Santa Monica City Hall (File photo)

City Hall will cut about 29 jobs and save $17 million in spending by mid-2021 to prepare for its coming financial shortfalls as it pays down its $448 million unfunded pension liability over the next 13 years.

Even with an accelerated payment plan for the pension liability that will save $106 million in interest and fewer employees and services, the City of Santa Monica’s General Fund will still be at least $15 million in the red in eight years. The fund, which comprises 60 percent of the City budget and collects revenue primarily from property, sales and hotel taxes, business licenses and parking fees, currently has a $7.1 million surplus.

While General Fund revenues are slowing or declining as more people shop online and fewer use parking lots, pension costs are the main driver of the City’s projected shortfall. The state pension system that covers City employees fell into crisis after the Great Recession, and a decade before that, it retroactively increased retirement benefits. Cities around California now have to make up the lost pension funds and higher costs.

Santa Monica is required to pay down its unfunded liability over the next 30 years, but the plan City staff will present to City Council Tuesday recommends making those payments in less than half that time to save more than $100 million in interest.

“We’re not going to be okay unless we act now,” said City Manager Rick Cole.

The City will be making budget cuts over the next decade to offset the pension liability, starting with the 2019-2021 budget that Council will adopt in June. The savings will come from leaving 21 vacant full-time positions unfilled and eliminating about eight as-needed jobs, as well as streamlining City programs, pending Council approval. The City currently has about 2,300 full-time employees.

During the 2019-2020 fiscal year, the City will eliminate 26.8 full-time positions and save $13.3 million by cutting services or bringing in new revenue. It operated on a $734 million budget during the 2018-2019 fiscal year and operated more than 660 programs and services.

“We’re going to do fewer things but do them at an excellent level rather than doing a lot of lower-quality things,” Cole said. “We’re not just going to trim government, we’re going to invest in keeping it current.”

The savings next fiscal year will come from forgoing a consumer price index adjustment, spending less on enforcing the City’s leaf blower ban and freeing up funds previously committed to operating the Mountain View Mobile Home Park, which is now privately owned.

The City will also start charging outside entities like the Los Angeles Marathon for the full cost of staff work, raise parking rates, reduce operating hours for recreational facilities such as the swim center and extracurricular activities like the Police Activities League, and stop broadcasting Council meetings on KCRW.

In 2020-2021, the City will continue cutting operating hours and scale down publication of its newspaper, Seascape, from 10 to six issues per year. It will also make additional cuts based on the recommendations of a community task force, which could include eliminating Breeze Bike Share, which is losing ridership due to competition from dockless scooters and bikes, bringing in a non-profit to run the Santa Monica Farmers Market and removing City Wi-Fi from certain areas.

Amid cuts to non-essential programs, the City plans to invest in the six budget priorities that Council decided on in January: affordability, neighborhood safety, homelessness, climate change, engaged and thriving community, and mobility and access. It plans to expand homeless outreach teams, allocate $2 million to a pilot program that provides low-income seniors with rent money to reach 200 to 400 households and modernize its website.

The City may put measures on the 2020 ballot that will bring in new revenue as its sales tax and parking revenues wane, Cole said. In the past year, New York has increased its mansion tax, San Francisco has pursued a rideshare tax and Oakland passed a tax on vacant properties. Santa Monica may pursue similar initiatives, raise business license and hotel taxes or give private entities sponsorship and naming rights to City events and facilities.

Council will study the budget plan Tuesday and the proposed budget will be published May 23. Council will discuss the proposed budget June 4 and 5 and the final budget will be adopted June 25.

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1 Comment

  1. As a longtime resident, I’d like to suggest two ways to raise funds:

    1. Institute $1000.00 fines for dog owners who refuse to dispose of their dog’s poop.

    2. Institute $1000.00 fines to landlords who permit landscapers to use any kind of leaf blower. It’s already illegal but it doesn’t seem to have stopped their use.

    3. Institute fines of a lesser amount for those drivers who sit in their running gas-powered vehicles while chatting away on their cell phones.

    4. Increase fines for drivers who refuse to stop for pedestrians. I’ve almost been hit multiple times. This needs to stop now.

    The first three items can easily be administered by our parking enforcement personnel with the last being left to police.

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