Santa Monica City Council convened on Saturday morning for a special budget workshop, in an attempt to address the city's ongoing financial struggles.
Council also created an Economic Development Ad Hoc Subcommittee, comprising Mayor Lana Negrete and Councilmembers Jesse Zwick and Barry Snell. This move underscores the Council’s strategic efforts to combat the city’s structural deficit and explore solutions to stabilize municipal finances.
Held in the Multi-Purpose Room at the Main Library rather than the chambers at City Hall, the meeting also set the framework for the upcoming Fiscal Year 2025-27 Biennial Operating Budget, covering city finances from July 1, 2025, through June 30, 2027. Deputy City Manager Christopher Smith emphasized the gravity of the situation, noting that Santa Monica continues to face economic vulnerabilities and challenges in its path to recovery from the disruptions of the past few years.
“Today's workshop is an important opportunity for council and staff to align on councils priorities and policy directives for the next two years as we go to build the next biennial budget,” Smith said.
Despite recent tax measures, the city’s financial health remains precarious, necessitating the use of $33.2 million from General Fund reserves over the next five years to maintain balance. Compounding this strain are substantial legal liabilities, particularly from the Eric Uller settlement, which has already cost the city $230 million, with additional claims still unresolved. The ongoing California Voting Rights Act lawsuit also continues to drain resources, with legal costs projected at $6 million over the current and next fiscal year.
To address these challenges, the Council directed staff to craft a budget that prioritizes fiscal restraint and revenue generation. Specific measures under consideration include eliminating the longstanding 90-minute free parking policy in Downtown structures, expected to generate $8 million annually, and utilizing code enforcement to pressure property owners into activating vacant commercial spaces. Other proposals involve charging market rates for city facility events, increasing fees for film permits, and expanding digital advertising initiatives Downtown.
During discussions, some Councilmembers advocated for more drastic steps. Councilmember Dan Hall voiced concerns that Santa Monica is "careening towards bankruptcy," urging bolder action. “We've attempted to tweak around the edges in the past, and while that's kept us afloat, I feel like it's really just delayed the pain until today,” he said.
One idea floated was the potential sale of city properties, including the Fairview Branch Library, to shore up funds for critical city services. While selling municipal assets is generally a last resort, Hall and Zwick noted that such measures may be necessary given the dire financial landscape.
Assistant City Manager Susan Cline highlighted the urgency of the situation, describing the budget workshop as a crucial moment in the city’s financial planning. “[The City] is using all available funds to keep the lights on and the work moving forward … We've had to use funds from every source possible over the last five years,” Cline said.
She pointed out that the city has been exhausting available funds just to sustain operations, leading to a backlog of deferred maintenance, reliance on outdated equipment and significant workforce reductions compared to pre-pandemic levels. At the same time, public service demands have surged, with resident requests increasing from 10,000 annually before 2020 to 50,000 today, largely due to the rise of 311 service calls.
Beyond immediate budget concerns, the Council also refined the city’s strategic priorities. Moving forward, Santa Monica will focus on three key areas:
• Economic opportunity and growth
• Clean streets and safe neighborhoods
• Affordable, livable, and secure housing for all
Notably, previous priorities such as justice, equity, diversity, sustainability, and connectivity were removed from the formal list. However, a city press release reassured that these values remain integral to all municipal policies and programs.
Mayor Negrete also called for a return to in-office work for city staff, arguing that in-person collaboration is essential for organizational culture and efficiency. Additionally, she noted that bringing employees back to Downtown offices could help revitalize struggling local businesses by increasing foot traffic during daytime hours.
Another contentious issue was the city’s ongoing legal expenditures, particularly the protracted voting rights lawsuit. With legal costs mounting, some Councilmembers expressed frustration over the financial toll, suggesting that funds could be better utilized to support public services and infrastructure improvements.
Ultimately, the Council agreed on a biennial budget approach centered on fiscal discipline, economic growth, and leveraging voter-approved Measure K revenues for public safety and street improvements. They also emphasized a commitment to long-term financial stability, even as difficult trade-offs and tough decisions lie ahead.
