By Jason Islas
Staff Writer

June 14, 2012 -- Facing the possibility of a deficit of more than $4 million in the next five years, the Santa Monica City Council approved a $530.5 million budget -- $274 million of that in the general fund -- for the upcoming fiscal year.

The budget, which includes $118.8 million in capital improvement expenditures, helps mitigate the effects of rising pension costs and the loss of money from its dissolved Redevelopment Agency (RDA).

With the State's retirement system is in crisis due to a poor environment for investments and the loss of millions in RDA funds, City officials reshuffled their priorities to stay ahead of what could be a $4.5 million deficit by the end of 2015.

“Retirement unfunded liability is a significant City obligation that can, and has, increased dramatically due factors largely outside of the City’s control,” staff told the council.

The council included a $10 million one-time payment to CalPERS as part of Tuesday's proposed year-end budget. In June 2011, the City also approved a $10 million payment to CalPERS.

According to staff, this will save the City $800,000 per year on payments to employees' pensions. Due to poor returns on CalPERS's investments, local cities throughout the state are being forced to pay the lion's share of their employees' pensions, staff said.

The City's pension contributions have skyrocketed over the past decade -- from about $10 million a year in 2001 to $44 million.

Tuesday night's discussion also raised some eyebrows about two City projects that could be impacted by the loss of RDA funds.

Santa Monica's Bike Action Plan -- which the Council adopted in November 2011 -- will undergo some changes under the adopted budget, which goes into effect July 1.

Bike “parking and amenities has been reduced from $150,000 to $60,000,” said Public Works Director Martin Pastucha, adding that the money had been moved to “free up some funding” for other Bike Plan-related grant projects.

“There was $300,000 in network connections that was proposed... that was not funded this year,” he said.

Pastucha said that the network connections money -- extending existing bike lanes so that they would connect with other bike lanes -- had been worked into the City's re-paving budget.

Approximately $55,000 for bike valet has also been cut, he said.

Planning Commissioner Ted Winterer spoke to the Council on behalf of the commission to express concern over Public Works' staff recommendation that a study of the Bergamot Area Infrastructure Assessment & Upgrades be deferred for two years due to budget constraints.

Staff said that they are not worried about the immediate impacts of future development on underground infrastructure in the 140-acre area, which surrounds the future Expo Light Rail station at Olympic Boulevard and 26th Street.

The “Planning (Department) is saying that it's part of the area plan,” said Winterer, adding that it is "baffling" that Public Works says a study isn't necessary yet.

The commission also recommended that the Council move forward with adopting a Transportation Impact Fee for all future developments, which could help pay for such studies in the coming fiscal year.

“Such a fee will generate as much as $60 million in additional revenue between now and 2030,” the commission wrote in a letter to the council June 7.

The Transportation Impact Fee is on the council's agenda in August.

In addition, the commission also recommended that the council review the Parks and Recreation Facilities Tax which, the letter says, hasn't been updated since 1973.

The funding for capital projects bankrolled under the approved budget include $8.8 million for the new Pico Branch Library, $5.5 million for the Early Childhood Education Center and $3 million for a new fire station.

The budget also earmarks $3.3 million for the Colorado Esplanade, $7.6 million for wastewater projects and $18.2 million to replace buses, bus components and technology,

The biggest general fund expenditures -- about $100 million and nearly $50 million -- will pay for public safety and planning and development, respectively.

Council members Bobby Shriver and Pam O'Connor were absent Tuesday.