CITY HALL — The economic downturn could force higher parking citations and overdue library book fines in Santa Monica.
Those are just some of the measures that city officials have incorporated into a roughly half billion dollar budget for the 2009-10 fiscal year, hoping to weather the storm through raising the fees for certain programs and violations that could altogether result in an additional $4.2 million available for spending.
The $510 million budget, which was presented to the City Council on Tuesday, comes with a series of cost savings and money raising recommendations to help City Hall battle through a $14.1 million hole caused by drops in tax revenues, cuts from state funding, and expected increases in contributions to employee pensions and health insurance.
While the budget isn’t pretty for City Hall, it’s a much more attractive financial situation than the predicament facing other municipalities. City Hall has been able to avoid layoffs and furloughing employees, as well as drastic cuts to services. The impact on residents should be minimal, city officials said.
“I have to say compared to other communities, Santa Monica has again been able to weather the storm,” City Manager Lamont Ewell said.
The proposals include raising parking citations for various infractions, including the fine for exceeding the meter time limit from $40 to $47, and the fine for street sweeping and preferential parking from $52 to $61.
“This is one key area where people’s behavior dictates whether they pay the fine or not,” Ewell said, emphasizing City Hall’s plan to protect the least vulnerable.
The projected $4.2 million will also come from raising the fine for overdue books by an undetermined amount, increasing fees to use the Santa Monica Swim Center, adjusting fees for youth sports and the afterschool CREST program, and increasing enforcement in the neighborhoods. The library book fines have not been increased since 1994.
Ewell said that increases in parking enforcement is predicated on existing patterns and not revenue, though doing so is expected to bring in an extra $1 million. City Hall has received a flood of complaints from residents about visitors who ignore preferential parking signs and take up spaces in neighborhoods.
“We decided in response to those complaints, we would put three additional TSO [traffic safety officers] out in the neighborhoods to help reduce this negative impact,” Ewell said.
City Hall also plans to use approximately $8.2 million it set aside in reserves last year in case a local ballot measure to modernize the Utility Users Tax did not pass, which it did. That money will be used over the next two fiscal years, providing breathing room for the community and City Hall to come up with a better game plan.
“This gives us time to determine what the real impact of the economy is,” Finance Director Carol Swindell said.
The budget also includes cost savings from instituting a hiring freeze on 18 vacant positions, asking all departments to provide a 5 percent contingency reduction scenario for 2008-09, and requesting that several unions forgo performance bonuses. While two unions have agreed to waive the bonuses for this year, City Hall is still waiting on a third — the Administrative Team Associates, which isn’t expected to make a decision until next month.
Hurting the general fund is the drop in sales taxes, hotel occupancy, business licenses and property values. City officials are expecting sales tax revenues to decrease by 8.9 percent for next year, a conservative figure based on the fact that the opening of Santa Monica Place has been postponed to the summer of 2010 and because auto sales are continuing to decline. One of the biggest dealerships in the area, Infiniti of Santa Monica, recently closed.
The transient occupancy tax, which concerns lodging, is projected to decrease by 3.6 percent. Over the past six months, the transient occupancy tax revenue has declined from a low of 10 percent to a high of 28 percent.
“It’s reflective of what the global market is experiencing,” Ewell said.
The business license tax is anticipated to drop by 2.5 percent, while the Utility User Tax, the lone bright spot, is projected to increase by 3.7 percent because of similar spikes in utility costs.
City Hall is also preparing for an increase in its contribution to CalPERS, which is the public employee retirement fund, by approximately 20 percent, translating to an additional $5.1 million expenditure from the general fund. The reason for the increase is because CalPERS lost nearly 30 percent of its portfolio in the stock market, Ewell said.
Some shifting in state funds from various propositions could also mean losses of more than $5 million for City Hall. The state has the option of shifting property tax revenue from Proposition 1A twice within a 10 year period so long as they reimburse the money with interest. If the state does exercise the option, City Hall could loose between $3-$5 million. Ewell is recommending that City Hall borrow from itself, using money from the MTBE contamination settlement as a source, though the money would have to be reimbursed within three years.
Ewell added that City Hall could see a decline of about $1.5 million from gas tax funds, $800,000 from Proposition 172, which is the half cent sales tax for public safety, and $900,000 from Proposition 42 transportation funds.
He believes that five of the budget propositions from the special election last week failed because California residents are tired of state officials presenting ballot measures that promises to fund various projects, only to have them shifted.
“I think people are fed up with the bait and switch approach that has taken place in this state,” Ewell said.
The proposed budget shows an 8.1 percent decrease from the revised budget in 2008-09. Ewell said that the reduction is not because of the recession, but rather the completion of several key projects, including the Annenberg Community Beach House and the sewer line at Second Street and Colorado Avenue, which finished on time.
While all departments were asked to reduce their budgets by 5 percent, Ewell said he is not recommending all of their suggestions. The cuts are also not spread evenly, with preference being given to public safety, which was a previously set council priority. The Fire Department will see an increase of nine personnel, mainly due to the reactivation of the dispatch center, and the Police Department is budgeted to receive three extra traffic safety officers and an additional crime analyst.
City officials did acknowledge that the result of the budget cuts will be a reduction in services, which might be noticed aesthetically, such as with maintenance.
Elaine Polachek, the deputy city manager, said the intent was to keep the cuts farthest from the most vulnerable residents.
“It was a very surgical approach,” she said.