The proposed Santa Monica budget for 2009-10 is $510 million, down 8.1 percent from the record level of the City’s budget for the 2008-09 fiscal year. City Manager Lamont Ewell, who unveiled the proposed budget for the press on Tuesday morning, May 26, said that the reduction was not only due to the state of the economy, but also the fact that the City had completed some major capital projects in the past year, including the Annenberg Community Beach House (415 PCH) and the downtown sewer project.The $262.3 million General Fund – the largest of the various funds that make up the total budget – actually represents a modest increase (less than one percent) from the prior year.The City Manager said the proposed budget “was prepared in the face of what will likely be the most significant economic downturn since the Great Depression.”Ewell presented the proposed budget to the City Council on Tuesday evening, May 26 [see related story, page 1], and the Council will now consider the proposal and hold public hearings before adopting the budget in final form before the July 1 beginning of the 2009-10 fiscal year.A key element in weathering the current economic storm is the fact that the City Council “prudently set aside an economic uncertainty reserve of $8.2 million, using monies previously reserved for potential Utility Users Tax (UUT) losses,” the City Manager said. Since Santa Monica voters approved modifications to that tax in November 2008 (Measure SM), those reserved funds were freed up and now “allow us the flexibility to respond to a downturn in a measured, thoughtful manner rather than making severe cuts in FY 2009-10.”The proposal is to use $1.9 million of these funds in FY 2009-10 and the remaining $6.3 million in FY 2010-11. The proposal leaves intact the City’s operating reserve fund of $25.6 million, which represents 10 percent of the City’s operating fund.Other cities in the area may be forced to invade such operating reserve funds in the face of the current economy and expected cuts in local government funding from Sacramento.Ewell said that the City had been “extremely conservative in growth projections,” assuming revenue decreases in property taxes of 1.1 percent; sales taxes of 8.9 percent; transient occupancy taxes (TOT, the hotel “bed tax”) of 3.6 percent; and business license taxes of 2.5 percent.He noted that sales tax revenues were negatively impacted by a particularly severe downturn in auto sales, which account for one fourth of the City’s sales tax revenue, and by the remodeling closure of Santa Monica Place, scheduled to reopen in August 2010. The TOT revenue has been down by about 30 percent in recent months this year compared with the year before.The proposed budget seeks to make up for these revenue losses by increases in parking citation revenues (both from higher fees and more vigorous enforcement), library late fees and penalties (which have not been increased since 1994), and fee increases for youth sports and at the Swim Center.Certain “belt-tightening” measures by City staff have also been instituted:∑ In January, City departments provided plans to ensure that their actual expenditures for FY 2008-09 would be below budget by at least three percent. Also, a hiring freeze for non-sworn positions (police and fire) has resulted in 18 current vacancies.Departments prepared five percent contingency reduction scenarios for the FY 2009-10 budget, and Ewell has included some of these in the current proposal.The Executive Pay Plan and Management Team Associates agreed to forego their pay-for-performance bonuses for this year, and discussions are underway with Administrative Team Associates for a similar concession.Although Ewell acknowledged that some of these developments “may result in slower response times for non-safety-related services,” the proposed budget nevertheless preserves several promised improvements within the City, including infrastructure improvements in the Borderline Neighborhood at the south edge of the City near Lincoln Boulevard, improvements to Ocean Park Boulevard west of Lincoln, more playground shade in City parks, and funding for Pier infrastructure improvements and Big Blue Bus projects and equipment replacement.
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