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City Plan Eliminates Nearly 500 Jobs, Scraps Programs, Shutters Facilities

Bob Kronovetrealty
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Santa Monica

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By Jorge Casuso

May 1, 2020 -- Slammed with a projected deficit of $224 million by July 2022, the City Council on Tuesday is expected to eliminate nearly 500 positions, shutter facilities and drastically scale back programs and services.

The elimination of 337 full-time and 144 temporary positions will help Santa Monica absorb the impact of a coronavirus shutdown that resulted in a $48 million budget gap through June alone.

The proposed cuts the City Council will take up on Tuesday are only an initial step to prevent further cutbacks, but they will alter the daily lives of Santa Monica's 93,000 residents.

While parks, the beach and the Pier will reopen, the proposed plan scraps the concerts and cultural programs the City offers for the foreseeable future. (For the staff report click here)

There will be fewer libraries to visit, with only the first floor of the Main Library Downtown and the Pico and Montana branches left open. Stacks will be off limits and programs suspended.

Hours at the Municipal pool will be reduced, and the already struggling Big Blue Bus (BBB) system will lose drivers as service is further scaled back.

And much of the interactions with City Hall staff will remain online.

“The path ahead will be painful, and fraught with shared sacrifices to stop cuts in services and prevent further layoffs," Interim City Manager Lane Dilg warned on Friday, before the City released staff's proposal to Council.

The proposal makes only limited cuts to public safety and protects the City's "most vulnerable populations," City officials said.

Its affordable housing programs -- such as Section 8 -- and its cash subsidies to help low income seniors pay for their rent-controlled apartments will still be funded.

It could have been worse. The plan is predicated on far lower projected losses than the City anticipated just two weeks ago.

The budget deficit is now projected to be $48 million through June, instead of the $72 million initially projected, and $102 million, not $154 million, for the upcoming fiscal year that starts July 1.

Meanwhile the projected deficit for the following fiscal year is up, from $72 to $74 million, as even a partial recovery is expected to take time.

"In the weeks since that initial projection, we have been able to observe firsthand how the Stay at Home orders have changed local revenue streams, and we have benefited from modeling forecasts now available from experts on sales tax and the local tourism industry," City officials said.

A City the size of Santa Monica can't expect state and federal funding to help fill what the City Manager has called "gaping holes in the budget."

"The chance that relief funds will replace revenue is nil," Dilg said Friday.

The City must also squirrel away money in the event the coronavirus resurfaces during the fall or winter, necessitating another shutdown.

The proposed plan creates a $20 million "Shutdown Fund" that would fill the revenue gap for two months, Dilg said.

To help fill the projected budget gaps, the plan taps a total of $117 million in one-time funds.

It does this by "leveraging reserves, cutting capital projects, and recalling water settlement funds and Measure GSH funds," staff said, referring to a 2016 sales tax increase local voters advised using to fund affordable senior housing.

The City already has released 467 as-needed workers, and a voluntary separation program was accepted by about 100 City employees, far fewer than the several hundred the program was prepared to fund.

The City also has suspended 2020-2021 CalPERS payments and shifted to a 15-year repayment plan.

The cost-saving measures have come as Santa Monica's main revenue sources have taken a direct hit -- with sales tax revenues projected to decrease by 14 percent over the next fiscal year and bed taxes by 42 percent, officials predict.

"It will likely be months before international travel resumes in a meaningful way, and business travel may never return to pre-virus levels," staff warned, adding that "people’s shopping habits may also be altered for a significant amount of time."

Despite the proposed cuts, the City's fiscal health -- already strained by a growing pension debt and ambitious taxpayer-funded projects -- is not expected to fully recover anytime soon.

“Like most cities in the nation, Santa Monica is in uncharted territory," said Finance Director Gigi Decavalles-Hughes. "The impact of this pandemic on our economy is unlike any other natural or man-made disaster.

“This situation is unique because the deficit is immediate and deep as well as long-term, with only modest projected gains after 2022."

The measures outlined in the plan would be implemented during a "post-COVID future" in Santa Monica that looks bleak.

"Restrictions on travel, public gatherings, and events will continue for a substantial period of time," staff warned. "There will be continued major impacts to operations of schools and workplaces, even as they gradually reopen.

"Business operations will look very different due to density, distancing, and sanitization requirements.

"And individuals and families across our community will have new and changed needs, as high-risk populations seek to protect themselves from the virus and others struggle financially to meet their basic needs."

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