City Council – May 28, 2024
Budget Study Session for the FY 2024-25 Proposed Budget and FY 2024-26 Biennial Capital Improvement Program
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May 28, 2024
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May 28, 2024
• Summary of five-year forecast
• Contingent liabilities and strategy for fiscal stability • Proposed FY 2024-25 Operating Budget adjustments
• Proposed FY 2024-26 Capital Improvement Program Budget • City Fees and Rates
• Other business
Agenda – Budget Study Session
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May 28, 2024
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May 28, 2024
The Budget is the result of collaboration between the community, City Departments led by the City Manager’s Office, and the City Council June 2023
Public Hearing and
Adoption of the 1st
year of the Biennial
Budget and 2nd year
of the Biennial CIP
Budget
October 2023
Staff reports on
FY 2022-23 year-end
budget performance,
proposes
adjustments
February 2024
Staff reports on
midyear budget
performance,
updated forecast,
proposes
adjustments
May 28, 2024
Proposed FY 2024-25
operating Budget and
FY 2024-26 biennial CIP
Budget presented to
City Council
June 25, 2024
Public Hearing and
Adoption of the 2nd
year of the Biennial
Budget and 1st year
of the Biennial CIP
Budget
Santa Monica's Budget Process
March 2023
Council Priority
Setting for the FY
2023-25 Biennial
Budget
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Challenges remaining
• Inflation and high interest rates
• Increased insurance and medical costs
• Impact of remote and hybrid work on
consumer behavior
• Deferred infrastructure and maintenance
• Contingent legal liabilities
• Program and service restorations
• Reduced CIP funding and Reserves
• Labor negotiations
Five Year General Fund Forecast
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Capital needs unmet
• In FY 24-25 at 61% of
pre-COVID level
• Deferred maintenance
is not sustainable
• No additional
investments through
forecast period
• $458M in projects
unfunded across all
funds
Capital Needs Remain Unfunded
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• Reserves provide financial
stability, cushion against
financial shocks
• Unrestricted reserves below
pre-COVID levels
• Legal Settlements
• Maintain services during
COVID
• FY 2022-23 reserves are
needed for contingent
liabilities and working capital
General Fund Reserve Levels
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Funds Transferred from Other Funds
Total $52.1
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Strategy to Safeguard Fiscal Stability
Continue to seek compensation from excess insurance providers Sale of city-owned properties
CIP Funding Deferral - fifteen one-time and ongoing projects over two years
Suspend Housing Trust Fund payments – suspend payment over two years, excluding payments that cover Preserving Our Diversity (POD) Program and staffing costs
Other initiatives – Existing partner agreements and/or Judgement Obligation Bonds
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FY 2024-25 Proposed Budget
Citywide Expenditures - $763.5 million*
• FTE Change 11.9 FTE:
• +14.3 Permanent
• -2.4 As-needed
General Fund - $462.5 million
• FTE Change 4.0 FTE:
• +6.3 Permanent
• -2.3 As-needed
*Citywide expenditures are net of reimbursements and transfers between funds $91.8
$13.0
$671.7
$449.5
$-
$100
$200
$300
$400
$500
$600
$700
$800
Citywide* General Fund
(in millions)
Operating
Capital
$763.5
$462.5
Budget Overview – FY 2024-25 Proposed Budget
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Other Adjustment (~$216,000)
• City Attorney Staff Retention
(Consumer Protection Funds)
General Fund Operating Budget Adjustments
Revenue Supported (~$266,000)
• Enhance Community Programs
• Pass-thru EV Charger Electricity
Adjustments (~$532,000)
• Equity Adjustments &
Reclassifications
NO COST adjustments to strengthen
services in:
• Customer Service (311 and Public Landscape)
• Communications
• Library Operations
• Community Recreation Programs
• Parking Operations & Enforcement
• Multimodal Transportation Network Alignment
• Staff Recruitment & Retention
Total FTE Changes 4.0
Permanent 6.3
Increase of approximately $1 million: As-Needed (2.3)
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Self-Sustaining: Airport, BBB, Cemetery, Housing Authority, RRR, Stormwater, Water, Wastewater
Requiring Attention: Vehicle Management, Information Technology & Replacement - future year repayments of suspended contributions General Fund Impact: Beach and Pier subsidies to offset revenue losses and support critical capital expenditures
Other Funds Financial Status
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Net increase of approximately $3.9 million:
Other Funds Revenue Adjustments
New Funding Levels
& Pass-Thru
Project Cost
Reimbursements
Fees & Rates
and Other
Gas Tax (-$0.2m)
Local Return (+$1.1m)
Wastewater (+$0.5m)
Big Blue Bus (+$1.4m)
Grants (+$2.5m)
Info Tech (+$0.7m)
Airport (-$3.2m)
Beach (+$0.8m)
All Other (+$0.4m)
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• Equity Adjustments and Reclassifications (BBB Fund, Vehicle Management Fund, and Water Fund) - $1.6 million
