Financial Status Update and Midyear Review
February 2024
High Degree of Volatility/Uncertainty
• Reserves provide financial
stability, cushion against financial
shocks
• Unrestricted reserves below preCOVID levels
• Legal Settlements
• Maintain services during
COVID
• FY 2022-23 reserves are needed for
contingent liabilities and working
capital
General Fund Reserve Levels
Funds borrowed from Other Funds
Total $52.1
• Lost $170M in revenues
through June 2023
• Total loss of over $204M,
ending in ‘26-27
• Gap reflects capacity to
restore services
• Additional challenges:
• New needs
• Inflation – Higher Costs
General Fund Revenues Still Lagging
Inflation
Diminished Purchasing Power
We would need $120 today to match $100 in pre-pandemic days Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) – national annual averages
• 3.7% average growth rate
• TOT impacted by hotel
renovations in short term.
Stronger growth mid-2024
reaching peak levels by late
2025/early 2026
• Property taxes projected to
increase as interest rates
moderate or are reduced
• Business License Tax increase
from higher gross receipts and
compliance efforts
• Parking revenues lower than
previous projection
Revenue Growth is Steady but Slow
• Contingent Liabilities (i.e., sexual abuse claims, CVRA) • Infrastructure and equipment maintenance funding at reduced levels • General and auto liability insurance contribution increases • Pension losses in FY 2021-22
• Healthcare increases reflecting national trends
• Pier and Beach Funds require financial assistance from General Fund Expenditure Challenges
Capital needs unmet
• Now at 59% of pre-COVID
level
• Deferred maintenance is
unsustainable
• No additional investments
through forecast period
• $358M in projects
unfunded citywide
Capital Needs Remain Unfunded
with inflation
Consumer Price Index for Urban Wage Earners and
Clerical Workers (CPI-W) – national annual average
Capital Improvement Program
Unfunded Projects (Not Comprehensive)
10 • Parking Structure 1 Seismic Retrofit
• Memorial Park Expansion
• Lincoln Neighborhood Corridor
Streetscape
• Street Light Upgrades
• Vehicle and Computer Replacement
• Gandara Park Restoration
• Airport Park Expansion
• Memorial Park Phases 2-3
• Fire Station Facilities
• City Hall North Wing Building
System Upgrade
• Pier Deck Upgrades
• Pier West End Upgrade
• Public Landscape Relocation
11 Sidewalk repairs
Right of way maintenance
Streetlight maintenance
Copper wire theft
Capital Improvement Program – Deferred Maintenance
Challenges remaining
• Contingent liabilities
• Deferred infrastructure &
maintenance
• Additional CIP funding beyond base
allocations
• Program and service restorations
• Labor negotiations
Five Year General Fund Forecast
*Includes the use of one-time working capital
• Used to smooth years when
projected expenditures
exceed revenues
• Made available from earlier
revenue recovery
• Programmed over forecast
period
• Covers continuation of
programs and increases in
pension, healthcare,
insurance costs
Need for Working Capital Reserve
Self-Sustaining: Water, Wastewater, RRR, BBB, Airport, Cemetery, Housing Authority, Stormwater
Requiring Attention: Vehicle Management - future year repayments of suspended contributions
General Fund Impact: Beach and Pier subsidies to offset revenue losses and support critical capital expenditures
Other Funds (Non-General Fund)
Key Takeaways
• Stable forecast as economic recovery continues
• Significant liabilities demands fiscal restraint -- hindering program / service restoration
• Mounting infrastructure and deferred maintenance needs • Need to continue to strengthen reserves
FY 2023-25 Midyear Revenue Adjustments (in millions)
General Fund
FY 2024-25
Increase /
(Decrease)
FY 2023-24
Increase /
(Decrease)
Description
Transient Occupancy (Hotel) Tax $ (0.2) $ 4.2
Sales Tax and Use Tax (0.7) (0.6)
Property Tax 1.5 1.2
Business License Tax 3.4 2.7
Parking-Related (0.2) (0.2)
Developer Agreement (2.0) (1.6)
Other Misc. Revenues (0.6) 0.7
Total Revenue Changes $ 1.2 $ 6.4
• Enables balanced budget
throughout forecast using
essentially the same level of
working capital reserve as in
previous forecast.
• Helps cover expenditure
changes and cost increases.
OS0
Slide 16
OS0 [@Jennifer Young] , this slide is good. We can use this one.
Oscar Santiago, 2024-02-21T21:50:26.266
OS0 0 Show in millions and combine smaller items.
Oscar Santiago, 2024-02-21T21:51:03.119
JY0 1 revised
Jennifer Young, 2024-02-22T01:11:29.215
FY 2023-25 Midyear Expenditure Adjustments
General Fund
FY 2023-24 Changes
Total $1,848
• Add 7.3 Permanent FTEs
• 3.0 from new revenues
• 3.3 by deleting 8.0 temp. FTEs
• 1.0 funded by Airport
• Right to Counsel Program and Below
Market Housing software upgrade (by
Housing Trust Fund)
• Reduced Measure GSH obligation
from lower TUT
FY 2024-25 Changes
Total $4.5 Million
• Increase insurance contributions
• CalPERS pension contribution
Total FTE Changes (0.7)
Permanent 7.3
As-Needed (8.0)
FY 2023-25 Midyear Adjustments
Other Funds
Revenues (in millions) Expenditures (in millions)
Fund FY 2023-24 FY 2024-25
Airport $ (0.4) $ (0.1)
BBB (1.9) (2.3)
Housing Authority (0.7) (0.8)
Miscellaneous Grants 1.8 (0.7)
Self Insurance Funds 1.1 4.9
Vehicle Management 4.5 1.6
Water (4.9) (5.0)
Other Funds 0.3 0.0
Total $ (0.2) $ (2.4)
Fund FY 2023-24 FY 2024-25
Big Blue Bus $ 0.4 $ 1.1
Clean Beaches 0.4 (0.2)
Housing Authority (1.7) (0.3)
RRR 0.2 0.6
Vehicle Management 0.1 0.7
Wastewater Fund (0.2) 0.4
All Other 0.6 0.8
Total $ (0.2) $ 0.8
Total FTE Changes 2.0
Permanent 2.0
As-Needed 0.0
FY 2023-25 Capital Budget Expenditure Adjustments
Other Funds
FY 2023-24 Changes
Total $8.6 Million
• Purchase of vehicles in RRR
o$4.0m payment from RRR to
Vehicle Mgmt. Fund
o$4.0m budget increase to
Vehicle Mgmt. Fund to
purchase the vehicles
• Santa Monica Blvd Safety
Enhancement Study
FY 2024-25 Changes
Total $1.2 Million
• Ongoing contribution for
depreciation of new RRR
Vehicles
Other Business
Authorization:
• to accept a grant award from the California Department of Aging’s Local Aging & Disability Action Planning (LADAP) grant program
• to accept a grant award from the U.S. Department of Homeland Security, Federal Emergency Management Agency (FEMA) Hazard Mitigation Grant Program (HMGP) through the State of California, Governor’s Office of Emergency Services (CalOES)