By Jorge Casuso

May 24 -- On the strength of a rebounding economy, City officials are proposing a $383.1 million budget for fiscal year 2005-06 that restores services cut back during recent belt-tightening and adds new services, some tied to major capital projects started during the '90s boom.

With major projects -- such as the new Main Library and the expansion of Virginia Avenue Park -- now fully funded and nearing completion, the proposed General Fund budget of $207.5 million represents a $16.9 drop from the current revised budget.

While capital appropriations dropped $25.2 million, operating expenses rose by $8.2 million over the current revised budget, due in large part to the anticipated opening of the library Downtown and the park in the Pico Neighborhood.

"The economic conditions are improving," City Manager Susan McCarthy told the local press during a budget briefing Monday morning. "We are very encouraged, but not exuberantly encouraged by what's happening."

While the local economy is starting to "turn around," the cost of living in California is rising at a faster pace than in the rest of the nation and there are "tremendous increases in fuel prices," as well as rising costs for utilities, retirement and health care, McCarthy cautioned.

Still, the economic turn-around is reflected in a budget bankrolled in large part by rising revenues from the utility user tax ($30.6 million), sales tax ($30 million) and property tax ($26.1 million).

A 2 percent hike in the hotel bed tax approved by voters in November 2004 is expected to boost revenues by $3.8 million during the fiscal year, which begins July 1.

"In prior years, we were looking at expenses exceeding revenues," said Finance Director Steve Stark. "This year, revenues exceeded expenses... We have had the flexibility to retool the organization."

Thanks to rising revenues, the proposed budget funds community priorities confirmed by the City Council earlier this year.

They include funding for programs to address homelessness -- including funds to evaluate the City's "continuum of care," expand a pilot program for the chronically homeless and fund a liaison to work with other regional cities. The budget also provides funds for two additional officers in the Police Department’s HLP program and six park rangers.

In the wake of a highly-publicized double homicide and two community workshops to address gang violence, the proposed budget also earmarks funds to "enhance the quality of life, safety and community involvement of residents of the Pico Neighborhood," Santa Monica's poorest area.

Funds are allocated to add a “trades intern” position to train at-risk youth at the new Virginia Park, while two staff members (one of them new) will help develop programs for youth and adults. Two additional rangers will also be dedicated to the park.

In addition, the budget funds a “graffiti removal technician” for the Pico Neighborhood, as well as well as streetscape improvements on Cloverfield Boulevard and additional lighting in the city’s most crime-prone residential area.

The budget also allocates funds to enhance City services (particularly in the Planning Department, where complaints of inefficiencies are common), to help achieve the goals of the Sustainable City Plan and to promote "Active Living" in an effort to "encourage fitness activities in the daily lives of residents."

The proposed budget also increases funding for infrastructure and landscape maintenance, providing monies for tree trimming and maintaining the bluffs and allocating one-time funds to replant medians and curb extensions.

The Downtown will also see lighting and electrical upgrades and tree grates will be replaced, according to the proposed budget. The facades and signage at the Downtown public parking structures will also be improved.

In addition, the budget earmarks funds to begin centralizing the public restrooms Downtown and build new restrooms on the Santa Monica Pier.

“We’ve been able to look at enhancements,” McCarthy said. “There will be an up-tick in service.”