• Increased POD Program and Art of Recovery Program funding (Special Revenue Source Fund) - $1.1 million
• Additional Positions - $1.1 million to:
• enhance event programming (Beach Fund)
• support the City’s growing water/wastewater infrastructure (Water Fund and Wastewater Fund)
• further integrate multimodal transportation (BBB Fund) Other Funds Operating Expenditure Adjustments
Total FTE Changes 8.0
Permanent 8.0
As-Needed 0.01
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Proposed FY 2024-26 Biennial
Capital Improvement Program Budget
Capital Improvement Program
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CIP Budget Process & Funding Sources
• CIP Budget Process
Biennial Budget – FY 2024-25 and FY 2025-26
Five-year planning period FY 2024-25 through FY 2028-29 CIP review and recommendations to Council
• Funding Sources
General Fund
Enterprise Funds
Grant Funds
Local Return Funds
CIP Budget Process & Funding Sources
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General Fund CIP Allotment (in millions)
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A. Mandated Activities
1. Necessary for health or safety reasons
2. Federally or State required
3. Maintain existing facilities, infrastructure or equipment
4. Projects underway
CIP Budget Priorities
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B. Council Priorities
1. Clean & Safe
2. Addressing Homelessness
3. Economic Growth and Cultural Vitality
4. Justice, Equity, and Diversity
5. Sustainable & Connected
CIP Budget Priorities
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C. Fiscally Responsible Projects
1. Improve operational efficiency and achieve cost savings
2. Generate revenue
3. Outside funding has been obtained
CIP Budget Priorities
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73 Projects in the Proposed Budget
(20 – General Fund, 53 – Other Funds)
All Funds
FY 2024-25: $91.8 million
FY 2025-26: $102.7 million
General Fund
FY 2024-25: $15.9 million > $13 million ($2.9 million)
FY 2025-26: $19.9 million >$15.3 million ($4.6 million) CIP Budget Summary by Fund
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CIP Diverse Funding Sources
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CIP Budget Trends (in millions)
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Proposed General Fund CIP Projects
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CIP Held Projects
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Maintaining Clean and Safe Public Spaces
Park Improvements and Planning
Water & Stormwater Projects
Modernization of critical City Infrastructure
CIP Program Areas of Focus
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Maintaining Clean and Safe Public Spaces
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Park Improvements and Planning
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Water & Stormwater Projects
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Modernization of Critical City Infrastructure
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Estimated at
$300M
Infrastructure Maintenance
New Infrastructure or Technology
Parks
Pier and Beach
Streetscape and Lighting
Miscellaneous
Estimated at
$458 million
Unfunded CIP Categories
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Unfunded Projects
• Parking Structure 1 Seismic
Retrofit
• Memorial Park Expansion
• Lincoln Neighborhood Corridor
Streetscape
• Street Light Upgrades
• Vehicle and Computer
Replacement
• Fire Station 3 and Fire
Station 7
• Airport ParkExpansion
• City Yards Modernization – Michigan
Ave Improvements
• Historic City Hall North Wing
Building System Upgrade
• Pier Deck Upgrades
• Pier West End Upgrade
Unfunded CIP Projects (Not Comprehensive)
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$46M In Pending Grant Applications
• Bus replacements and mobility projects
• Lincoln Blvd Neighborhood Corridor Plan (LiNC)
$16M Not Awarded
• Freeway Capping
• Memorial Park Expansion and Gandara Park Improvements $35M Successful Grant Awards
• Bus replacements
• City Yards Microgrid
• Groundwater Recharge Well SM-11i
• Lincoln Blvd Neighborhood Corridor Plan
(LiNC)
• Wilshire Blvd Safety Study Phase 2
Grants for CIP Projects
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• Community Development Fees
• Fire Department Fees
• Library Fees
• Police Fees
• Public Works Department Fees
• Airport Fees and Rates
• Recreation and Arts Fees
City Fees and Rates
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• June 25th
• Public Hearing: Adopt the FY 2024-25 Operating and FY 2024-26 Capital Improvement Program Budget
• Final Changes
• Resolutions
• Seek Direction on Revising Cannabis Rates
Next Steps
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Tonight’s Recommended Actions
• Review and provide direction on the FY 2024-25 Proposed Operating Budget adjustments and FY 2024-26 Proposed Biennial CIP Budget
• Direct staff to proceed with setting the budget adoption hearing on June 25, 2024
• Provide direction for staff to evaluate other funding mechanisms such as general obligation bonds to support the City’s CIP in future years
• Review and provide direction on new and changes to existing fees Item 7-A
May 28, 2024
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May 28, 2024