SANTA MONICA—On Tuesday, September 26, the Santa Monica City Council received an update on the city’s fiscal health, closed out the fiscal year 2020-2021 budget, and made small revisions to the 2021-2022 fiscal year budget through the year-end budget report.
“Our financial outlook continues to be positive thanks to prudent financial management and the hard decisions this Council made over the last two years to see us through the pandemic,” said Mayor Sue Himmelrich. “The much-needed federal aid that makes up 15% of our total projected revenue loss and better than anticipated revenue returns are helping to slowly put us back on track as we continue to provide meaningful community services with fewer resources while making a difference in our priority areas.”
According to a press release from the city’s website, Santa Monica’s budget remains in active recovery with reserves helping fill the gap for a balanced budget. Fewer reserves are expected to be leveraged due to revenues coming in six percent higher than anticipated as a result of the active housing market; higher sales, hotel tax and parking receipts; and the positive impact of the recently passed Measure SM Real Property Transfer Tax increase. Santa Monica will conserve the $20 million Shutdown Reserve originally needed to balance the 2020-2021 budget. The General Fund will still require the use of $22 million in one-time reserve funds, as previously planned, because revenues continue to be deeply impacted by the ongoing COVID-19 pandemic.
To assist emergency response, affordable housing, and the community priorities of homelessness, clean and safe spaces and services, and economic recovery, American Rescue Plan Act (ARPA) federal stimulus funds that were unspent in the 2020-2021 budget as a result of their receipt at the end of the fiscal year will be re-appropriated for the fiscal year 2021-2022. In the next three years, staff will continue to use ARPA funds and evaluate the need to shift funds that would have gone towards capital improvements, to bolster operating programs and cover unanticipated cost increases until revenues reach pre-pandemic levels.
The Santa Monica City Council directed the immediate use of $1 million in existing funds. Staff will prioritize the funds from now through February 2022 in the areas of greatest community need. Modest budget adjustments were made with the total approximately $0.6 million for fiscal year 2020-2021 and approximately $2 million for fiscal year 2021-2022, $1.1 million of which is in the General Fund.
Outside the General Fund, the majority of Santa Monica’s other funds met revenue projections or had nominal variances and forecasts are positive.
The fee for utility payments were adjusted from $2.95 per transaction to 2.95 percent of the transaction amount to be consistent with the charge for other transactions. There will continue to be no fee for the use of paper checks, electronic checks, and cash. A complete list of fee adjustments can be seen by viewing the staff report.
Staff will return to the City Council with the Midyear Budget Report on February 8, 2022 to provide a more complete assessment of the city’s finances and progress towards recovery, including an updated five-year financial forecast.
