Ewell wary of bumps in the road
CITY HALL — While City Hall’s coffers are healthy as of late — with $2.5 million in additional, unexpected revenue realized this year — elected leaders have many under-funded priorities that need to be addressed before they set next year’s budget, according to an economic forecast prepared by City Manager Lamont Ewell.
In his first assessment of the city’s fiscal health, Ewell, who has been on the job for nearly three months, said City Hall’s finances are “quite stable,” as there is a reserve of $21 million. The city also has a triple-A bond rating — the highest available.
However, before councilmem-bers start celebrating, Ewell said members must contemplate concerns for the future, such as potential deficits, under-funded capital replacement and improvement projects, as well as increasing subsidies to enterprise funds that are supposed to be self-sufficient.
“I don’t want to be an alarmist, but what I suggest is we need to step back and re-think some of our expenditures,” Ewell said.
The report comes as the council and city staff get ready to draft a budget for the coming fiscal year, which begins July 1. The council will hold a trio of budget hearings — May 25, 26 and 27 — in which staff from each department in City Hall will declare their needs and requests for funding. The public also will have an opportunity to address the council concerning budget priorities.
In his report to the council, Ewell identified several funding priorities, including the infusion of one-time funding to “catch-up” on street resurfacing and reconstruction needs that were delayed or reduced during a round of budget cuts following the recession in 2002-03.
Facility maintenance and routine building systems replacement also have been under-funded for many years, Ewell said.
“Currently, repairs are done on an as-needed basis, which is reactive, not proac-tive,” Ewell told the council.
Another area of concern is with the large number of capital improvement projects that have not been funded. Ewell identified nearly $100 million in unfunded need, with significant gaps in funding.
General fund requests total $30.5 million in capital funding for next year, but there are funding levels of only $15 to $18 million. Those numbers are virtually the same for 2007-08, according to the budget report. Those projects include restoring the breakwater just north of the pier, many Civic Center Specific Plan projects, Senior Recreation Center renovation, Crescent Bay Park renovation and two fire stations in need of structural evaluations that may need to be replaced.
Ewell also expressed concerns with City Hall’s enterprise funds, which in definition are supposed to be self-sufficient. Several funds — including those for the Woodlawn Cemetery, the pier and Civic Auditorium — are subsidized by City Hall’s General Fund. The cemetery is being subsidized at a tune of $500,000 a year, as is the Civic Center, while the pier is subsidized at a cost of roughly $2.5 million year, Ewell said.
“Every dollar you save with respect to the general fund, will give you flexibility in paving streets, taking care of sidewalks and other community needs,” he said.
City Hall’s cramped quarters should also prove to be an issue in the future, along with projected debt if expenditures continue at current levels, Ewell said.
Currently, City Hall is not big enough nor modern enough to adequately house staff, which has become a concern for coun-cilmembers who are worried residents may not be served as efficiently as they could if staff was given more room to work with.
“City Hall space is critical,” said Councilman Ken Genser. “I think the public suffers to some extent because of inefficiency caused by a lack of space … Certainly, I think the City Manager is correct. We have to start thinking about the long term, making sure that we are in a strong fiscal position. We’ve cut back on some maintenance and infrastructure issues, and while they’re not sexy, I think they are important to start talking about and catch up where we left off, and we are in the process of doing that.”
Thinking about the years ahead is crucial, Ewell said, because City Hall is facing a deficit by 2008-09 if officials continue to spend at the same rate they are today.
Steve Stark, City Hall’s finance director, said a projected deficit will not mean City Hall will operate at a loss, and characterized the projected deficit identified by Ewell as a conservative estimate.
City Hall is required every year to pass a budget that is balanced, Stark said. What the deficit projection really means is that the council will have to start thinking about curtailing some expenses or consider ways to raise revenues, such as increased fees or taxes.
“The forecast is really a conservative estimate to make sure that we will have enough moneys,” Stark said. “It will most likely change in the future, but it is helpful for the council to use as a guide when drafting the budget.”
Stark said, if necessary, city staff will try to identify cuts that have as little effect on the community as possible.
“We do everything we can to provide excellent services to the community,” Stark said. “If there is an area we need to toe the line on, they are typically areas that wouldn’t affect residents directly.”
Councilman Richard Bloom said a budget priority should be addressing funding levels for services that were reduced, such as police officers at Virginia Avenue Park, additional jail staff and custodial support. He also would like to see some money dedicated to gang intervention and in helping the homeless.
“Those things that we have cut back on need to be closely scrutinized,” he said. “It may be that some aren’t as crucial as we once thought they were. But it seems that those things we have cut back on that are most important to residents — such as tree trimming schedules, infrastructure improvements — I would think we would want to ramp them back up as soon as possible.”
In e-mails, letters and personal exchanges with councilmembers, residents have identified several priorities, including addressing the impacts of the homeless; enhancing safety and the quality of life in the Pico Neighborhood; ensuring the public receives timely and responsive services from all city departments; incorporating ways to achieve the goals of the sustainable city plan; and capitalizing on Santa Monica’s climate and community amenities that promote an active population.
Identifying which priorities should receive the most attention will be the job of the council.
“It’s no different than running a household,” Councilmember Pam O’Connor said. “You have to sit down and figure out what things you really need and make them a priority. We have a lot of under-funded capital projects that need to be addressed, but we have made some inroads with the new Main Library. So we are continuing to see improvements. The challenge every year is what tradeoffs do we make.”
Originally published in the Santa Monica Daily Press print edition on April 14, 2006. Read the original PDF.