The Santa Monica City Council adopted a $908.8 million citywide budget this week for fiscal year 2026-27, a spending plan that officials say positions the city for a structurally balanced future while preparing for an unprecedented run of major events including the FIFA World Cup, the 2027 Super Bowl and the 2028 Olympic Games.
The budget, which covers all city funds net of reimbursements and transfers, includes 2,287.6 full-time equivalent positions and a capital improvement program (CIP) totaling $110.4 million in the coming fiscal year and $116.6 million in 2027-28.
“The CIP serves as a defining feature of this year’s budget,” Finance Director Oscar Santiago told the council.
The General Fund, which covers core city services, is budgeted at $525.2 million in operating expenditures, with $19.9 million in capital spending.
The council also separately adopted the Santa Monica Housing Authority’s operating budget for the coming fiscal year, which is approximately 0.9% greater than the prior year, with increases primarily reflecting labor agreement impacts and the addition of a housing inspector position.
Structural Balance on the horizon...thanks to more taxes
Officials noted that updated projections show the city on track to achieve structural budget balance — meaning ongoing revenues match ongoing expenses — for the first time since before the COVID-19 pandemic, potentially as early as next summer.
That projection, however, depends on voter approval of a citizens' initiative parcel tax on an upcoming ballot.
“So, you’re saying if that parcel tax does not pass, or for some reason it doesn’t qualify for the ballot, that we will face some pretty difficult decisions ahead with regards to supporting our schools and potentially continuing the level of services that we provide our community through any number of programs,” said Councilman Dan Hall.
Santiago confirmed that if the measure fails, the city would face difficult decisions.
The city also carries a $47 million obligation to repay its housing trust fund, Santiago confirmed in response to questions from Councilwoman Lana Negrete. Santiago said repayment is budgeted to occur when additional funds become available.
Capital Program revisions
Three targeted changes were made to the capital budget since the council’s May 26 study session. The Santa Monica Neighborhood Greenways Project was advanced from 2027-28 into the current fiscal year, supported by a grant from the Southern California Association of Governments. The 4th Street Transit Priority Improvements were accelerated to boost bus operations ahead of the LA28 Olympics. Funding for a separate affordable housing project was reduced to align with updated scheduling.
Fee and fine increases
The budget adoption package included updates to the city’s master fee and fine schedules, drawing some public pushback, particularly regarding aquatics fees.
Most city user fees were recalculated through a citywide fee study and adjusted for cost-of-living, with amounts rounded down to the nearest nickel. Fees not covered by the study will increase 3.3% on July 1, reflecting projected growth in total city compensation costs.
Aquatics permit fees, unchanged since 2021, are set to rise 8 to 9%, ranging from a 50-cent increase for Santa Monica-based nonprofit youth groups to up to $8 more for non-resident organizations using long-course lanes.
In response to criticism over the adult permit fees, staff said additional analysis confirmed adult aquatics groups recover 58% of costs — higher than youth groups at 44% — and that even with the increases, Santa Monica’s lane rental rates remain below those in Long Beach, Torrance and El Segundo.
Mayor Caroline Torosis pressed staff on whether 58% is an acceptable endpoint or a step toward higher recovery. Recreation and Arts Director Jenny Rogers said the department targets 80 to 90% cost recovery for most recreation activities but has deliberately kept aquatics lower, noting that maintenance and staffing costs have risen roughly 20%.
On the enforcement side, three existing code enforcement fines — for construction work without a permit, construction work with an expired permit, and non-compliance with an approved construction management plan — will each increase to $1,000. A new $500 fine was also established for violations of tenant protection regulations during construction.
Councilmembers flagged parking fines for future review, noting that a $350 penalty for using a forged disabled parking placard may not be sufficient to deter violations.
There are no changes to transient or permit parking rates in city lots and structures. The downtown discount validation program and a bulk parking agreement with the state Judicial Council were both extended through June 30, 2027.
The budget takes effect July 1. Negrete recused herself from a separate vote authorizing $20,000 in discretionary funds for Santa Monica Malibu Unified School District grad night, citing her ownership of the Santa Monica Music Center that has contracts with the district. The remaining council members approved that allocation unanimously.
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