Three Santa Monica City Council members voted against the city's fiscal year 2025-27 budget Monday night, citing concerns over taxpayer funding for neighborhood organizations that make political endorsements.
Council members Dan Hall, Caroline Torosis and Jesse Zwick cast the dissenting votes on the $793.3 million budget after a heated debate over whether the city should continue providing $49,000 annually to seven neighborhood associations that can legally engage in political activities.
"I think it's incredibly inappropriate to use taxpayer dollars to subsidize organizations that make political contributions and political endorsements," Hall said during the meeting, explaining his opposition to the funding.
Torosis echoed similar concerns, stating she did not believe "the city of Santa Monica should fund any organizations that can perform lobbying functions." The council member noted that as 501(c)(4) organizations, the neighborhood groups are permitted to engage in political campaigns and lobbying activities.
Zwick suggested forcing the neighborhood associations to convert their nonprofit status to one that prohibits political activity but ultimately the three opponents were outvoted.
The debate over funding stemmed from an 11th hour revision to the budget that restored funding to the groups. Going into the meeting, funding had been revoked due to the city’s budget crisis but after realigning some public safety positions, additional money was made available.
Santa Monica’s neighborhood associations were initially funded to send out physical newsletters to members but over the years the groups have used the money for other purposes like community events. Staff said that historically, receipts were submitted that prevented the money from being used for political actions and that they could go back to that process again to ensure public money was not used during a campaign.
The neighborhood association funding debate highlighted ongoing tensions over the role of these community groups, which receive $7,000 each annually for membership building and communication activities. The grants were originally intended to support newsletters, but the groups now use the funds for various community engagement activities.
Five of Santa Monica's seven recognized neighborhood organizations hold tax-exempt status, allowing them to engage in political activities as long as such activities don't constitute their primary purpose. The city requires signed agreements stipulating that grant funds cannot be used for political purposes and mandates annual reporting of expenditures.
Supporters of the funding said the organizations provide valuable community services and help residents engage with local government. They noted that the groups contribute significant volunteer hours to community activities and serve as important communication channels between residents and city officials.
City Attorney staff noted that the neighborhood associations are independent entities and that questions about their tax status should be addressed with their own legal counsel.
The maneuver that opened the door to funding the groups was less controversial.
The council opted for an alternative police staffing proposal that adds one sergeant and one Community Service Officer instead of the originally planned four Community Service Officers. Police Chief Ramon Batista had requested five sworn officers at the start of the budget process but expressed support for the compromise, noting that the sergeant would provide needed supervision while the Community Service Officer would free up patrol officers for other duties.
The staffing change generated $73,000 in savings from Measure K public safety funds, which council members allocated to restore the neighborhood grants and police training programs. Measure K, approved by voters to increase public safety, provides the city with dedicated revenue for law enforcement initiatives.
"The sergeant would need to be assigned depending on staffing, where the vacancy is, where the shortage of supervisory personnel ends up being," Batista explained to the council.
Several public speakers during the meeting's lengthy public comment period urged the council to hire additional police officers, arguing that voters expected Measure K funds to go toward more sworn personnel.
The budget approval caps months of difficult deliberations as Santa Monica grapples with a structural deficit requiring $60.5 million from reserves over the next five years. The city has struggled to recover financially from the COVID-19 pandemic, with key revenue sources including sales tax, hotel occupancy tax and parking fees remaining flat or declining.
City staff emphasized the need for revenue generation and cost-cutting measures throughout the budget process. The final budget includes a hiring freeze for non-sworn positions in general, beach and pier funds, while preserving core city services.
The budget also addresses other community priorities, including maintaining community garden fees at current levels through an alternative funding approach and allocating $15,000 for the city's Fourth of July parade.