Council members and City staff will be crunching numbers for consecutive days as Santa Monica’s Biennial Budget, pegged at more than $1 billion and to be allocated to a variety of operations and services, is up for review May 28 and 29.
In a set of back-to-back meetings perhaps best enjoyed by accountants and finance geeks, the council will pore over budgetary proposals from each of the City’s departments and determine where $520.9 million may be spent during the next fiscal year.
Another $527.7 million is proposed be spent in Fiscal Year 2014-15.
“The Proposed FY 2013-15 Biennial Budget is balanced and maintains core municipal services,” City staff stated.
According to City staff, the 2013-15 Biennial Budget “shows positive balances,” but an estimated $4 million deficit is anticipated to surface in Fiscal Year 2015-16. That deficit may balloon to nearly $10 million by Fiscal Year 2017-2018.
“Structural deficits starting at $3.9 million begin in FY 2015-16 due to projected extraordinary increases in the City’s pension contributions, and increase to $9.2 million in FY 2017-18,” City staff stated. “Applying best and worst scenarios to the forecast results in varying degrees of deficits over the latter three and four years of the forecast, respectively.”
City staff added the proposed two-year budget “addresses continuing and emerging community needs; sets forth a reduced budget baseline; funds high priority capital projects and maintenance; and, promotes sustainability, livability, education, human capital, economic development, mobility, and fiscal stability.”
Nearly 60 percent of the budget is dedicated to the General Fund. For Fiscal Year 2013-14, $306.1 million is allocated to the General Fund; that figure jumps to $311.3 million for Fiscal Year 2014-15.
Another major line item: retirement costs.
According to calculations, City staff estimates Santa Monica’s CalPERS contributions to cost the General Fund $18.1 million annually in Fiscal Year 2019-20.
City Hall may also be on the hook for $1 million in taxes associated with healthcare costs tied to the Patient Protection and Affordable Care Act (PPACA), otherwise known as Obamacare.
“Alongside these new costs will be the continued escalation of healthcare premiums, which are anticipated to increase by at least 14 percent per year over the next two years. In addition, current healthcare premiums are subject to change pending new agreements with insurers,” City staff stated.
The loss of redevelopment last year also impacted the proposed Biennial Budget. According to City staff, the General Fund “absorbed approximately $2 million in costs previously funded by Redevelopment.”
Beyond outlining the overall outlook of Santa Monica’s fiscal health, City staff also provided some perspective of the coastal municipality’s tax base.
“Property values in the City remain the third highest in Los Angeles County and are expected to continue to increase about 3 percent annually,” City staff stated. “Sales tax receipts, which declined for two consecutive years due to the economy and the temporary closure and remodel of Santa Monica Place, have also turned around and, like property taxes, are projected to show modest growth in the near future.
“Tourism continues to exhibit strength, but growth is expected to moderate to about 3.5 percent per year after three consecutive years of near double digit gains coming out of the recession. Business license taxes are also expected to grow slowly, following the general course of the local economy, while Utility Users Tax revenues are projected to remain flat,” City staff added.
Departments will make budget presentations to council members one at a time during the two-day study session.
Presentations will be made May 28 by the following departments: City Council; City Manager; Office of Sustainability and the Environment; Community and Government Relations; Office of Emergency Management; Office of Pier Management; Records and Election Services; City Attorney; Human Resources; Finance; Library; and Information Systems.
The following day, Community and Cultural Services, Planning and Community Development, Police, Fire, Big Blue Bus, Housing & Economic Development, Public Works, and Capital Improvement Program will make their respective budget presentations.
Following the two-day study session, council members will hold a public hearing June 25 to “make revisions to, and adopt the first year and approve the second year of the Biennial Budget.”
To comment on the Biennial Budget, Santa Monica residents may give public testimony at next week’s study sessions and the June 25 budget adoption hearing. Residents may also email their respective thoughts to council members at [email protected]