Facing a projected $226 million budget gap as coronavirus slashes municipal revenues, Santa Monica City Council on Tuesday authorized payouts for city staff who volunteer to leave their jobs and discussed a future plan to cut city services.
The city relies on tax revenue from sectors such as retail and tourism that have been devastated by stay at home orders. By June 30, the end of the fiscal year, the city will have a $72 million General Fund shortfall, said Gigi Decavalles-Hughes, the city’s finance director. Next fiscal year, projections show a nearly 40% drop in city revenues and a $154 million General Fund gap.
City Council voted Tuesday to offer lump sums of $10,000 or $15,000 to staff who voluntarily leave their jobs, depending on their date of hire, and 18 months of medical benefits. Staff who take the payouts will resign by May 9.
“COVID-19 and the economic repercussions have had devastating impacts across our country,” Mayor Kevin McKeown said in a statement. “Our thoughts are with all those stricken, and their families, while we soberly assess our city’s finances. Santa Monica, like communities across America, faces the daunting task of rebuilding our economy, adapting how we live and restructuring how our government operates.”
The city has moved to delay, reduce or cancel $40.4 million in capital projects and accessed $65.2 million in emergency funds.
McKeown said at the Tuesday Zoom meeting that City Manager Rick Cole and City Attorney Lane Dilg have also volunteered a 20% reduction in pay effective May 1. As of 2018, Cole was paid about $343,000 and Dilg was paid about $297,000, not including benefits.
As of Wednesday morning, more than 2,000 people have signed a petition that claims Cole asked City Council to approve cuts to youth services and sustainability programs, the council did not vote on specific cuts Tuesday and instead authorized city staff to develop a plan to restructure city services that will be presented May 5.
The petition calls for Cole and Chief Operating Officer Katie Lichtig to be fired, alleging they gave city staff three days to propose cuts to their departments and are pushing to eliminate the Office of Sustainability and the Environment, close the Santa Monica Swim Center and eliminate or reduce CREST, Virginia Avenue Park and Police Activities League youth programs.
Hundreds of residents wrote letters to City Council urging them to preserve sustainability and youth programs.
“CREST has been, at different times, a necessary life saver for us as working parents, a social connection for our children and the key to their physical activity and health,” wrote Catherine Mahmoudi. “It would be impossible to replace, and the kids who would suffer most from its loss are the ones that don’t have other options. Please fight for it.”
Cole did not address the petition directly, but said the cuts residents are discussing are “rumors and suppositions.” The city has not yet proposed a plan to cut services, he said.
“The rumors and anxiety … are not without foundation,” Cole said at the meeting. “We will have to make choices that are unprecedented in their negative impact on everything we believe in in order to get through this and rebuild effectively on the other side.”
Cole said local governments have only been promised reimbursement for services they have provided in direct response to the COVID-19 pandemic. It is uncertain whether state and federal governments will provide aid to supplement lost revenues.
“There will be extraordinarily harsh choices that I won’t like, (the council) won’t like, the community won’t like (and) the workforce won’t like, absent dramatic state or federal bailout funds,” he said. “We hope for those, I pray for those, but we cannot count on those.”
The city will focus its limited resources on foundational programs, emergency response and economic recovery from the impacts of the pandemic, council members said.
At the Tuesday meeting, they drafted a list of goals for the plan to restructure city operations, which include making reductions across the entire city workforce, including executives, managers and supervisors, and preserving community resources with the understanding that some programs cannot continue or must be altered to balance the budget.
As the economy improves, services that were put on hold can be reinstated, council members said.
“Ideally, we’d have time for a thoughtful, collaborative process – but as we’ve seen, events are moving with breathtaking speed,” Cole said in a statement. “The longer we wait to make hard decisions, the greater the long-term threat posed to essential services and the staff who provide them.”