With budget season underway in several Westside cities, I asked the City of Santa Monica’s Director of Finance, Gigi Decavalles-Hughes, if she would join me for several questions I had after reading a staff report on the proposed fiscal 2022-2023 budget. I am most grateful she was willing to do so.
Todd Flora, Publisher, Westside Voice: Director, thank you for taking a few minutes to discuss Santa Monica’s 2022-2024 Biennial Budget, specifically the budget for Fiscal Year (FY) 2022-2023. One thing that always strikes me is the monies from the General Fund versus that wide open category of “Other Funds.” Can you let readers know what some of the Other Funds are, as I think some may be surprised by the number and specificity of these special funds.
Santa Monica Director of Finance Gigi Decavalles-Hughes: “Other Funds” include the Big Blue Bus, Water, Wastewater, Stormwater, Resource Recovery and Recycling, Airport, Pier, and Cemetery Funds – these are enterprise funds where users pay for the services they use through fees or rates, and those payments support the operations and capital infrastructure of the funds. The Beach Fund is a special revenue fund, where any revenue collected on the Beach may only be used for the Beach. The City also has a number of internal service funds – such as fleet and computer equipment replacement funds and self-insurance funds.
TF: One of the Council’s three main goals is addressing homelessness, which, I think we can agree, is a top issue throughout Greater L.A. right now. Can you talk about some of the innovative new approaches and programs the city will be funding to help alleviate this crisis?
GD-H: Last month, the Santa Monica City Council took action to give priority access to affordable housing to Emergency Housing Voucher program participants, approved up to $200,000 for expanded legal and support services to Santa Monica renters at risk of eviction, and endorsed potential new investments to address homelessness, as resources become available.
These investments would include creating an additional multidisciplinary street team to provide expanded outreach citywide, expanding the Santa Monica Police Department’s Homeless Liaison Program (HLP) team to operate seven days a week, and redesigning the SAMOSHEL interim housing program scope to facilitate after-hours intakes for City referrals. These responsive solutions combined with longer-term strategies such as working regionally to increase the supply of affordable housing and pursuing a strategy to address behavioral health comprise the City’s comprehensive approach to homelessness.
More about recent action can be found here: https://santamonica.gov/press/2022/05/12/santa-monica-city-council-takes-action-on-housing-vouchers-rental-assistance-and-future-investments-to-address-homelessness
TF: Based on the budget council will be voting to approve on June 28, it is clear the city is on the mend from pandemic-induced revenue losses. I note the council was able to add an additional $54.2 million in adjustments, for example. I also see mentioned the recent Bloomberg survey among economists predicts modest to slow growth for the next couple of years. But in your budget planning generally, do you and your department account for unexpected downturns? And if so, what goes into that?
GD-H: We are very careful in our forecasting, considering risk areas in all of our revenue streams. We have included some level of impact in our forecasting and also have set aside a $20 million “Shutdown Reserve” to ensure that funding is available to continue essential services.
TF: The proposed budget will allow the city to return staff size to almost 2,025 employees, up from 1,977. But what is city staff size at its peak? Or pre-pandemic, if you will? Does the city aspire to fully staff up, or will it maintain certain efficiencies even in good budget times?
GD-H: In FY 2018-19, Citywide staffing was approximately 2,325, including temporary positions. The City is adding positions as necessary and appropriate to meet community needs and is not looking towards an ultimate target, including past staffing levels. That said, many of our services are still significantly reduced while revenue recovery continues to lag.
TF: The Staff Report mentions planning for the closing of the Santa Monica Airport, as well as the coming Summer Olympics – both of which are slated for 2028. Can you explain a little bit about what goes into that planning process and the timelines that go with converting airport land?
GD-H: Staff is working on the development of the planning process for the future use of the Santa Monica Airport land, and preparation for the 2028 Olympics. Upon approval, staff can come back and provide more information on the planning process and timeline for both of these efforts.
Readers: I’ll be circling back with Ms. Decavalles-Hughes who wants an opportunity to add subject matter experts to our conversation about the airport in order to expand on answers here.
