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Budget Cuts Loom as Costs Rise at Santa Monica City Hall

 

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Kutcher & Kozal, LLP

By Niki Cervantes
Staff Writer

May 29, 2018 -- From cuts to trash collection to keeping vacant jobs unfilled, the Santa Monica City Council is looking at ways to operate during leaner years.

The potential cost saving measures come as the City steels itself against a possible recession amid sky-high employee pensions and other costs.

“We need to be a little ruthless,” said Council Member Gleam Davis as the council took a closer look at the City’s rocky five-year fiscal forecast during its May 22 meeting.

City staff, she said, should start “getting creative” to keep the City in the black.

In a City that often boasts of its wide-array of services, Davis suggested saving money by eliminating once-a-week garbage/recycling collection and switching to twice a month.

Clients could request extra pick-up services in special circumstances, she said.

Santa Monica should start with “incremental” cuts to services so residents “can become accustomed to the brave new world of government operations in the 21st Century,” Davis said.

City Manager Rick Cole said staff is trying to rein in rising personnel costs, although doing so does not necessarily translate into layoffs.

But increasing taxes to escape red ink is not being considered, he said.

So far, the City is hiking fees and adding a string of new fees to increase funding.

Blessed with big tourism dollars and other financially healthy business sectors, the City has averted the cuts other governments began imposing after the Great Recession.

But Santa Monica is now sharing the pain of other cities in California as it struggles with a looming bill for “unfunded liabilities” -- or $461 million in the City’s case.

Cole warned the Council that the debt will continue to grow for the next eight years, as the troubled California Public Employees’ Retirement System (CalPERS) recalibrates its expectations of the Stock Market.

Under the current forecast, City government sinks into deficits starting in the 2020-2021 fiscal year.

The following year, the projected red ink jumps to $15.2 million in the “probable” scenario or $29 million in a worst-case scenario.

Cole acknowledged the amount of the budget devoted to capital spending is far larger that such expenditures earmarked by other cities.

The Capital Improvement Program for the 2018-2019 year is $186.3 million; the total budget is $732.5 million.

But the funding, Cole said, adds financial value to Santa Monica by allowing projects other cities couldn’t afford -- like the new $41.6 million three-story fire station being constructed downtown -- or extensive maintenance of streets and landscape.

“Most cities can't afford it,” he said.

 


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