While Santa Monica’s economy is recovering from the pandemic-era slump, the overall forecast is worrisome and Council will gather in a rare Saturday meeting this weekend to discuss priorities and provide direction on the fiscal year 2023-2025 budget.
According to the Council, the City’s economy showed a strong recovery over the past 18 months, but is now showing signs of softening. "Labor shortages, supply chain issues, historically high inflation and economic volatility continue even as the world shifts from a pandemic state," states the agenda.
This has been compounded by a continued slowdown in global tourism, together with political and economic disruptions in Europe and Asia and "realization that knowledge workers that once filled our community in the daytime have yet to return to the office in the same numbers."
While the local economy is recovering and General Fund revenues are growing, levels are still below what they would have been had the economy not been disrupted by the pandemic. These funds are generated by taxes, fees, interest earnings and other sources that can be used for the general operation of city government. As of June 30, 2022, General Fund reserves amount to 70 percent of what they were as of June 30, 2019 and it’s anticipated that revenues will not fully recover for another four years.
Since 2020, demands on these reserves have been compounded by both delivery of essential services during the COVID-19 Pandemic and payments of over $107 million in legal settlement payments related to allegations of sexual abuse by a former employee.
Many sub-funds, including the Water & Wastewater Fund, the Big Blue Bus Fund and the Airport Fundremain in the black, but others are in the red and require support. The Resource Recovery & Recycling Fundwill be increased to cover mounting costs and the Pier Fund, which was severely affected by the Pandemic and continues to seek efficiencies and revenue generating opportunities to support unfunded capital expenditures.
In March 2021, the Council adopted Addressing Homelessness, Clean & Safe Santa Monica, and Equitable & Inclusive Economic Opportunity & Recovery to inform the FY 2021-2023 Biennial Budget
The City conducted a survey in May 2022 that captured community sentiment on the most important issues in Santa Monica once the COVID19 pandemic was over. Traffic was deemed the least urgent, followed by trash and litter in the Downtown and beach areas. Crime rated the second most urgent with homelessness far and away being the most urgent.
The City has the opportunity to expand services addressing the City’s priorities over the next biennial period using two new funding streams, Measure CS and Measure GS, approved by voters in November 2022. Additionally, the Council may authorize a change in the City’s fiscal policy related to the expedited paydown of unfunded pension liability to free up to $2.5 million annually during the forecast period to assist in restoring General Fund services while revenues recover.
Following this meeting, City staff will return to Council on April 11, 2023, with proposed midyear budget adjustments.
If you’re interested in providing public comment or opinion at a City Council meeting regarding items on the agenda, there are several ways to participate. Firstly, by writing, those should be sent via email to councilmtgitems@santamonica.gov before 12 p.m. on the day of the meeting. The second method is by in-person public comment. The meeting will be held at 9 a.m. in the Main Library (601 Santa Monica Blvd.) If this is your preferred choice, it’s necessary to provide your name to the City Clerk before the public comment section is opened for that item during the meeting. A maximum allotted time of two minutes is allowed to voice any comments. Full details of how to participate can be found on the City of Santa Monica website.
