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# Financial uncertainty lingers over City Hall
- URL: https://www.smdp.com/financial-uncertainty-lingers-over-city-hall/
- Published: 2003-07-09T15:00:00.000Z
- Updated: 2026-10-23T02:30:30.000Z
- Author: Carolyn Sackariason
- Tags: Government & Politics, Santa Monica, #archive-import

*State finances make city’s future uncertain*

June gloom may be over as far as the weather is concerned, but it will loom over City Hall at least through the summer, if not longer.

That’s the message sent to the business community from City Manager Susan McCarthy on Tuesday during the Chamber of Commerce’s luncheon. Dubbed the “state of the city,” McCar-thy’s presentation was full of gloom and doom related to the city’s financial forecast.

But City Hall’s problems are all relative. At least Santa Monica officials have anticipated the city’s problems in the future, which is more than what can be said for the state government, which has missed the deadline of passing a balanced budget and faces a growing $38 billion deficit, McCarthy said.

“Whatever you think of the city of Santa Monica, the state is so not there,” McCarthy told Santa Monica’s business leaders. “At least we have adopted a budget and it’s a balanced budget.”

And also different from the state, Santa Monica uses a five-year financial forecast to understand fiscal decisions made today. City Council members and city financial officials already are coming up with a plan to deal with next year’s budget which is expected to have a multimillion dollar deficit.

The City Council closed a $16 million gap for this year’s budget by cutting expenditures and raising revenues. And the public can expect next year to be even more painful, McCarthy said.

However, the luncheon crowd, tired of endless construction in Santa Monica, sounded a round of applause when McCarthy told them the city will slow down its rate of public works projects in the future.

To close this year’s gap, about $7 million was found by reducing city expenditures, another $2 million will be generated through new revenue streams, including increased parking ticket fines, and $5.2 million will be freed up in City Hall’s general fund through policy changes.

“Expenditure reductions will be more noticeable to the public next year,” McCarthy said. “It hasn’t been a lot of fun.”

City officials aren’t predicting a lot of fun times through 2006, when City Hall is expected to get out of the red.

And whatever financial problems the state faces, it surely will be passed onto cities and school districts throughout California, making it difficult for Santa Monica officials to predict what’s going to happen next.

“We know the state will come after cities,” McCarthy said. “They collect property taxes. They collect sales taxes.”

> “We know the state will come after cities. They collect property taxes. They collect sales taxes.” — — SUSAN MCCARTHY Santa Monica City Manager

She added that rumors are circulating that the state may keep a half cent on all sales tax revenue that is supposed to go to cities throughout California.

“We are all preparing for the worst case scenarios... Every day they wait to pass a budget, their deficit problems are compounded,” McCarthy said. “We do know it will effect our ability to balance the budget in the future.”

McCarthy characterized the state government’s way of dealing with its finances as “tunnel vision” by continuing to ignore what’s broken by borrowing more money and partisan bickering slowing the process down.

Santa Monica a decade ago was in an “economic dream bubble,” according to McCarthy, but local officials couldn’t predict that revenues would fall off and expenditures would increase to the extent they have.

“We knew it wouldn’t last... you don’t ask the tough questions and prioritize when it’s good,” she said. “But belt tightening makes us look more closely at things and there is real potential at the city to be leaner and more responsive at the same time.”

McCarthy attributes City Hall’s financial woes partly on a slow economic recovery, a fall off in tourism from the Sept. 11 terrorist attacks, increased costs relating to city employees and hundreds of millions dollars worth of large capital projects that have just come on line, including a new municipal pool, a new park on Virginia Avenue, a new Main Library and a new public safety building behind City Hall.

![](https://storage.ghost.io/c/55/9f/559f9abc-8372-4a2e-8c2d-27386da4e363/content/images/2026/10/070903-01_01.jpg)

*Originally published in the Santa Monica Daily Press print edition on July 9, 2003.* [Read the original PDF.](https://s3.us-east-1.amazonaws.com/smdp%5Fbackissues/070903.pdf?ref=smdp.com)