order to help close its $34.8 billion deficit.

Dennis warned that things could still get worse. He said this year’s deficit is likely to grow even more if there is a terrorist attack or a war in Iraq.

2D2,“Pull on your boots folks,” said Councilman Kevin McKeown, reacting to the new budget projections. “We’re in deep.”

To combat the growing deficit, parking meter rates, parking fines and various planning fees will be raised under the new plan, which was passed unanimously by the council.

“The next few years are not going to be business as usual in Santa Monica,” City Manager Susan McCarthy said. “Despite the steady news about the budget situation, denial is alive and well here.”

> “The next few years are not going to be business as usual in Santa Monica. Despite the steady news about the budget situation, denial is alive and well here.” — —SUSAN MCCARTHY City Manager

While council members wrestled with the budget, community leaders who attended the meeting asked the council to double the amount of money it gives to the cash-strapped school district — from roughly $3.5 million to $7 million annually.

The Santa Monica-Malibu Unified School District faces a $13 million drop-off in state funding, and is looking for ways to recoup the lost money. One option currently being considered is laying off more than 200 school employees.

Sherri Orgel, president of the Santa Monica-Malibu Unified School District PTA Council, said the speakers at Tuesday night’s meeting came “in lieu of hundreds” to voice the community’s concerns.

“We’re asking that you support our children and our collective future because we cannot afford to do less,” she said.

Harry Keilly, president of the Santa Monica-Malibu Classroom Teacher’s Association, admitted budget decisions can be difficult but said the schools can’t be ignored.

“It is a quality public education that is the great equalizer,” he said. “As the quality of our schools declines, so shall the quality of life in our great city.”

Nat Trives, former Santa Monica mayor and vice president of the Chamber of Commerce, also pleaded with the council to open its checkbook for the schools.

“People on opposite sides of political issues will come together (to support the schools),” he said. “Have the courage to save our children.”

*Originally published in the Santa Monica Daily Press print edition on February 27, 2003.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/022703.pdf?ref=smdp.com)