The city of Santa Monica is planning to cut $203.2 million from its budget and about 337 permanent and 144 temporary jobs as the coronavirus shutdown devastates the sectors of Santa Monica’s economy that sustain city revenues.
With a projected general fund deficit of $224 million through June 2022, City Council will vote Tuesday on a budget plan that proposes freeing up $117 million in one-time funds and cutting $86.2 million in ongoing costs through radical cuts to city programs, services and staffing. Many in-person services would be shifted to a redesigned city website, both to facilitate physical distancing and to save money.
In addition to the 481 city employees who would lose their jobs under the proposed plan, more than 100 city employees have opted to participate in the city’s Voluntary Early Separation Incentive Program, which offers buyouts and continued health insurance to staff who wish to leave their jobs amid the budget crisis. The city currently employs about 2,300 people.
The interim city manager and interim city attorney have taken 20% reductions in pay, said city spokesperson Constance Farrell. Department heads, executive staff, and the police and fire chiefs will take 10% or 15% pay cuts.
“The path ahead will be painful, and fraught with shared sacrifices to stop cuts in services and prevent further layoffs,” said interim city manager Lane Dilg. “We grieve with our colleagues who have dedicated themselves to this work whose jobs will be lost.”
The plan also includes the creation of a $20 million contingency fund in the event of another coronavirus shutdown and a $1 million economic recovery fund.
Dilg said staff will ask City Council to allocate an additional $2 million in available funding and articulate which services and programs to restore if revenues return in the future. The council has the power to make adjustments to other parts of the plan, she said.
"They could decide that we kept something we should be losing or are losing something we should preserve," Dilg said.
With a $448 million unfunded pension liability and flattening revenues, the city was already in trouble financially before the pandemic. Projections showed the city’s general fund would be $72 million in the red by the end of the decade.
The effects of the coronavirus shutdown on city revenues have been even more catastrophic. The city relies heavily on tax revenue generated by the city’s tourism and hospitality industries, which have ground to a halt during the shutdown and will likely continue to suffer losses when stay-at-home orders are relaxed.
Finance Department Director Gigi Decavalles-Hughes said projections show a 14% decrease in sales tax revenue next fiscal year and a similar decrease in the current fiscal year. The city’s fiscal years last from July 1 through June 30.
Decavalles-Hughes said hotel taxes are down 21% this fiscal year and are projected to drop 42% next fiscal year.
Parking revenues, including fines, have declined 9% this fiscal year and will fall nearly 22% next fiscal year. During the coronavirus shutdowns, the city has been taking in about 5% to 10% of typical parking revenues, Decavalles-Hughes said.
She said the loss of revenues will create a $48 million general fund deficit between March and June, a $102 million deficit next fiscal year and a $74 million deficit in fiscal year 2021-2022.
If City Council approves the budget cuts as proposed, the balance of the general fund will be nearly $500,000 next fiscal year and slightly more than $2 million the following year, Decavalles-Hughes said.
“Like most cities in the nation, Santa Monica is in uncharted territory,” she said. “The impact of this pandemic on our economy is unlike any other natural or man-made disaster.”
Dilg said Santa Monica has no assurance of a government bailout, but the city’s representatives are advocating the state and federal governments to direct aid to smaller cities.
The FEMA reimbursements Santa Monica is eligible for can only be used to cover the cost of work directly addressing COVID-19, Dilg said.
“We have no indication federal aid is coming,” she said. “The state has received funds that they can distribute to cities, but there are cities across California with needs, including large cities, and the state needs money too, so we don’t have assurance that we would receive money from the state.”
Under the proposed plan, the police department would reduce its budget by $3.5 million and eliminate 45 jobs, and the fire department would cut 10 vacant positions and is working on plans to either reduce staff hours or generate revenue that will yield $2.8 million in savings.
One vacant police officer position will be eliminated, said Santa Monica Police Department Chief Cynthia Renaud. All school crossing guards and several employees that patrol parks, handle animal control and manage traffic would be laid off. Seven open firefighter and paramedic positions would be left unfilled.
Renaud said the SMPD's workforce is 54% sworn police officers and 46% professional employees, with a heavy reliance on part-time employees.
"Every SMPD employee contributes to our overall mission, and just as my fellow departments will be making deep reductions, the police department had to look internally and do the same," Renaud said. "We first reduced almost all of our part-time staff and then reduced by one or two in most classifications within the PD – including one vacant sworn officer position. These changes will give us the personnel to focus on our core mission of public safety.”
The public library would cut $4.5 million in spending and lay off 65 employees. The library’s Fairview and Ocean Park branches would be temporarily closed. Other branches would continue to operate with reduced hours and programming, as well as enhanced physical distancing protocols.
Dilg said the city will scale library services back up and hire more staff when it becomes safe for people to use public facilities and more funding is available. In some circumstances, city employees who were laid off have a right to return to their positions if the positions reopen, she said.
