Major Cuts Spared Under Proposed Budget

By Blair Clarkson

May 27 -- Facing a significantly brighter fiscal future than expected and reaping the benefits of belt-tightening measures, the City Council on Tuesday was presented with a proposed budget that spared the cost-cutting measures called for a year ago.

The proposed $376.9 million budget-- which will be adopted on June 15 for the fiscal year beginning July 1 -- reduces the current year’s $16.1 million gap to a projected $4 million, thanks to across-the-board cuts implemented by the council last June.

"The City has achieved a financial flexibility that has placed us in substantially better shape than many communities across the State that are currently contemplating significant cutbacks," said City Manager Susan McCarthy.

"That's not to say we are spared some discomfort," she warned. "We continue to tighten our belts, but not as many notches as we anticipated last year at this time."

To bridge the remaining gap, the proposed budget would reorganize six full-time employees in certain departments, eliminate four vacant police department positions, and reduce select landscape maintenance and street repair services. A total of $3.6 million in capital improvement projects would also be cut.

Mayor Pro Tem Kevin McKeown commended McCarthy on "bringing us a budget that doesn't require quite as deep an anesthetic as we anticipated taking last year.

“We're still doing some cutting," he said, "but it's not as painful."

Total City expenditures in the budget for the coming year are $377 million, down $5 million (1.3 percent) from last year.

Finance Director Steve Stark detailed a number of proposed revenue streams intended to augment the expenditure cuts and further close the budget gap.

They included $1.4 million in fee increases for ambulance services, recreation and facility use and preferential parking, and up to $3.5 million in new bed taxes by boosting the Transient Occupancy Tax from 12 to 14 percent.

Given these proposed measures, the total estimated City revenues for 2004/05 are $373 million -- a 1.2 percent rise over last year, Stark said. Estimated General Fund revenues, which are fed primarily by local taxes, are up $13.1 million from last year to $192.5 million.

But the study session wasn’t all smooth sailing. Several Council members asked McCarthy why the budget failed to provide for a living wage for City employees and contractors, a measure the Council had requested earlier this year.

"How can we go forward as a community that has taken to heart ending poverty and not ourselves be paying a living wage on these jobs?" McKeown asked.

A half dozen concerned residents also expressed their disappointment at the City's failure to make good on the promise of a living wage.

"Without a living wage Santa Monica continues to subsidize and create poverty among working people," said Beth Leder-Pack, a member of Santa Monicans Allied for Responsible Tourism (SMART). "This flies in the face of our attempts to be a sustainable city."

McCarthy told the Council she would review the issue and its associated costs and report back before June 15. But she cautioned that the $6 million the City recently agreed to give the School District forced some trade-offs in budgeting salary improvements for City workers.

The City, she said, is boosting of status and benefits of as-needed (temp) employees.

"In this situation, we have set aside funds to do something for a group of City employees that is more meaningful than an arbitrary wage-setting measure," McCarthy said.

Following the general budget overview, the first wave of City department heads reviewed their progress over the past year and presented their individual budgets. After the dramatic cuts seen last year, when most departments were asked to trim their budgets by 5 percent, this year's moderately streamlined budget did not have nearly the same impact.

The Capital Improvement Program (CIP), which funds ongoing service maintenance and replacement of City assets, budgeted $78.9 million, a slight reduction from last year. The CIP also funds basic services such as street and sidewalk repair and signal light improvements.

The reductions were in part possible because several one-time projects, such as the Virginia Avenue Park expansion and replacement of the Main Library, are well underway, said finance analyst Mona Miyasato.

Several of the CIP's heftiest proposed ongoing projects include completing Virginia Avenue Park ($2.5 million); expanding the Big Blue Bus Campus ($9.5 million) and adding 31 replacement buses in 2005/06 ($11.5 million); retrofitting the Downtown parking structures ($6 million), shoring up the Palisades bluffs ($6.1 million), and improving affordable housing sites ($7.8 million).

Next year's proposed 2005/06 CIP budget is expected to drop by $17.8 million, according the Miyasato, primarily because the City will not be purchasing any new buses.

Following the presentation, Council members questioned the lack of street improvement plans for 20th and Cloverfield between Pico and the freeway, and asked staff to return with estimated costs for enhancing those areas.

City departments also will experience few cutbacks. The City Council's budget had no significant changes in the proposed financial plan, with expenditures rising $5,000 this year to $341,509.

In the City Manager's office, one office administrator position was eliminated after the staff member filling it retired. However, total departmental expenditures rose slightly from $7 to $7.2 million, reflecting insurance increases and election costs.

After having to cut back on City TV programming and website maintenance last year, McCarthy said this year's cuts "are not reductions that we anticipate will be felt in terms if service to the public."

City Clerk Maria Stewart told the Council there would be no major cuts to her Records and Election Services department, and her budget would increase almost $350,000 this year, reflecting the cost of election services in November.

The City will continue to provide financial support that candidates would normally have to pay for in other cities, Stewart said.

Last year's budget projections for the City Clerk estimated cuts of $70,000 and one full-time position.

A similar turnaround was seen in the City Attorney's office, which was expected to cut $145,000 from its budget this year based on 2003 estimates, but is remaining essentially even in 2004/05, according to City Attorney Marsha Moutrie.

The rosier outlook for her office will help the attorneys better handle the heavy workload, she said. While lawsuits against the City were down slightly last year, the City was still sued approximately once every three days, Moutrie said.

Following almost $200,000 in budget cuts last year, the Finance Department was projected to slice an additional $200,000 and two full-time positions this year. Instead, the department will bring on six new staff members from the finance department of the Big Blue Bus in an effort to streamline financial services citywide, Stark said.

The department also plans to remodel the customer counter at City Hall.

"As always we're looking for efficiencies in our operations," said Stark. "We're looking forward to another great year."

The Human Resource department also dodged major cuts this year. Director Karen Bancroft reported that the restructuring of her department and the reclassification of two positions enabled it to meet its budget goals this year.

As a result, Human Resources will continue to provide the same level of customer service and worker's compensation training, she said.

The Police Department will make "significant" reductions to help balance the budget, according to Chief James T. Butts, by freezing four vacant communications positions, which will remain "frozen" -- empty but not funded. There will be no reduction to the presence of on-street officers.

The County’s decision to transfer misdemeanor cases from the Santa Monica Courthouse to the new criminal courthouse at LAX will result in transportation costs of between $70,000 and $100,000, according to Stark.

Fire Chief Jim Hone reported that the Fire Department would maintain its third straight year of zero growth in 2004/05, without any major cuts to services.

The department's expenditures are expected to rise slightly to train new firemen in the coming years, because by 2008, one third of the FD will be eligible for retirement, Hone said.

Although the proposed 2004/05 budget calls for additional belt tightening this year, the reductions are nowhere near what were expected last year, according to McCarthy.

Thanks to the current local economic recovery and the drastic cuts of a year ago, the City's financial future appears poised to turn the corner, she said.