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# City Hall deficit grows to $16 million
- URL: https://www.smdp.com/city-hall-deficit-grows-to-16-million/
- Published: 2003-05-21T15:00:00.000Z
- Updated: 2026-10-23T02:09:28.000Z
- Author: John Wood
- Tags: Government & Politics, Santa Monica, #archive-import

*State cutbacks are to blame, officials say*

City Hall’s $12.1 million deficit grew by another $4 million last week when Gov. Gray Davis released the state’s revised budget.

With the city’s budget sessions just a week away, officials announced Monday the deficit for next year is $16.1 million. The city released its proposed budget this week and the Santa Monica City Council will adopt a final budget in June.

The city’s budget deficit was estimated in January to be $9.1 million. In February that estimate grew to $11.2 million and when the United States was engaged in a full-blown war with Iraq, city officials in April revised the deficit to $12 million, mostly because of revenue losses. At the time, they predicted the state’s shortfall would be about $4 million.

Funding from the state government to cities throughout California will be cut back this year and upcoming years, leaving Santa Monica officials wondering how hard the hammer will fall. They already have some good guesses.

Santa Monica will face a deficit of $20.2 million in 2004- 2005 and $28.1 million in 2005- 2006, officials predict. “Basically the city has got three pretty tough years ahead of it,” said City Finance Director Mike Dennis. “This is the toughest situation I’ve seen in the 20 years I’ve been with the city.”

Jobs in City Hall will be eliminated, expenditures will be cut, funds will be diverted and revenues will be increased in order to meet the $353.7 million proposed budget, Dennis said.

“When the dust settles, we’re going to be losing about $4 million (from the state),” Dennis said. “So we’ve already incorporated that into our estimates.”

Though the state’s $38 billion deficit for this year plays into City Hall’s shortfall, there are a number of other question marks in Sacramento that are having a detrimental effect on Santa Monica.

Among them are the long-term ramifications to the state of borrowing now to plug its deficit. Also a concern, Dennis said, is the possible effect on Santa Monica of preventative efforts by the state government to avoid a deficit in the future — like taking out loans, which officials worry will put it further in the hole down the road.

“We’re fearful that cities such as Santa Monica, that are relatively better off, are going to lose additional revenues (from the state),” Dennis said. “It’s highly fluid, very complex and we’re just going to have to carefully monitor what happens and make sure our perspective is reflected in the process.”

> “We’re fearful that cities such as Santa Monica, that are relatively better off, are going to lose additional revenues (from the state).” — — MIKE DENNIS City finance director

In an effort to reconcile the shortfall, managers throughout City Hall, with the exception of fire and police, were asked earlier this year to cut their departments by 5 percent this year and another 5 percent next year.

The city’s proposed budget calls for the further elimination of 31 positions in 2003-2004 and another 19 the year after that, though Dennis said reassignments and early retirements will mean only a handful of people will actually be laid off.

Officials also propose that a portion of the money raised from the hotel bed tax be used by the city for general operations instead of going to civic redevelopment programs, which would amount to $1.5 million in revenue.

Another $1.6 million is expected from reduced spending on capital projects and $1 million can be recovered by halting capital projects that have already been approved, Dennis said.

Residents and visitors also can expect proposals for increases in business license and development fees, sales taxes, transit taxes, the hotel bed tax, parking fines and meter rates.

A trio of budget planning meetings at City Hall kicks off next week. The meetings, which allow the city manager and department managers to voice suggestions and concerns to the City Council, will be held at 6 p.m. on Tuesday, Wednesday and Thursday of next week.

After hearing from the public on June 17, the council will adopt a budget for 2003-2004, which begins on July 1\. City officials said this week that the financial crisis will have wide-reaching effects throughout the city.

“This is a painful period, requiring a strong partnership of council and staff, and our residential and business communities, with sacrifices by all,” said City Manager Susan McCarthy in a press release.

> “This is a painful period, requiring a strong partnership of council and staff, and our residential and business communities, with sacrifices by all.” — — SUSAN MCCARTHY City manager

*Originally published in the Santa Monica Daily Press print edition on May 21, 2003.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/052103.pdf?ref=smdp.com)