By Jason Islas
Staff Writer

May 22, 2013 -- Santa Monica will spend some $150 million for public safety and for employee pensions -- nearly half of the General Fund expenses -- under a proposed budget unveiled Monday for the upcoming fiscal year, which starts July 1.

According to this year's proposed budget, which the City Council will take up next Tuesday, City services will be paid from a general fund that accounts for some $306 million of the $520.9 million budget proposed by staff for Fiscal Year 2013-14.

Of that amount, $108 will pay for the Santa Monica’s Police and Fire departments, and $44 million for the City’s escalating employee pension costs.

In order to keep City services functioning, Santa Monica will spend some $220 million to pay the wages and retirement benefits of the more than 1,700 employees who provide the services for its roughly 90,000 residents.

“We are a service industry,” said Mayor Pam O'Connor. “People have to make sure that our streets are clean and safe.

“Even in the best of times, it's challenging,” she said. “But we have to make sure that the service level is what the people of Santa Monica expect and want.”

The 442-member police force -- which includes administrative employees as well as officers -- will account for $75.6 million -- nearly a quarter -- of General Fund expenses in 2013-2014, while the 129 full time employees in Santa Monica's fire department will cost more than $32 million.

Those numbers have been steadily increasing over the past several years. In 2010-2011, the City spent a little under $67 million for its police force and some $28 million for its firefighters.

The following year -- 2011-2012 -- those numbers jumped, about $4.5 million for police and almost $1 million for firefighters.

By the end of the current fiscal year, City officials estimate that police will account for about $73.6 million of General Fund spending, and by the middle of 2015, that number could increase to more than $77 million.

The City is being “much more surgical” when it comes to balancing the budget, said Finance Director Gigi Decavalles-Hughes.

In the 2007-2008 financial year, the SMPD spent $15 million in overtime. That number was halved in 2008-2009 and was further reduced to $6.8 million in 2011-2012. Officials estimate that SMPD will spend about $6.26 million on overtime by the middle of 2014.

“One of the reasons why police has sometimes exceeded its overtime budget is position vacancies, so the budget savings that is used for overtime is often from salaries, as well as the health benefit savings from the open positions,” said Decavalles-Hughes.  

“As with any organization, position vacancies need to be filled somehow,” she added. “In an organization like the Police Department, the need is fulfilled using existing officers who work overtime.”

After the cost of policing, employee pensions are the General Fund’s largest expense, totaling nearly $44 million, far more than the fire department’s budget. Employees contribute roughly $14.5 million, with an additional $12,574,344 coming from other sources.

“Pension plans have taken center stage during the years after the market downturn of 2008,” officials said. CalPERS -- the State's public employee retirement fund – saw its investment portfolio returns fall to a level that “left many overly generous plans underfunded.”

Santa Monica could see its share of its employees' pension costs rise by $22 million over the next five years.

“It's a discouraging trend and one that needs close study by the Conucil and the community or it will eat the whole budget,” said former Council member Bobby Shriver.

Council member Kevin McKeown believes that other forces are putting pressure on the City's budget.

“All California cities are wrestling with pension and health care costs,” McKeown said. “Santa Monica, though, is additionally challenged by providing resident-subsidized services to non-residents.

“Our resident population pays for some of the public safety and other needs of daytime employees, customers, and visitors,” he said. “We will always continue to welcome visitors, but may need to ask them to more proportionally fund the burden they put on local services."

Under the proposed budget about 30 percent of General Fund revenue comes from transient occupancy taxes on hotel beds and sales taxes.

Other then the Police Department, the City's Public Works department will be the most costly to operate, with a proposed budget of $38.4 million in 2013-2014. The total mushroomed by $11 million after the City's $11 million Urban Landscaping Program was transferred from Community and Cultural services.

Community and Cultural Services will see its budget revised down by $11 million to $24.2 million.

The proposed budget also allocates $12 million to Santa Monica’s libraries and $7.6 million for its Information Systems department, which handles City wireless Internet and other network services.

The City Attorney's Office and the City Manager's Office are both slated to receive more than $9 million each. The budget allocates just under $1 million for the City Council and all related expenses. Council members receive health benefits but no salaries.