Santa Barbara City council scheduled to vote on Fiscal 2024 plan on June 13
Editor’s note: This concludes a three-part News-Press series on the city of Santa Barbara’s budget.
City budgets can seem dull, dry to the point where just trying to read them makes people’s eyes glaze over. And many people find it doesn’t help to include mind-numbing budget jargon like “structural deficit” and “expenditure reduction targets.”
One way to hang in there and cut through the mind fog is to consider what the budget represents.
It’s really nothing more than simply listing how much the city needs to operate over the next year to pay for such things as police officers and firefighters responding to emergencies; parks and recreation workers maintaining city parks while simultaneously offering ways for people to enjoy them; public works crews making sure the city’s water and wastewater infrastructure function without a hitch; and the city administrator’s office ensuring it all runs smoothly.
The flip side of the budget, of course, is to make sure there’s enough money to cover expenses.
Perhaps it would also help to think of the city budget less as a set of static figures than a dynamic process, a choreographed, coordinated series of steps designed to flow seamlessly from one to the next. A kind of budget ballet, if you will.
Thus, it might make sense to consider the budget one step at a time, from start to finish, especially now, when the process stands at the halfway mark.
City staff have worked for more than a year preparing for this moment. Armed with long-range, multi-year forecasts, they’ve been keeping a careful eye on the numbers to see if their predictions were accurate.
Staff already knew that the new, Fiscal Year 2024 budget would have to incorporate increases in employee salaries and benefits.
What they didn’t know was whether revenue from sales taxes and transient occupancy taxes, two of the biggest sources of revenue feeding the General Fund, would be enough to cover these increases as part of the cost of running each department, even while factoring in the impact of inflation.
Especially since sales taxes and TOT were “significantly reduced” during the COVID-19 pandemic, according to Finance Director Keith DeMartini.
Revenue was rising, to be sure, but only at rates considered “very modest” to “moderate.”
Something had to be done to cover what essentially was a “structural deficit” in the General Fund, to the tune of $3.8 million. (The proposed $221 million “status quo budget” represents about a third of the overall $667 million FY 24 budget.)
To reduce the deficit, they proposed 2% reductions in all General Fund department budgets to save $2.7 million. The remaining $1.1 million would have to come out of the city’s reserves in order to balance the budget.
Staff, led by Finance Director Keith DeMartini, met with each department to break the bad news and discuss ways to implement the cuts, leaving the decisions on where and how to make the cuts up to each department head.
City officials went public on April 18.
News releases about the FY24 budget were sent to local media, including the News-Press.
“Staff is pleased to present the Fiscal Year 2024 and 2025 budgets,” Mr. DeMartini said in the release.
“The budget is the culmination of multiple months of hard work reviewing revenue sources, programs and understanding what it costs to continue to deliver critical services to the community and maintaining the city’s infrastructure,” he said. “The city is committed to fiscal sustainability and has made some challenging choices to present a balanced budget.”
The same day, the finance director went before the Santa Barbara City Council, where he officially went on the record, warning about the General Fund structural deficit and staff’s proposed 2% across-the-board budget cuts.
A series of meetings was scheduled between the council and each department head, who outlined their ideas about how to trim their budgets without affecting essential programs and services.
“Each General Fund department is proposing reductions that are unique for their operation,” Mr. DiMartini told the News-Press in an exclusive interview.
For example, he said, “the police department is proposing to continue to hold officer and other positions vacant, reduce hourly positions and purchase required equipment using Measure C funding.
“The fire department is proposing to hold positions vacant, purchase required equipment using Measure C funding and achieve various operating cost savings.”
And “the parks and recreation department is proposing to reallocate funding of certain positions and reduce some programming.”
To date, council members have met with the heads of the airport, police and fire, sustainability and resilience, waterfront, library, city administrator, mayor and council, city attorney, human resources and finance.
On Wednesday, they will meet with the heads of Community Development and Information Technology.
Thursday, they will meet with the head of parks and recreation.
And on May 31, they will meet with the heads of public works and capital (General Fund & Measure C).
The city has reserved June 5 just in case something comes up that needs to be addressed before the council begins its budget deliberations.
Otherwise, everyone involved will be able to take a week-long break before the two-part Budget Finale.
Part 1 is scheduled for June 7 when council members will hold a marathon, three-hour special meeting to discuss for the first time in public their respective thoughts and positions on the FY 24 budget.
The meeting is scheduled for 6-9 p.m., and will be held in council chambers at City Hall, 735 Anacapa St., Santa Barbara.
Already, some council members have signaled places where they’d like to see fewer budget cuts, particularly when it comes to public safety, knowing full well that if a majority of the board agrees with them, money saved for one or more departments will have to be made up by making steeper cuts elsewhere.
But before they start talking, two things are going to happen, one fairly routine and the other significant.
The former is a brief presentation by Mr. DeMartini, who will outline where the budget process stands as of that night.
“I will deliver a brief presentation to introduce the item and summarize the recommendations that the Finance Committee made during their meetings over the past month as well as summarize any staff recommended changes to the budget,” he said. “Multiple staff will be available to answer questions as necessary, including our budget manager, Natalija Glusac.”
The latter involves the public, who will have their first opportunity to weigh in on the budget — including the structural deficit and proposed budget cuts — and offer their own ideas about how much to cut and where, or whether the cuts should even be made.
People can either show up in chambers and speak in person, or watch the meeting online and participate remotely.
Once the public comment period is over, it’s the council’s turn.
Their deliberations will set the stage for Part 2 of the Budget Finale the following week.
STEP 6: DECISION TIME.
The council is scheduled to vote on the budget at their regular meeting on June 13. The meeting starts at 2 p.m.
For the second time, Mr. DeMartini will talk first.
“I will deliver a brief presentation to introduce the item as well as list the various resolutions that are required to formally adopt the budget,” he said.
Another public comment period will follow.
Then it’s the council’s turn to debate what should happen before they cast their ballots.
Among their options:
— Approve the budget as proposed by staff, with no changes made to their recommendations.
— Make any changes they want to see and then pass the budget.
— Decide to skip the budget cuts altogether, and vote to cover the entire $3.8 million deficit out of the city’s reserves which, at last count, stand at $36.9 million.
— Postpone the vote to another day, as long as it takes place before the new fiscal year starts on July 1.
If, as expected, the FY24 budget is approved, everyone involved can take a deep breath and move on to other things, at least until next April when the budget ballet begins anew.
Everyone, that is, except for city staff.
They’ve already forecast a larger structural deficit in FY25 ($8.9 million) and an additional 3% in budget cuts ($4.1 million) that will need to take place to help close the gap and balance the budget.
So yes, they might take a pause, but only a brief one.
They’ll be watching — with fingers crossed — for sales tax and TOT revenue to seriously pick up steam this summer as locals, joined by thousands of tourists projected to visit Santa Barbara, spend most of their time outdoors basking in the local weather.
And that translates into a lot more people shopping and eating here, as well as a lot more people who will need a place to stay overnight filling up local motels and hotels.
But city staff don’t plan to just watch and wait for that to happen.
They’ll also be focusing on new ways to generate revenue, ways which Mr. DeMartini said “will be presented and discussed in detail with the Finance Committee and City Council in the coming months.”