"We won’t resume in-person library services at their full capacity for some time until a vaccine is not only present but widely available, and no physical distancing is required," Dilg said.
The new community services department, which will handle recreation, cultural affairs, housing and human services, would cut $11.1 million from its budget and lay off about 95 employees.
The department would close Miles Memorial Playhouse, Camera Obscura Art Lab, eliminate annual city events, and reduce cultural and arts grants.
The Annenberg Community Beach House, Santa Monica Swim Center and Memorial Park would continue to operate with reduced hours and programming. The beach house pool would remain closed through next June.
Youth programs administered by CREST, the Police Activities League and Virginia Avenue Park would continue with physical distancing and reductions in programming.
Organizations that receive human services grants from the department to provide services to the homeless, seniors, youth and other vulnerable groups would see a 12% reduction in their grants. Grantees include The People Concern, Chrysalis, the Legal Aid Foundation of Los Angeles, Wise & Healthy Aging and Family Service of Santa Monica.
"We’re hopeful members of our community will make direct contributions to many of these organizations to ensure they can continue to provide services," Dilg said.
Housing programs would be administered by the community services department. The city would eliminate funding for new affordable housing and limit the Preserving Our Diversity (POD) rental assistance program for seniors to 40 participants instead of the additional 250 to 400 it was planning to enroll.
"Affordable housing will remain a priority for the city, but we'll focus more on external grants and funding," Dilg said. "We’ll always be looking for more revenue sources, especially because right now people have an increased need for affordable housing."
The new community development department, which will include planning, mobility, economic development, and building and safety, would cut $9 million in spending and nearly 47 jobs.
The Architectural Review Board would be eliminated and replaced with a staff review process, and processing for historic properties and districts would be delayed.
The department would not provide staff support for business districts and would reduce funding allocated to the Santa Monica Pier, including its summer concert series.
The department would reduce public counter hours for parking services, public transportation, planning, and building and safety. It would take longer to process applications, plans and requests, including Vision Zero and bike programs.
Transportation management organization GoSaMo would be dissolved, but the city's transportation management requirements for employers would remain in place. Preferential parking regulations would be put on hold and the city would no longer grant franchises or permits to taxis or pedicabs.
The Safe Routes to School and Take the Friendly Road campaigns would be suspended, although both would maintain an online presence.
Big Blue Bus would cut $16.8 million in ongoing costs and 38.5 positions, including 19.5 bus driver positions. The agency anticipates an infusion of one-time CARES Act funding.
BBB would eliminate four routes and reduce service on almost every other route, with only routes 1, 3 and 7 maintaining their regular schedule on weekdays and weekends, and is planning to start collecting fares again in June. Its ridehailing service for seniors, MODE, would run only during the day on weekdays.
Public Works would cut spending by $21.8 million and lay off 105 employees, reducing the frequency of streets, public facilities and parks maintenance.
The department will postpone or cancel 18 capital projects to preserve $16.2 million in the city’s general fund, including plans to expand Memorial Park and the electric vehicle charging network. Other major projects such as the City Yards renovation will be reduced in scope.
The office of sustainability and the environment would eliminate sustainability programs at local schools, Youth Climate Corps and the Sustainable Quality Awards.
The office would cut programs that facilitate the city’s single-use plastics ban and green building program. Efforts to achieve carbon neutrality, water self-sufficiency and zero waste would be significantly scaled back and delayed.
Dilg said although the functions of the office will be reduced, other city departments will continue to incorporate sustainability into their work. The office itself will focus on regulatory compliance and helping the city and businesses green their operations.
"While we won't have an office developing new ordinances or trying to engage in new and innovative policy efforts,we will have expert staff across departments advising city on key sustainability concerns in choices we’re making," she said.
The city manager’s office would eliminate the offices of wellbeing and performance management, reassign the office of emergency management would be reassigned to the police and fire departments, and scale back the office of communications.
Fifty-three jobs would be eliminated, including the as-needed senior advisor on homelessness position held by Alisa Orduña would be eliminated, leaving the restructured office with just 13 employees.
"Our organization has learned a lot from our (wellbeing and performance management programs) and while we may not be able to run those programs in the current environment, they've become part of our culture," Dilg said.
The city attorney’s office would cut $1.8 million in spending and 8.4 positions by prosecuting fewer misdemeanors, focusing on violent conduct and driving under the influence, and taking longer to respond to extensive public records requests.
The finance department would reduce its budget by $2.5 million and cut 15.5 full-time equivalent positions, and the human resources department would cut nearly $900,000 and about five jobs.
The city will suspend its payment on its pension liability next year and make payments to CalPERS, the state pension system, over a 15-year schedule rather than a 13-year schedule.
The city clerk would cut about $250,000 and eliminate 1.5 full-time equivalent positions, and the information services department would eliminate $1.7 million from its budget and lay off 11 employees.
madeleine@smdp.com
