The city of Santa Monica will merge several departments and lay off staff as it moves to reduce its budget amid a sharp decline in revenues.
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. Next fiscal year, projections show a nearly 40% drop in city revenues and a $154 million General Fund gap. Officials will release a proposed plan for organizational restructuring and budget cuts Friday that City Council will vote on Tuesday.
On Wednesday, Interim City Manager Lane Dilg shared some details of the plan in a videoconference with city staff.
Dilg said the city will eliminate the Housing and Economic Development Department (HED) and the Community and Cultural Services Department (CCS), merging the the Housing Division under HED and CCS into a new Community Services Department.
The Economic Development Division under HED and the Planning and Community Development Department and twill be combined into a new Community Development Division.
Dilg said departments heads will work without assistant department heads, including the city manager. She said the city manager’s office will be streamlined and focused on supporting departments in their work. She and newly appointed City Attorney George Cardona will take 20% pay cuts.
“This reorganization will force us to reduce the size of city staff,” she said. “I wish I could be saying something different to you, but that is inevitable. We know that it will be painful.”
Chief People Officer Lori Gentles said the job classifications up for elimination will be included in the plan that will be released Friday. Layoffs will be determined by how long an employee has worked in their job classification, she said.
Gentles said staff will receive 30-day layoff notices May 6 and 7, and will have the right to demote themselves into a lower classification on their promotional ladder in order to keep their jobs. Workers in lower classifications who have been “bumped” can themselves bump into a lower classification if one exists, Gentles said.
Some city employees have criticized the bumping process, which allows a new hire in a more senior position to bump down and displace an employee who has worked for the city for a longer period of time.
Additionally, employees who wish to voluntarily separate from the city and receive a $10,000 or $15,000 payout and 18 months of health insurance may continue to do so until Friday. Employees who opt for the Voluntary Early Separation Incentive Program (VESIP), which the city created earlier this month, will work through May 23.
“We recognize how hard this process is, and we are doing everything we can to ensure we move through this process consistent with our city’s values,” Dilg said. “We want to acknowledge to all of you how difficult the situation we’re in is and how much you are feeling that.”
Dilg said the city’s operations will be refocused on providing foundational services for a clean and safe Santa Monica, ensuring effective emergency response and facilitating economic recovery. She said city leadership has heard feedback from staff and the community about restructuring and have been adjusting their plans.
“Essential services that define life here will remain – high-quality drinking water, stunning parks and public spaces, and responsive police and fire departments,” Dilg said in a statement earlier this week. “But we will not be able to do everything we have done in the past, and we will lose many city services that we love.”
Dilg, who formerly served as city attorney, assumed the position of interim city manager earlier this month after Rick Cole resigned from the post, citing the challenges of attempting to balance the city’s budget amid the 40% reduction in city revenues caused by the economic shutdown.