City leaders to outline strategies for addressing budget shortfalls, boosting economic growth, and managing long-term financial stability
The Santa Monica City Council will meet on Saturday, March 8, to establish priorities for the city’s 2025-2027 Operating Budget, with a renewed focus on economic development as officials seek to address a growing structural deficit.
City officials say Santa Monica continues to face financial strain despite efforts to stabilize its economy following the COVID-19 pandemic. While the return of tourism and business investment has provided some relief, rising costs, declining revenues in key sectors, and legal liabilities have contributed to ongoing budget challenges. The city’s General Fund, which supports essential services, is projected to run a deficit until at least the 2028-29 fiscal year, requiring the use of reserves to balance the budget in the near term.
The council’s discussion will include strategies to address revenue shortfalls and spending constraints. Finance Director Gigi Decavalles-Hughes has recommended limiting discretionary spending growth and using approximately $60 million in reserves while the city pursues long-term economic revitalization efforts. City officials say measures such as zoning updates, streamlined permitting, and targeted marketing campaigns will be critical in boosting business activity and revenue.
The economic challenges have been compounded by inflation, increased labor costs, and a shifting business landscape. Sales tax, hotel tax, and parking revenue—major sources of city funding—have been lower than anticipated due to changes in travel patterns and consumer behavior. Additionally, legal settlements related to past city employee misconduct and voting district lawsuits have cost Santa Monica more than $230 million in recent years.
To address these issues, the city has formed an economic development task force and is proposing the creation of a council subcommittee focused on growth initiatives. Officials say the next two years will be critical in shaping Santa Monica’s financial future as the city aims to stabilize its budget and attract new investment.
