By Jorge Casuso

July 12, 2023 -- With projected revenues expected to slowly continue growing, the Santa Monica City Council last month approved a biennial budget that totals nearly $1.5 billion and restores cut services.

The 2023-24 Fiscal Year budget that went into effect on July 1 -- which includes operating and capital budgets -- totals approximately $745 million and is set to increase to $750.6 million in 2024-25.

The operating budget for the current fiscal year is $641 million and will rise to $664 million in the next fiscal cycle. Meanwhile the capital budget will fall from $104.1 million to $85.9 million.

The budget approved on June 27 reflects "the most substantial restoration of services" since the 2020 coronavirus shutdown and provides a plan to "rebuild, restore and reenergize our community," City officials said.

The budget significantly boosts the total number of full-time employees and as needed employees from 1,889.8 in FY 2020-21 to to 2,100 this year.

Public Safety, Public Works and pension costs account for $311.6 million, or nearly half, of the City's operating budget.

The Police Department's $113,191,099 fiscal year budget is by far the City's largest, followed by the Fire Department's $74.1 million budget and the $51,358,640 budget for Public Works.

The total net pension cost in the current fiscal year is $74.1 million and is expected to rise by $5.4 million next year.

Revenues -- mostly generated by taxes -- are expected to increase by $13.4 million, or 3.2 percent, this fiscal year to $438.7 million, and by approximately the same amount next fiscal year.

"(A)n uncertain economic outlook due to high inflation, continuing supply chain disruptions, and the impact of the continuing war in Ukraine is reflected in a softening of tax revenue projections over the next two years," City staff warned the Council.

"Additionally, as is always the case, other unknown variables such as the depth of the expected economic downturn and unforeseen state legislative changes could affect the ultimate amount of taxes received."

Taxes accounted for 73 percent of the City's total revenues, with 19 percent of revenues generated by property taxes, 18 percent by sales taxes and 16 percent by transient occupancy, or "bed taxes."

Other taxes accounted for 27 percent of revenues, while the balance was generated mostly by services, fees and fines.

Finance officials calculate that revenues from services are expected to increase by $6.5 million during the current fiscal year to $53.6 million.

The increase is "primarily due to the advertising revenue from the City’s new Digital Wayfinding Kiosk program and the consolidation of the Community Broadband Fund into the General Fund," City staff said.

"These increases are partially offset by a decrease in zoning revenue due to process streamlining, which reduces the number of projects requiring zoning review and by a further reduction to mutual aid deployment revenues."

Meanwhile, fines and forfeitures -- which are comprised mainly of parking citations, as well as administrative fines and penalties --
are projected to remain relatively flat at about $13.3 million during the current and upcoming fiscal years.

"Parking citation revenues are projected at $12.9 million for both years and represent a gradual return to near pre-pandemic levels," staff wrote.

The proposed budget adds six police officers and one police sergeant to expand the Homeless Liaison Program team and enhances patrol and security services at the Pier, Beach and Downtown.

It also implements a transit safety officer program for Big Blue Bus (BBB) and expands efforts to address homelessness, including adding a multidisciplinary outreach team east of Downtown.

In addition, the budget expands Public Works teams, creates a Housing and Human Services Department to coordinate homeless efforts, as well as a Recreation and Arts Department, establishes a Citywide ADA Coordinator and restores the City Traffic Engineer position.

The budget also further restores funding for after-school programs, extends hours at the Main Library, supports monthly meetings for the Landmarks Commission and creates a new small businesses assistance program.

“As we continue to recover from the pandemic, the approval of the Biennial Budget adds to the City’s momentum and focuses our next two years,” Mayor Gleam Davis said in a statement after the budget was passed.

“I’m looking forward to the expansion of our beloved programs and ask for the community’s support as enhancements become implemented to address what’s most important to our residents.”