CITY HALL — As City Hall prepares to tackle an especially daunting budget cycle, parents with the local school district are hoping that officials don’t forget that there’s another organization facing its own set of challenges from the state.
The Santa Monica-Malibu Unified School District is looking at a budget for fiscal 2009-10 that is 16 percent less in revenue than the current year, translating to roughly $12 million in state funding cuts.
City Hall provides more than $7 million to the SMMUSD through its joint-use agreement in which the district receives money in exchange for community access to its facilities.
During a recent City Council discussion when staff presented a five-year financial forecast and best, worst and baseline case scenarios, a group of parents asked that officials consider education as its number one priority.
“We are proud of our accomplishments in what has for years been fiscally difficult circumstances and ask you to continue work with the education community to do whatever you can to hold on to the first-rate staff, teachers, administrators and programs,” said Debbie Mulvaney, one of the founding members of LEAD [Leadership Effectiveness Accountability Direction.]
But City Hall itself is in a less than desirable financial position, seeing a net loss of $2.7 million in expected revenue this fiscal year. Council voted to set aside $8.2 million in revenue from the Utility Users Tax to an economic uncertainty fund. Council also approved increasing the general fund expenditures by $1.5 million, most of which is for the transfer of the fire dispatch center back to Santa Monica.
“We’re starting to see further deterioration,” City Manager Lamont Ewell said. “Given the current trend, I want to advise you that we are going to be looking at some reduction in services, but for the most part we will do everything we can to avoid negative impacts to the public.”
City departments have been asked to reduce their respective budget by 3 percent in the current fiscal year to make up for the deficit while planning for a 5 percent decrease for 2009-10.
While City Hall has in the past been resilient to much of the financial troubles affecting other municipalities thanks to a diversified tax base, those sources are starting to take a hit.
Much of the major revenue sources — property, sales, utility user, transient occupancy and business license taxes — have fallen victim to the economy.
Auto sales, which account for more than 20 percent of the local sales tax revenue, has continued to decline in the past few quarters. Transient occupancy taxes, which is money from the local hotels, is also expected to decline in the next fiscal year.
The baseline scenario, which is considered the best estimate of the future, assumes a budget deficit of $8.3 million in next year, growing to $24.3 by 2013-14. The worst-case scenario, which assumes the recession will have one of the greatest impacts on City Hall in decades, projects a deficit of $16.4 million next year while the best-case outlook, which expects more revenues along with lower labor costs, projects a $17.4 million deficit in 2013-14, the final year of the forecast.
“I served in this community for the past 26 years … and we’ve been through this before but I’ve never been through something as deep and bad,” Councilmember Bob Holbrook said.
School advocates urged that the council continue funding education.
Richard McKinnon, a district parent, told council he had just recently attended a meeting at Santa Monica High School where administrators said that class sizes could increase and at least one house could get shut down. Samohi operates under a house system in which all students are assigned to a “house” that has its own principal and counselor.
“Schools are a very powerful symbol of what a community is and in Santa Monica, we have built an extraordinarily powerful symbol,” he said.