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Best Case City Budget Forecast: $15 Million Deficit

City plows ahead with big projects while trying to rein in payroll costs. Under the worst case scenario, the budget gap would swell to $29 million in less than five years.

The city might try to limit salaries and lower benefits in future talks with its employees as it wrestles with a budget forecast to be in the red by as much as $15 million in the 2017-18 fiscal year.

And that is the best case scenario.

In a budget update to the City Council, finance staffers said this week the deficit could soar to $29 million if labor costs—which account for three-quarters of the budget—grow and if the city has to take on more costs once absorbed by the now-defunct community Redevelopment Agency.

But, they said, with "controlled spending and budget adjustments" they will keep the budget "balanced and also allow the maintenance of healthy reserve."

In addition to negotiating down salary and benefit packages, the staffers said the city needs to decrease expenditures and/or grow its revenues by 5 percent.

"Considering the city’s need to make due with limited resources," the report says, "departments would undertake a thoughtful review of their current operations and refocus attention and funding on core and priority programs."

In the last fiscal year, Santa Monica's pensions costs grew "dramatically" by $6.4 million or 16 percent, to almost $38 million because of "severe" investment losses in the 2008-09 fiscal year, longer life expectancy, and "enhanced" pension benefits doled out a decade earlier "when plans appeared to be superfunded."

Healthcare costs are forecast to rise 14 percent through through the next fiscal year, then by 12 percent starting in 2015-16.

To the tune of about $2 million per year, the city will also start paying to maintain and operate some major projects under construction now: the Palisades Garden Walk, Pico Library, Colorado Esplanade, Expo Buffer, and Expo Bikeway.

In the next five years, it's forecast to spend $6.6 million to subsidize low-income housing, the Santa Monica Airport, Woodlawn Cemetery, the Civic Auditorium, and the Santa Monica Pier. An additional $21 million is projected for new capital projects, such as the Lincoln Boulevard Streetscape and the redevelopment of the city’s Corporation Yards.

The forced dissolution of redevelopment agencies was a major blow to city coffers. In addition to paying for employees whose salaries were previously funded by the agency, Santa Monica owes the county about $42 million in redevelopment money that will go mostly to local schools. The city is protesting the payment; it has so fair paid $12.6 million.

Brenda Barnes January 18, 2013 at 11:02 PM
I know where they could have saved at least $50 million--either not build two parks for $55 million total in front of City Hall, or at least build them with the budget befitting a City that claims to have fiscal difficulties. Particularly is this so since the real reason for these parks is to benefit the huge luxury housing development the City approved without sufficient open space next door, at the Village at SM. The co-developer of that project--with the City's incestuous partner Community Corp of SM, which claims to be a non-profit building and renovating "affordable" housing--is Related Companies, the same biggest developer in the US that tried to evict over 800 tenants at Lincoln Place and lost $8 million to settle, and let all the tenants move back, after 14 years of litigation. That developer told a group of developers the City tried in July to woo to come here--and do MORE obscenity they have already foisted on us--that $1900 a square foot condos are in the offing here. This is when the City claims "affordable" housing costs $200 a square foot, and the land speculator at Village Trailer Park claimed his costs will be $400 a square foot, including land. The greed of these developers and the complicity of their co-conspirators at City Hall have got to be stopped. Plow ahead with nothing if you don't have the money. Stop spending if you don't have the money. Resign if you can't figure it out. Or be recalled and fired, depending on your position.
Valerie Ferguson January 29, 2013 at 06:32 PM
The city really needs to do their checks and balances before deciding to do it...does this need to be done....how much will it cost(the tax payers).... how will it impact parking and the flow of traffic etc etc....it is enough that (right now) we're dealing with the waste water construction on 11th st...and having to park on Michigan west of 11th street or park on 10th or 9th street.
Brenda Barnes January 30, 2013 at 02:56 AM
What wastewater construction? That construction seems to be going on forever, so I thought it was somehow Expo related, when of course it could not be there. When the planner dealing with the proposed project we were fighting said SMicans are used to construction, so the noise from it is not a problem, I thought I would either burst from anger or die laughing at how "let them eat cake" it was. There is simply no real planning for anything in SM. Everything is one project at a time, with no consideration of cumulative effects.
Dan Charney April 04, 2013 at 05:12 AM
Pretty absurd that with all these developers ruining this city we don't have this chump change amount- compared to their profits it's really nothing- one way to save money is fire all the "consultants"- if staffers can't do the jobs they were hired to - the should go to

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