TF: The Beach and Pier Funds show a structural deficit. Can you predict if those funds will be in good enough shape to fund capital improvements that will be needed in time for Olympic-sized crowds in 2028?
GD-H: It is current practice for the General Fund to subsidize the Pier Fund, if necessary, in order to ensure that necessary capital infrastructure projects can be completed. We will continue to monitor the financial health of the two funds, the use of potential grant funds, and the need for additional support from the General Fund.
TF: Am I right to read the report may be hinting that residents may be in store for a rate hike in the sanitation fees? Should residents prepare for such a possibility after 2024?
GD-H: It is likely that there will be a rate increase in 2023. Staff will conduct outreach and communications before coming back to Council in the winter of 2022/23 with proposed new rates.
TF: The Staff Report mentions that the Transit Occupancy Tax (TOT), sales tax, and parking revenue account for nearly half of all General Fund revenue pre-pandemic. Even with them bouncing back, should we as a city be looking to better diversify our General Revenue base, and if so, what are some ideas of how to do that?
GD-H: As a city in California, there are limited ways to raise revenues. In addition to the TOT ballot measure, the Council is considering placing a Documentary Transfer Tax measure on the November 2022 ballot. Over the next two years, we will be reviewing our business license tax structure with an eye toward modernizing (perhaps with a measure on the 2024 ballot) to reflect our current economy. Additionally, the City hopes to continue its economic recovery and grow stronger with partnerships and new opportunities. Among the areas that staff is working on is the introduction of a digital wayfinding system/out-of-home advertising network that will provide the City a new revenue source.
TF: Speaking of the TOT, if the TOT tax measure – a.k.a. “the Hotel Bed Tax” – is put on the November ballot and is in fact successful, will our hotels’ TOT rate remain competitive vis-à-vis other area hotels?
GD-H: Yes, the new rate would keep the City’s rate competitive with those of neighboring cities and other California destinations.
TF: Turning to the Capital Improvement Project (CIP) budget for a moment, I see an exciting new lighting program will be funded to improve lighting on the 3rd Street Promenade. But will this include improved lighting in the parking garages, where I am hearing people are feeling increasingly unsafe?
GD-H: The City recently completed a multi-million dollar LED lighting project providing brighter and more energy-efficient lighting to the downtown parking structures. It was supplemented by additional lighting changes in the stairwells and elevator landings of the parking structures. Mirrors were installed at all exits and entrances to enhance safety.
In addition, public safety officers continue to perform overnight checks of the parking structures in partnership with private, contracted security officers.
Downtown Santa Monica’s 13 public parking structures and three surface lots are monitored 24/7 by staff who routinely walk through and inspect each facility, including elevators, multiple times over a 24-hour period.
TF: In addition to addressing safety concerns, what are some factors in your view that will have to work or come into play for the city’s downtown to return to its previous glory?
GD-H: Addressing public safety and quality of life concerns downtown remains a top priority for Santa Monica. The City deploys a comprehensive, collaborative approach to public safety and cleanliness to provide enhanced hospitality, maintenance, sanitization and custodial services daily to the downtown area. Regular services include pressure washing, motor scrubbing, motor sweeping, public restroom sanitization, landscaping, playground and urban forest maintenance, street cleaning, sanitization of the street furniture and other Promenade amenities, bulky item pick-up, utilities and street repairs, as well as bluff cleanup.
The Santa Monica Police Department works diligently to address public safety downtown and is working to redeploy officers for a stronger police presence and 911 response.
Supplemental efforts, such as the Downtown Ambassador Program, support City services, providing an added physical presence in the downtown district to address quality of life issues in real time.
TF: What are one or two other things you would like Santa Monica residents to know about the budget, budget process, and/or the health and outlook for the city budget?
GD-H: The City continues to recover, despite the many challenges that it has faced and is continuing to face. The recovery of our revenue will take several years. In the interim we will continue to assess our needs, particularly in the areas of addressing homelessness, providing clean and safe spaces, and furthering economic recovery for all of our community members so that we can make high-value changes, using new resources as they become available, in the highest priority areas.
TF: Thank you for your time and responses.