I recently read that “Massachusetts, with no significant natural resource extraction industry, has leveraged its highly educated workforce and research institutions to rank among the richest economies in the world. As of 2025, it holds one of the highest median household incomes in the U.S. and boasts a per capita GDP that would place it ahead of most sovereign nations.”
Interesting. It appears a good education is a critical component of economic prosperity. Given that the City of Santa Monica, ravaged by COVID, fires and legal settlements, is at a tipping point at which years of declining revenues, economic stagnation and quality of life issues threaten our collective well-being, it seems to me that local support of our public schools is essential to our city’s future.
That’s why State Senator Ben Allen, SMMUSD Board President Alicia Mignano and I are proponents of a ballot measure to assure our PreK-12 public schools continue to receive the same local revenues that have contributed to their excellence. The background? Two decades ago, when the City was flush with cash and the schools were struggling, the City Council was persuaded by education activists to annually transfer General Fund dollars to SMMUSD. Unlike other local funding for our schools, those dollars were not secured by a dedicated revenue source approved by voters and thus entirely contingent upon the relative health of municipal finances and City Council discretion.
So Santa Monicans for Reliable School Funding has been collecting voter signatures to qualify a citizens’ initiative creating a $495 parcel tax costing property owners $1.35 per day. Those new revenues would replace the discretionary General Fund dollars that are up for Council renewal in 2027, assuring our TK-12 schools maintain their current operating revenues and continue to prepare our children for an increasingly challenging future. This would not be new funding for school operations; it would simply replace existing funding. At the same time the City’s budget, currently under a declared state of fiscal distress, would no longer include that previous payment to our schools, allowing the Council to allocate more resources to other resident priorities.
Recently, local media have run rosy projections of the City’s finances that suggest an imminent budget surplus of $5M annually, leading some to question the need for our measure, but those predictions assume voter approval of a funding measure yielding $12M in new annual revenues. Without those new funds, the Council will have to make budget cuts next year. Where would you like to see spending reductions: public safety, schools, libraries, recreational programs? Pick your poison.
And when I look at the City’s financial picture I’m reminded of a seminar I took in college taught by Gordon MacDonald, the head of the Council on Environmental Quality during the Nixon Administration. MacDonald told us he and Nixon traveled to Santa Barbara in 1969 to review the cleanup effort of the infamous oil spill. As they walked along the beach, they found no signs of pollution, just miles of pristine sand. Skeptical, MacDonald kicked at the sand and a big blob of oil flew up in the air from under a thin layer of sand and landed on the lapel of Nixon’s suit jacket. The oil wasn’t removed, it was just covered up with imported sand.
Now I’m not suggesting City Hall is covering up its money woes with a layer of gleaming new sand. Quite to the contrary, I think the renaissance plan promulgated by City Manager Chi, Mayor Torosis and the Council is daring, innovative and already yielding results. But I also think there’s potential toxins lurking beneath that will challenge City Hall to return soon to the prosperity of past decades. Why?
Sales tax revenue is down from its historic highs and will never recover, because the City gets a smaller cut of sales tax from online purchases than from transactions at brick and mortar locations within city limits.
Hotel occupancy and annual visitor numbers are 50% below the 2019 totals, mostly due to the hostility displayed by the Trump administration towards foreign tourists who stay longer and spend more than domestic visitors. Those figures may recover in 2029 under a new, more welcoming President. It’s also possible Canadian snowbirds have developed new winter travel patterns and will never return to the US.
3. In fiscal 2018, Santa Monica had about $435.8 million in reserves;
those reserves are now about $150 million and it’s going to take many
years of robust revenues to rebuild that fund.
4. The City has borrowed from its Affordable Housing Trust Fund to pay
its bills in recent years and now has a significant internal debt to
repay. There’s also a backlog of deferred maintenance and capital
improvements to address.
5. Projections are just educated guesses, not certainty: the City projected
continued financial vibrancy in 2019 and then COVID hit, decimating
municipal revenues. Could a closed Strait of Hormuz induce a
worldwide recession not included in these projections? What about
another $100M payout to victims of Eric Uller?
That’s why we urge Santa Monicans to support our school funding measure, as it would be naive to assume the City can continue its past support for SMMUSD. And without that cost of $1.35 per day to property owners, teachers will have to be laid off and class sizes will increase. We owe it to our children to provide them with an excellent education that gives them a shot at prosperity.
Ted Winterer is a former Mayor and City Councilmember and chair of Santa Monicans for Reliable School Funding