CITY HALL — The best-case scenario, according to city officials, is that City Hall pulls out of a deficit in fiscal year 2017-18, with revenues exceeding expenditures by about $200,000.
The worst-case scenario is that we're $7.1 million in the hole.
City Council approves a budget (roughly half a billion dollars annually) every two fiscal years. They approved one last year but, as this fiscal year comes to a close, they get a chance to make some adjustments and check the math.
City financial officials are projecting a deficit, likely around $2.3 million by 2017-18, as expenditures outpace revenues. The former is expected to grow at a rate of 3.2 percent while the latter grows at 2.1 percent.
Compensation costs, which make up 72 percent of the General Fund budget, are the root of the projected expenditure increases. Healthcare and retirement costs are expected to go up.
Director of Finance, Gigi Decavalles-Hughes, updated council on projections for each of City Hall's individual funds at last Tuesday's meeting.
Big Blue Bus, Wastewater, and Beach funds are expected to be stable, with no need to use reserves. The same is true for Resource Recovery and Recycling funds, thanks to a recent rate increase that will establish a 5 percent reserve.
The Water Fund will be self-sustaining through next year as will the Cemetery Fund.
Thanks to increased landing fees, the Airport Fund is expected to remain balanced.
The Housing Authority is going to need a $400,000 boost from the general fund, slightly less than it needed last fiscal year, due to a small increase in federal funding.
Despite a decrease in estimated property tax revenues related to the dissolution of the redevelopment agency, General Fund revenues are up. This is thanks to , among other things, increased parking revenues, utility users taxes from new telecommunication providers, increased transient occupancy taxes, and business license taxes.
This month council will consider some expenditure adjustments to the coming year's budget.
City Hall needs an extra $2.6 million in the General Fund to cover, among other things, the living wage increase recently passed by council, a collocated public safety communications center for police and fire, and staffing changes to ensure compliance with the Affordable Care Act.
City Hall also needs about three more full-time employees than previously expected thanks, in part, to the aforementioned communications center and some staffing changes resulting from the health care law.
City officials are recommending that council rescind a fee waiver that's been in place since just after the 1994 Northridge Earthquake. It waives plan check and building permit fees, and was intended to encourage the seismic retrofitting of all hazardous buildings. Earlier this year, city planners announced that many city buildings haven't been appropriately retrofitted and they now question the effectiveness of the waiver.
A hired consultant is currently assessing the buildings in Santa Monica to determine which ones need seismic upgrades. When they return with their findings in the fall, it's expected that there will be a need for a lot of plan checks.
If the waiver isn't rescinded, city officials said, General Funds would need to be budgeted to cover the time city staff spends working.
dave@www.smdp.com
