CITY HALL — Around budget time last year, “flat is the new up” became City Manager Rod Gould’s mantra.
This year, it’s pretty much the same, but with a few twists.
The preliminary budgets for fiscal years 2012 and 2013, which staff will present over the course of three meetings to the City Council starting tonight at 5:30 p.m., include no reductions in services and only modest increases in revenue.
In fact, Santa Monica’s City Hall plans on requesting a new department, the Office of Emergency Preparedness, in response to the recent disasters that have occurred in Japan and the Midwest.
The city manager is asking the council to approve spending packages of $647.1 million in 2011-12, and $624.2 million in 2012-13.
“What distinguishes this budget from budgets being considered around the state and nation is that this budget does not reduce services further, does not cut city staffing, does not furlough employees, does not borrow money to pay for operations, does not run down reserves, does not cheat the infrastructure and does not withdraw from meeting community needs that are not seen as central to the mission,” Gould said.
Instead, the proposed budget holds many expenditures roughly steady from last year when a series of cost-cutting measures were taken to trim down projected deficits by $25 million.
Employees were asked for the first time to pay a portion of their health care costs, fee schedules for the use of public property were raised for the first time in nearly a decade and spending was trimmed in every department.
Those savings have been realized and will continue, Gould said.
Additionally, employee negotiating groups will find themselves back at the bargaining table to discuss how to rein in costs, likely focusing on health care and pensions.
On the spending side, the budget takes into account traditionally under-funded areas like police overtime and puts more money behind them to give an accurate picture at the get-go.
It also shows $700,000 for credit card transaction fees alone, as more city services begin to provide the option for people to pay with a card.
The budget also includes $19 million in one-time payments that city officials expect will save money in the future.
The bulk of those payments is a $10 million check to CalPERS (California Public Employee Retirement System) to pay down liability on employee pensions and retirement benefits. Spending $10 million upfront is expected to save $800,000 every year for two decades, or roughly $16 million.
That $10 million comes from the general fund as well as other funds that have managed to save money on employee liabilities by prepaying for them in July of each year, which earns a discount from CalPERS, said Finance Director Carol Swindell.
“We saved that money and banked it every year and set it aside so we could do something like this,” Swindell said.
On its face, the budget does not look balanced.
It proposes to spend $647.1 million in 2011-12, and $624.2 million in 2012-13, but take in only $532.9 million and $535.5 million respectively.
That deficit is illusory, caused by planning to spend a lot of upfront money on redevelopment projects to get them underway before the state government raids those funds, Gould said.
“One of the best things we can do to construct and use the facilities we’ve been talking about for years in Santa Monica is to get them under contract,” Gould said.
To that end, on Tuesday night, staff will ask the council for permission to issue nearly $36 million in bonds to combine with money already borrowed for a total of $150 million to get projects either under contract or push them into the design and build stage.
Those projects include the Colorado Esplanade, Palisades Garden Walk and Civic Auditorium renovations, among others.
This budget process represents a number of “firsts” for Santa Monica, including a multi-year budget spanning two fiscal years, slimming the budget to half its normal length and building in a technique called expenditure control budgeting.
Expenditure control budgeting discourages large-scale end of the year spending seen when departments use their entire allocation in an attempt to prove that they need every dollar given in the budget process.
Instead, departments will get to keep one-third of the money that they save, while the rest will go to bolster the general fund, Gould said.
“I’ve seen it work in other agencies very dramatically,” Gould said. “It benefits the general fund because there are more savings, and you get a better budget all around.”
The new system will free up a lot of staff time in the second year to work on other projects, Swindell said.
Tonight, Gould and Swindell will present the big picture of the economic realities facing Santa Monica, the state and the nation, as well as an overview of the budget.
Wednesday, the large departments including police and the Big Blue Bus will go over their budget requests and explain their goals for the next two years.
Thursday, staff will close out with a presentation on nonprofit organizations selected to receive city grants.