Proposed budget cuts will be felt by community
Staring at an $8 million revenue shortfall for the upcoming year, the city is facing the most severe budget cuts it’s felt in a decade.
The public can expect to see the budgets for city services, city staff, public safety and a host of capital improvements cut drastically.
Fourth of July celebrations have been canceled, neighborhood and street improvements will be delayed, and organizations will get less money allocated to them by the city council.
Also, vacant city positions won’t get filled, city employees will receive minimal raises and their benefits won’t be enhanced.
After months of pouring over the numbers, city administrators outlined the harsh realities of Santa Monica’s faltering economy in a proposed 2002-2003 budget released Friday by City Manager Susan McCarthy.
The city’s total budget is $387.3 million, a decrease of $23.1 million from last year.
“We tried very hard to pick items that would impact the community the least,” she said. “We’re trimming around the edges.”
“We tried very hard to pick items that would impact the community the least. We’re trimming around the edges.” — — SUSAN McCARTHY Santa Monica City Manager
The trim translates into more than $2 million being cut from City Hall’s departments. About $20 million in capital improvements will be cut from what was budgeted last year.
As a result, planning for several projects like the $148 million civic center redevelopment plan, the $1.8 million Santa Monica Pier improvement plan, more affordable housing and general improvements around the city most likely will be put on hold indefinitely.
What won’t be cut from the capital budget is the Virginia Avenue Park expansion, the Santa Monica Library redesign and a new park at the airport.
The city made deep cuts in 1992, but recovered quickly because of a decade of unprecedented fiscal expansion.
McCarthy said just like now, the 1992 cuts were a result of an economic recession. But the difference this time is that the negative effects on local economies, particularly ones that rely on tourism, are related to terrorism.
City Councilman Ken Genser remembers the tough choices made in 1992. As he and his fellow council members begin the arduous task of approving the cuts this month, they must make tough decisions about what are “luxury items” and what are necessities. What’s tougher, however, is making the public understand the reasoning behind the cuts.
“These are just suggestions at this point,” he said. “We’ll cut where it’s less painful at first but I think that in 1992, we saw the community really pull together.”
Every department head in City Hall was asked to cut his or her budget between 2.5 and 5 percent. The reductions were strategically selected to minimize impacts and services to the public.
However, it’s impossible to cut this deeply without feeling some pain. Fewer people will work in City Hall and fewer resources will be available to the public. “... There is no question that, over time, the public will feel the cumulative effects of the reduced maintenance and equipment budgets in the appearance of public facilities and the productivity of city staff,” McCarthy wrote.
Residents most likely won’t see the energy-related utility tax rebate that they enjoyed last year, either.
Unexpected realities The bleak financial forecast for the city means some organizations — which are facing their own harsh budget realities — could get little respite from the city.
Under the proposed budget, the city will be able to only allocate $1.7 million in one-time funds. However, the requests are significantly more than that.
“In a normal year, we don’t please everybody and this year, we certainly won’t,” McCarthy said.
The Santa Monica Malibu-Unifed School District is reeling from state budget cuts that eliminated a significant amount of its resources. The district has asked the city to kick over an additional $2 million to its already $3 million subsidy.
In an effort to recover from the Sept. 11 terrorist attacks, Santa Monica’s tourism campaigns could be extremely important for the local economy’s future. Contributing $250,000 toward the Convention and Tourism Bureau would be a strategic move, McCarthy wrote.
The Convention and Tourism Bureau’s new visitor booth at Santa Monica Place scheduled to open in June will require $150,000 annually, another unforeseen cost.
The costs related to the living wage measure is expected to reduce spending for other programs if city revenues continue to decline. The controversial living wage ordinance would require businesses that generate more than $5 million in revenue annually to pay their workers $10.50 an hour, plus benefits.
Deep capital cuts The city prepares a three-year capital improvement program, but the council only appropriates one year at a time. But because it was clear as early as last spring that the level of funding for capital projects enjoyed during the past decade would no longer be available, this year’s projects have been cut substantially.
