City, schools mull how to spend funds
With the state budget approved earlier than usual, both City Hall and local schools can anticipate more than $1 million coming their way sooner than expected.
Gov. Arnold Schwarz enegger signed the $117.3 billion California state budget on July 11, the earliest a spending plan has been adopted in five years.
“We came together not as Republicans or Democrats, but as Californians to create a fiscally responsible and compassionate budget to be an instrument of good for the people,” Schwarzenegger said. “This is a bipartisan budget we can all be proud of because it is balanced, does not raise taxes or include new borrowing, pays down our debt and makes a strong investment for California today and for our future.”
The early budget adoption has guaranteed certain funds to both City Hall and local schools, representatives of which are trying to figure out how to best allocate the boost in funding each institution is set to receive this year. City Hall is awaiting $1.85 million, while the Santa Monica-Malibu Unified School District will receive approximately $1.2 million to help offset its costs, officials said.
CITY HALL ‘ENCOURAGED’
By State Budget
Santa Monica officials said they are encouraged by the latest state budget, particularly the agreement reached to repay a year early the Vehicle License Fee “loan” made from cities to the state in 2003.
Repayment of the VLF funds, used to balance past state budgets, is expected to bring approximately $1.5 million to Santa Monica in 2006, with an additional $385,000 to be received in Proposition 42 funds being released as part of the budget agreement, city officials said. The money will be added to City Hall’s $386.8 million budget.
Prop. 42 revenue is generated by the gasoline sales tax and is generally used for roads and transportation systems.
“This additional revenue, when received, will allow us to restore cuts the council was forced to make when adopting a balanced budget in June and should also advance progress on the work plan on major community priorities,” said City Manager Susan E. McCarthy.
The bipartisan budget adopted by the state legislature earlier this month represents a welcome departure from nearly two decades of the state’s balancing its budget on the backs of cities. It also respects the intent of Prop. 1A, adopted by California voters in November 2004 to protect local funds, officials said.
“We are pleased that the state is addressing its fiscal issues without taking money from local cities, as has been its past practice,” said Steve Stark, City Hall’s director of finance. “Reforming the state’s budget process is essential to ensuring that Santa Monica and all California cities can deliver local government services that residents expect.”
Santa Monica officials anticipated that the VLF loan would be repaid in the 2006-07 budget plan.
Since the $1.85 million will likely come this year, City Hall might be able to start earlier on a few projects, said City Hall spokesperson Judy Rambeau.
Last month, $231,000 was taken out of capital improvement funds that would have re-paved seven city blocks. In addition, $23,000 was taken from City Hall’s usual contribution to the Santa Monica Festival, which staff said may have some impact on event planning. This year’s windfall may be used to help restore the full amount of those projects, Rambeau said.
Stark said that in addition to improvement projects, City Hall also would like to see a continued restoration of its staff — to pre-recession levels.
STATE’S SCRAMBLE
HELPS SCHOOL DISTRICT
SMMUSD officials said the effect of the state’s budget means the school district will not have to provide $1.2 million for the State Teachers Retirement System (STRS), a fund set up to pay for teacher pensions statewide.
The district’s overall budget for 2005-06 is $107 million. District officials said they were prepared, but uncertain, whether they would have to pay for a 2-percent increase to the cost of STRS prior to the adoption of the state budget. The governor had not clarified whether he might push a 2-percent cost increase for the pension system onto schools statewide.
Officials said Gov. Schwarzenegger decided at the last minute to withdraw such a request and agreed to pay the needed contribution from the state’s general fund in order to expedite the budget process.
Winston Braham, SMMUSD finance director, said one direct effect of the $1.2 million the district will receive is that it has reduced the $7,668,529 in new spending anticipated for 2005-06. That sum is being repaid from revenues the district managed to trim during the 2004-05 fiscal year.
However, Braham cautioned that the state still owes local schools money that’s not being accounted for in the district’s budget.
“The district no longer has to expend the $1.2 million, but we are still not getting some money owed to us by the state,” Braham said. “The bottom line is, it’s a tit-for-tat situation.”
The district also will make efforts to trim its 2005-06 budget this year, in order to have excess revenues it may use to shore up budget funding for the 2006-07 fiscal year.
“It makes good business sense,” Braham said. “The district has absorbed additional increased spending that is typical of companies today, having to do with professional growth, benefits, etc.
“It will continue to look at cost-saving measures.”
Originally published in the Santa Monica Daily Press print edition on July 16, 2005. Read the original PDF.