City Council discussed putting new types of taxes on the 2020 ballot and seeking corporate sponsorship to make up for flatlining revenues during a discussion of the City of Santa Monica’s finances Tuesday.
Council met Tuesday to review plans to shrink the City’s budget over the next several years as pension costs balloon and sales tax and parking revenue dwindle. City staff presented Council with a range of options to reduce costs, including eliminating about 29 currently vacant jobs, streamlining or cutting some services and putting new taxes on the 2020 ballot. The City has about 2,300 full-time employees who provide about 660 distinct services with a budget of more than $700 million per year.
After decades of financial health, Santa Monica is projected to sink into the red throughout the 2020s while it pays $448 million to the state’s pension system, which fell into crisis after the Great Recession and retroactively increased retirement benefits a decade before that. Cities around California now have to make up the lost pension funds and higher costs. Staff is recommending that Santa Monica pay off its pension liability in 13 years rather than the required 30 to save about $100 million in interest.
City Manager Rick Cole said Tuesday that the City will need to cut costs while investing in the six budget priorities that Council adopted in January following a public input process: affordability, neighborhood safety, homelessness, climate change, engaged and thriving community, and mobility and access.
“This an inflection point for the Santa Monica community and its government,” Cole said. “Our approach is not simply to live within our means. Our approach is actually to have a stronger government, one that better serves our community.”
Cole presented a budget plan for Council to consider that would save $13.3 million and eliminate 26.8 full-time positions during the 2019-2020 fiscal year. The plan also proposed additional funding for homeless outreach teams, rental subsidies for low-income seniors and a renovation of the City’s website.
The savings would 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 could 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 afterschool activities like the Police Activities League (PAL), CREST and programs at Virginia Avenue Park, and stop broadcasting Council meetings on KCRW.
Most councilmembers said that any measures to reduce the cost of afterschool programs should not reduce the number of children they serve or impact their quality.
“I’m probably alive because of PAL and Virginia Avenue Park,” said Councilmember Greg Morena. “It’s really important that none of it goes away.”
Cole also presented a plan to save about $4 million and cut 2 full-time positions in 2020-2021. The plan included more changes to operating hours for recreational facilities and afterschool activities and scaling down publication of its newsletter, Seascape, from 10 to six issues per year.
It also proposed 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 reducing free parking downtown from 90 to 60 minutes.
Councilmember Ted Winterer said he was skeptical about cutting Breeze because the City has invested significant funds in the program and it’s unclear how many of the electric scooter and bike companies currently operating in Santa Monica under the shared mobility pilot program will still be here in a few years.
In addition to short-term cost reductions, Cole discussed how the City could raise revenues in the long-term by putting measures on the 2020 ballot to bring in new revenue or allow private companies to sponsor some events and facilities.
“We don’t want to sell our soul for commercial interest, but we could put on a trash can at the beach “brought to you by so-and-so”,” Cole said.
Councilmember Sue Himmelrich said she wanted to introduce new taxes to replace the revenues eroded by online shopping and ridesharing, which are impacting the sales tax and parking fees the City collects. She proposed a tax on vacant homes and storefronts and the sale of luxury properties, as well as charging a license fee for Uber and Lyft similar to the license fee taxi companies pay to operate in Santa Monica.
“Landlords are willing to hold out for larger rents as long as they can,” Himmelrich said. “I think a vacancy tax would make a difference.”
madeleine@smdp.com
