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New Budget Strategy to Result in Better Government at Lower Cost, Officials Say

Bob Kronovetrealty
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By Jorge Casuso

April 24, 2019 -- Santa Monica's municipal workforce will shrink by nearly 30 full-time employees and voters could be asked to approve new taxes in an effort to rein in a rising pension debt, City officials said Wednesday.

That is part of a strategy for the proposed 2019-21 Biennial Budget that will help pay down the City's estimated $448 million in unfunded pension liability, top City officials said at a morning media briefing.

Officials, however, did not reveal the bottom line that will be presented to the City Council May 23, which they said finance officials are still reviewing and tweaking.

The biennial budget is part of a six-year plan that lays the groundwork for "a 21st Century government that works better than it does today but costs less," said City Manager Rick Cole.

He called the proposed budget "more ambitious" than any presented "in some time."

The proposed biennial budget calls for using general fund money to pay $16.6 million, instead $2.6 million, towards the pension debt ("City Should Immediately Boost Annual Pension Payments, Report from Top Finance Official Recommends," April 23, 2019).

It is part of a plan to pay down the City’s current unfunded pension liability over 13 years, said Finance Director Gigi Decavalles-Hughes.

The plan is expected to reduce the projected budget shortfall from between $34 million and $47 million over the next decade to $14 million and save the City $106 million over the next 30 years, Decavalles-Hughes said.

"To be successful, it is necessary to find efficiencies, restructure or phase out low impact activities, and think boldly about long term changes that will help us plan ahead for the tougher times we know are coming," Decavalles-Hughes wrote in a report to the City Council.

Paying down the debt using general fund dollars -- more than two-thirds of which pay for City services -- will require making cuts.

The proposed budget calls for eliminating 28.8 full-time positions that have not yet been filled and cutting back programs and services, said Assistant City Manager Katie Lichtig.

This could include reducing the time the swim center is open, cutting down on the City's printed newsletter and eliminating KCRW's airing of Council meetings.

It also will require increasing the general fund's income streams, which have been slowing as online shopping cuts down on sales tax revenues and alternatives to driving, such as Uber and Lyft, reduce parking revenues.

The City could boost its parking fees and seek to "fully capture the cost of doing business" by building the cost of credit card transactions into the fees or recovering the full cost of such events as the LA Marathon.

It also could consider placing new taxes, which require voter approval in California, on the 2020 ballot, officials said.

As examples, they cited the rideshare service tax San Francisco is pursing, the increase to New York's "mansion tax" and the vacant property tax approved by Oakland voters.

If the City's plan is successful, officials said, the quality of life in Santa Monica would be enhanced, not diminished.

The City, Cole said, will have "a smaller workforce doing fewer things at an excellent level," rather than "doing a lot of lower-quality things.

“We’re not just going to trim government," he said, "we’re going to invest in keeping it current.”

The Council will take up the proposed budget strategy at its meeting Tuesday.

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