At the mid-point of the city’s two year budget cycle, the cost to operate the city has increased by just over 1% and while staff are cautiously optimistic about the future, resources remain tight for both ongoing expenses and special projects.
The Council will discuss the proposed budget for fiscal year 2024-25 on Tuesday night. According to the staff report, the budget for the year totals $763.5 million, with $462.5 million allocated to the General Fund. This reflects a 1.3% increase over the previous year in what staff said was a careful balance between necessary expenditures and fiscal prudence.
The budget assumes the long-term economic outlook is positive but acknowledges limited resources in the short term. The city is still grappling with slow revenue recovery, a challenging labor market, deferred maintenance needs, and potential legal liabilities. Staff said the issues underscore the need for careful financial management to ensure continued progress.
The operating budget has a slight increase of $4.8 million and the General Fund increase of approximately $1 million, or 0.2%, is driven by equity adjustments required by bargaining agreements, staffing funded by consumer protection and enterprise funds, and new revenues from recreational programs. Other funds see an increase of $3.8 million, or 1.3%, supporting staffing for the City’s water and wastewater infrastructure and enhanced event programming at the Annenberg Community Beach House.
City efforts to maintain and enhance critical infrastructure are also constrained by a lack of funding.
"Planning efforts for large projects, such as the Airport Conversion project, require project funding as well as future ongoing funding to cover the operating costs once these projects have been completed," says the staff report. "Capital improvements at the Beach and Pier that cannot be supported by the Beach and Pier Fund revenues, compete for limited General Fund allocations. In addition, staff anticipates needing infrastructure upgrades in preparation for the 2028 Olympics to accommodate the anticipated increased number of visitors."
The city's reserves remain lower than pre-pandemic levels and the city is working to restore savings spent to make up for pandemic related shortfalls.
Future of Trapeze school is up in the air
Also on the agenda for Tuesday is the future of the trapeze school on the Santa Monica Pier. The 10,000 square foot site at 370 Santa Monica Pier, located between Pacific Park and Playland Arcade, is currently operated by Trapeze School New York, which has been functioning on a month-to-month basis since its license expired in April 2017.
Staff are recommending Santa Monica Amusements (SMA), which operates Pacific Park for EPR Parks, LLC.
SMA plans to develop a multi-attraction space with rope courses, a climbing tower, an outdoor Pier history exhibit, and a refreshment/souvenir stand. The City is set to award SMA a three-year license with a minimum annual fee of $300,000 plus percentage rent participation.
Real Estate Negotiations
Several property sales or leases are on the agenda. City staff are in negotiation with two companies regarding the operation of the Civic Auditorium. The City previously asked for options for a private partner to help revitalize the property and the closed session includes two potential partners. Revitalization Partner Group LLC and Sugar Monkey Live are listed as interested companies.
Former Councilman Greg Morena is threatening legal action against the city over the lease terms of Rusty’s Surf Ranch. Morena, who owns the Albright, has a contract to operate Rusty’s and has a dispute with the city over lease terms for the property.
Paying councilmembers
The list of discussion items includes a request from Councilmembers de la Torre and Vice Mayor Negrete that the city undertake a study of various cities to determine appropriate compensation for councilmembers. They say the study is needed to make the Council positions accessible to residents with lower incomes.
Other discussion items include reducing the fees for outdoor dining on the Promenade and protecting trees on public streets.
matt@smdp.com