To balance the current year’s budget, nearly $5 million of previously budgeted projects could be delayed at least a year. That includes design work for City Hall, as well as finishing the fiber optics network, work on the California Incline, a new Euclid Park, neighborhood traffic measures and Santa Monica Boulevard improvements. The cuts also delay redevelopment of a historic building at 415 Pacific Coast Highway and rebuilding a new bridge to the pier, as well as other improvements.
In the 2003-2004 budget, which is the second year of the capital improvements program, the city anticipates having $11.7 million available, a reduction of more than $7 million than what was projected. That includes $2.2 million cut from ongoing projects; $3 million from facility maintenance work that will be delayed until 2004 and $1.9 million in deferred maintenance work on downtown parking structures that will be rebuilt in the future.
Bad times to come McCarthy expects the city’s financial situation to get even worse once the state hands down its cuts to municipalities. City administrators estimate that up to $5 million more in revenue could be lost to Santa Monica because of the state’s politically-motivated techniques in balancing the budget.
“Given that this is an election year, we would not be surprised to see that substantial borrowing, coupled with unrealistic revenue and expenditure projects, will have been employed by the state to present a budget in balance,” McCarthy wrote. “Many observers believe that it will be necessary shortly after the November election to make severe budgetary adjustments that more accurately recognize the reality of the state’s fiscal imbalance.”
The 2003-2004 budget is likely to be even more difficult because operating costs are expected to increase beyond what would normally be expected, McCarthy said. Unanticipated health care costs and insurance premiums are expected to rise as a result of the Sept. 11 terrorist attacks.
The city is going into the next year’s budget already having to make significant savings to address the $8.8 million shortfall in sales tax revenue from the previous year.
“We come into this budget with already significant expenditure cuts,” McCarthy said. “But we should come in on target.” Here’s a look at the proposed cuts within City Hall’s departments: ■The Santa Monica Police Department’s budget, one of the largest in City Hall, could be cut.8 percent, or $307,459. The mounted police, who patrol the city on horseback for crowd control, is proposed to be cut entirely. ■City council’s budget is proposed to be cut 5.2 percent, or by $17,920, through reductions in legal expenses, office supplies and travel expenses. ■The city manager’s administrative budget is proposed to be slashed 3.5 percent, or $37,036, by eliminating the vacant community relations specialist position and adjustments to conferences, travel and membership dues. ■The cable TV budget will be cut 4.1 percent, or $12,790, through reductions to advertising, legal expenses, office supplies and other cuts. ■The information systems budget is proposed to be cut by 3.9 percent, or $114,000, which will be in the form of travel, professional services and training. The cuts will reduce the staff’s exposure to new developments in the technology field. ■The elections and record services budget will be cut by 1.8 percent, or $25,000. ■The finance department’s budget will be cut by 3.9 percent, or $145,458, by eliminating a vacant analyst position and reducing the amount of overtime employees are given, plus training, office supplies and travel. ■The city attorney’s budget will be reduced by 2.5 percent, or $129,824, by eliminating a full-time deputy city attorney and a full-time legal assistant, as well as reductions to overtime, a temporary employee and office supplies. ■The planning and community development budget will be cut by 2.8 percent, or $337,715, by reducing professional services, temporary employees and supplies. ■Recreation supplies, community events, custodial services, tree maintenance and community outreach will be cut by 2 percent, or $443,204. ■The library budget will be cut 2.9 percent, or $168,900, through building maintenance, furniture and equipment, supplies and other services. The cuts mean a 3 percent decrease in books purchased. ■The environmental and public works budget will be slashed 3 percent, or $305,417, through eliminating a public works inspector, supplies, street and road maintenance, as well as maintenance to street lights, buildings and custodial services. In other words, City Hall and public facilities won’t get the same level of attention and there will be delays in street maintenance and street lights. ■The resource management budget will be cut 3.5 percent, or $147,500, by a reduction in professional services. The cuts could mean that the timing and quality of decision making on redevelopment and housing issues will be compromised.
Originally published in the Santa Monica Daily Press print edition on May 20, 2002. Read the original PDF.