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Record Santa Monica City Budget Proposed as Future Deficits Loom

 
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By Jonathan Friedman
Associate Editor

May 19, 2017 -- Efficiency, effectiveness and discipline will be critical if Santa Monica’s government operation is to thrive through upcoming difficult financial times, City Manager Rick Cole wrote in a message this week introducing a record biennial budget of nearly $1.6 billion.

The proposed budget is $773.7 million ($504.9 million for the General Fund) in 2017-18 and $802.1 million ($530.5 million for the General Fund) in 2018-19.

The budget represents a major increase from the $564.4 million ($347.6 million for the General Fund) approved for FY 2015-16 and the $614.1 million ($409.1 million for the General Fund) approved for the current fiscal year.

There is limited need for deficit coverage during the next two years, Cole said. Some shifting around of monies can be done to cover the housing and Pier funds.

But things get shaky after that when City officials anticipate a $3.8 million structural deficit in the 2019-20 fiscal year and an alarming $19 million two years after that.

Cole wrote that the “sobering threats” can be avoided if the City has a “rigorous focus on efficiency and effectiveness” of programs and spending and if there is an accepting of “the reality that we will need to be exceptionally disciplined in setting priorities.”

“We must be purposeful, watchful, and strategic about how we spend,” Cole continued. “We can no longer start with our existing services and programs and then add staffing and funding to meet new demands and desires.

"We have to prioritize how we spend money and focus on the return on taxpayer investment.”

Cole points to a series of “challenges,” with nearly all focusing on employee compensation, including retirement payments ("Santa Monica City’s Pension Debt Ranked Among Highest in California," February 22, 2017 and "Santa Monica City Pay and Benefits Climb at Double the Inflation Rate, New Data Shows," May 2, 2017).

“Given these multiplying pressures on a budget where nearly 70 percents of our costs go toward wages and benefits, the City Council Audit Subcommittee is undertaking a comprehensive review of our compensation levels and practices to ensure fiscal sustainability while continuing to attract and retain a high quality workforce in a competitive labor market,” Cole wrote.

The number of new positions has been kept “to a minimum,” according to Cole, who wrote that the City plan is “repurposing existing or vacant positions to areas needing additional attention or reallocating non-salary funds to absorb new positions.”

Among new items proposed to be added to the General Fund’s spending list are on-site ambassadors at Tongva and Palisades Parks to ensure they remain “safe and welcoming,” two new attorney jobs and a fire cadet program with the aim to increase diversity in the department.

The council will review the proposed budget at its meeting on Tuesday and possibly Wednesday. A vote on the budget will take place next month.


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