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City Manager Proposes Record Budget

By Jorge Casuso

May 21 -- The City Manager last week presented a record $521.7 million budget for fiscal year 2008-09, representing a nearly $40 million hike over the current $483.4 million revised budget, an increase that at first blush could be viewed as “very aggressive.”

The hike -- which includes mandated increases, capital improvements for the pier’s 100th anniversary and staff for the opening of a public beach club -- continues a trend that has seen Santa Monica’s annual budget swell despite a relatively stable population of some 84,000.

Bankrolled by taxes, grants and service charges, the general fund budget used to deliver services grew to a proposed $251.7 million, from the current $245.8 million. The general fund has ballooned during the past decade, from $107 million to $160 million in 2003, when an analysis by The Lookout found that the City spent $1,906 per resident, among the highest in the region. ("Great Expectations or Spending Spree?" June 16, 2003 and "A Tale of Two Cities: How Santa Monica and Pasadena Spend Their Money," June 16, 2003)

The proposed budget, City Manager Lamont Ewell told the City Council last Tuesday, “could be interpreted as an extremely aggressive budget during a very extremely difficult and sluggish economy.

“I do want to assure you that it’s a realistic budget, and it’s achievable in its ability to spend wisely,” Ewell said, adding that the budget “preserves and protects the integrity of the general fund.”

The budget, Ewell wrote in his message to the council, “maintains existing levels of service and recommends careful choices about expanded services to fulfill obligations and continue the focus on Community Priorities.”

The proposed budget -- with the heading “Creating and Sustaining Our Future” -- adds 45 full-time equivalent personnel for “essential positions,” the City Manager said. Of these 12 are funded by the general fund.

About half of all the new positions are to staff the $27.5 million Annenberg Beach House at 415 Pacific Coast Highway, which is scheduled to open next spring, Ewell said. The positions will be funded in part by proposed increases to beach parking rates -- a $2 increase in preferred lots, such as the pier, and $1 in the others.

The proposed budget also adds four full-time Police Department employees “to improve safety in our jail and comply with the standards set forth by the State of California,” Ewell said. Three full-time employees were added to the Fire Department to “bolster their hazardous material response capability and further protect the residents of our City.”

In addition, the proposed budge adds $500,000 for homeless intervention, to launch a
panhandling education campaign and to add an employee to oversee the approved Homeless Management Information System.

Seven of the 45 new positions are funded by the Redevelopment Agency “to provide the organizational capacity to further develop and move forward long-standing capital project priorities such as the Civic Center Specific Plan and the expansion of Memorial Park,” Ewell wrote in his report.

The agency administers a $65 million redevelopment fund in large part bankrolled by the approximately $25 million a year in Earthquake Redevelopment money the agency has been collecting since the 1994 Northridge earthquake, according to the line item budget.

The fund is largely bankrolled by taxes collected when a Santa Monica property changes hands. The lion’s share of the difference between the old and new tax assessments goes into the fund for capital projects within the redevelopment district.

The proposed budget allocates $21 million for capital improvements, including improvements for the Pier, the Borderline community and the western segment of Ocean Park Boulevard.

Santa Monica has been able to weather a “turbulent economy” thanks to a strong and diverse business sector, Ewell said.

“To date, our local economy has fared better than the nation and California based primarily on the strength of our local businesses and the types of industries located here,” Ewell wrote in his report.

“Our diversified tax base has also offered some insulation from the turbulent economy,” he said.

The proposed general fund budget is bankrolled by $98.2 million in property taxes (or 18 percent of the fund), $67.8 million in sales taxes (12.5 percent) and $112.2 million in other taxes (21 percent), including utility user and bed taxes, according to the budget.

Also pumping money into the general fund were charges for services, $93.1 million (17 percent); investment and rent, $22.8 million (4 percent); licenses and permits, $19.6 million (3.5 percent), and fines and forfeits, $14.1 million (2.5 percent).

The general fund also counted on $64.1 million in grants (17 percent) and $37.7 million in intergovernmental funds (7 percent).

Despite the seemingly healthy state of the economy, the City needs to be cautious, Ewell said.

“Our City is not immune to the larger economic influences, and the current economic environment continues to require our fiscal prudence,” he wrote in his address. “Santa Monica, like other communities, faces a challenging economy.

“We expect slower revenue growth and continue to face expenditure growth outpacing the rate of revenue increase,” he wrote.

“Our five-year forecast indicates balanced budgets in the coming years but deficits beginning in three years if costs are not managed prudently and/or revenues do not grow at a greater rate.”

Columnist Frank Gruber’ reporting contributed to this article.





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