Santa Monica City Council found itself in a positive position Tuesday night as City Staff reported a 2013-2014 budget surplus in a prospering local economy.
“We have good news to report,” Director of Finance for the City Gigi Decavalles-Hughes stated at the opening of her budget presentation. “Our local economy is prospering, our local departments are working efficiently, and we are recovering our costs effectively.”
The City ended the year with greater revenues and lower expenditures than expected.
The City’s General Fund ended the 2013-2014 financial year with revenues $17.3 million greater than estimated actuals, and operating expenditures $5 million below budget, for a net $22.3 million positive impact.
General Fund revenues were 5.1 percent greater than estimates. Approximately $6.9 million of the increase is anticipated to be on-going, including $1.9 million in fees and charges; $1.4 million from local taxes, $1.1 million from parking revenues, $1 million from parking citations, and $1.5 million from various other sources, according to the City.
The remaining $10.4 million of the increase is from onetime sources that will be used to support one-time costs.
During the Council meeting on Tuesday, Oct. 28, City Staff recommendations discussed included changing the 2013-2014 budget to “reflect significant events, to adjust Capital Improvement Program budgets, and to revise rental rates for the Santa Monica Pier Carousel to reflect comparable venues.”
Staff also recommended changes to the 2014-15 Adopted Budget for General Fund expenditure control savings allocations and for position and classification changes based on changes in operations.
These surplus funds, the majority of which are one-time, will be used for expenditure control budgeting, the new Enterprise Resource Planning (ERP) system to be purchased in 2014-2015, increased contributions to the Workers’ Compensation Self Insurance Fund in order to maintain an appropriate funding level to cover liabilities, and to prefund and paydown the City’s retirement benefit liabilities, City staff stated.
For the year 2013-2014 the City recommended that Santa Monica Pier Carousel take a rent hike to bring the venue in-line with comparable surrounding businesses. The carousel has not seen rent increase since 2002 and the City’s recommendations suggested that the venue be rented out for private events with a limit of six times per year.
“Depending on the type of rental and number of guests, the proposed rates would increase between 9 percent and 25 percent from the rates set in 2002. Revenue to the City under the proposed rate schedule is estimated to increase by $10,000,” according to City staff.
Staff also recommended a net $0.03 million in adjustments for year 2013-2014: a net $0.02 million increase in the General Fund and a $0.01 million increase in other funds to reflect appropriations for the Summer Go with the Flow program and one of four equal $14 million payments to the Los Angeles County Auditor Controller for the stipulated judgment with the State Department of Finance and the State Controller’s Office regarding the dissolution of the City’s Redevelopment Agency. The funds to cover this payment were previously Redevelopment funds and had been set-aside for this purpose.
During the meeting Councilman Kevin McKeown reaffirmed the statement that funds historically requiring General Fund support, including the pier, airport, and beach funds, ended the year with a positive balance.
He also raised the issue of Santa Monica Airport (SMO), which was only able to pay interest on its long-standing debt this past year. Decavalles-Hughes confirmed this, adding that SMO’s financial result, while still slight, was better than previous years.
For the fiscal year 2014-2015, City staff recommended changes to include a $4.1 million increase to the General Fund to reflect personnel changes, funds for the Water Conservation Unit, and expenditure control budgets.
Personnel changes anticipate a 4.5 Full Time Equivalent (FTE) employee increase which will result in an estimated $485,372 General Fund increase in 2014-2015, “of which $392,850 will be reimbursed by the Water Fund,” according to the City.
Provisions for new Water Conservation initiatives were also recommended for the 2014-2015 budget.
Council members took time during the meeting to discuss salaries and job reallocation, before deciding to pass all City staff recommendations with one amendment: to take $400,000 from General Fund reserves as a one-time contribution to jump-start the water conservation incentive program. The amendment was moved by Mayor Pro Tempore Terry O’Day and seconded by Councilman Tony Vazquez.
Other recommendations passed included funds allocation to a consolidated public safety communications center, expenditure control budgeting and to the capital improvement budget.