City Council
Housing Authority
Parking Authority
Report
City Council Meeting: June 23, 2026
Agenda Item: 12.A
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To: Housing Authority, Parking Authority, Mayor and City Council From: Oscar Santiago, Director, Finance Department
Subject: Adoption of the Second Year of the FY 2025-27 Biennial Budget / Adoption of the First Year and Approval of the Second Year of the FY 2026-28 Biennial Capital Improvement Program Budget
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Recommended Action
Staff recommends that the Housing Authority:
1. Adopt a Resolution of the Housing Authority of the City of Santa Monica adopting the FY 2026-27 Operating Budget and adopting the first year and approving the second year of the FY 2026-28 Biennial Capital Improvement Program Budget at Attachment B, as amended by Attachment D;
Staff also recommends that the City Council and Parking Authority:
2. Adopt a Resolution of the City Council of the City of Santa Monica adopting the FY 2026-27 Operating Budget and adopting the first year and approving the second year of the FY 2026-28 Biennial Capital Improvement Program Budget at Attachment A, as amended by Attachment D; and
3. Adopt a Resolution of the Parking Authority of the City of Santa Monica adopting the FY 2026-27 Operating Budget and adopting the first year and approving the second year of the FY 2026-28 Biennial Capital Improvement Program Budget at Attachment C, amended by Attachment D.
Staff also recommends that the City Council:
4. Adopt a Resolution revising the Master Fee Schedule (Attachment E);
5. Adopt a Resolution revising the Master Fine Schedule (Attachment F);
6. Adopt a Resolution establishing parking rates and permit fees for all City facilities (Attachment G);
7. Adopt a Resolution establishing new classifications and salary rates (Attachment H) and approve related position and classification changes (Attachment I);
8. Adopt a Resolution establishing the Gann Appropriations Limit (Attachment J);
9. Adopt a Resolution incorporating an SB1-funded project: The Road Repair and Accountability Act (Attachment K);
10.Authorize staff to amend the City’s Fiscal Policies to incorporate updated Procurement Policies, as described in Attachment L; and
11.Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines and findings of categorical exemptions pursuant to Section 15301 (Existing Facilities), Section 15273 (Rates, Tolls, Fares, and Charges), and Section 15324 (Regulations of Working Conditions) and a finding of Statutory Exemption pursuant to Section 21080.20.5of the California Environmental Quality Act (CEQA) Guidelines.
Executive Summary
This report presents the information and actions necessary to adopt the FY 2026-27 Operating Budget and the first year of the FY 2026-28 Biennial Capital Improvement Program (CIP) for the City of Santa Monica, the Santa Monica Housing Authority, and the Santa Monica Parking Authority. Staff also requests that Council approve the second year of the FY 2026-28 Biennial CIP Budget. Because the City Charter requires annual budget adoption, staff will return in June 2027 to present the second year of the CIP for formal adoption, including any necessary revisions. 3 of 15
At its May 26, 2026 budget study session, the City Council reviewed the FY 2026-27 Proposed Operating Budget Adjustments and the FY 2026-28 Proposed Biennial CIP.
Following public comment and Council deliberation, the Council expressed strong support for the proposed budget and directed staff to return with final documents for adoption.
Since the study session, three CIP adjustments have been incorporated: advancement of the 14th Street Bikeway Project into FY 2026-27, acceleration of the 4th Street Transit Priority Improvements, and a funding refinement for an Affordable Housing and Sustainable Communities (AHSC) -supported project in FY 2027-28. The Bikeway acceleration supports the City’s Vision Zero goals and responds to community priorities for a safer, multimodal north-south route, while the 4th Street Transit Priority Improvements enhance bus operations, travel efficiency, and transit reliability ahead of LA28.
This report also brings forward the annual implementing resolutions as part of the budget adoption process, including updates to the Master Fee and Fine Schedules, the parking rate schedule, the Gann appropriations limit, and SB1 compliance requirements. Personnel and classification changes are also included, consistent with the May 26 review. In addition, staff is providing a brief update on the Pier Corporation (Pier Corp) Services Agreement.
The final FY 2026-27 citywide budget for adoption totals $908.8 million, net of reimbursements and transfers, and includes 2,287.6 full-time equivalent (FTE) positions across all funds.
Collectively, the FY 2026-27 Operating Budget, FY 2026-28 CIP, Citywide Fee Study updates, and Fiscal Policy amendment position the City to sustain enhanced service levels, deliver priority capital projects, and prepare for a historic period of major events 4 of 15
including the FIFA World Cup (2026), the 2027 Super Bowl, and the LA28 Olympic and Paralympic Games.
Background
Operating Budget
The FY 2026-27 Operating Budget represents the second year of the FY 2025-27 Biennial Budget adopted in June 2025, updated to incorporate the Realignment Plan and March 2026 operational refinements. At the May 26 study session, Council reviewed the revised FY 2026-27 proposed operating budget, including updated revenue estimates, departmental alignment adjustments, and personnel changes.
Capital Improvement Program
The FY 2026-28 Biennial CIP Budget also received extensive Council review in May.
The CIP presented for adoption remains consistent with that version, with three targeted revisions:
• Advancement of the Santa Monica Neighborhood Greenways Project from FY 2027-28
• Acceleration of the 4th Street Transit Priority Improvements • A reduction in FY 2027-28 funding for an AHSC-supported project Beyond these revisions, the CIP continues to reflect the City’s structural shift to relocate recurring maintenance, technology, and fleet replacement back into the operating budget. This allows the CIP to remain focused on true capital improvements, including park enhancements, major event readiness, mobility investments, and infrastructure renewal.
Citywide Expenditure Budget Totals
The final FY 2026-27 citywide budget for adoption totals $908.8 million, net of reimbursements and transfers, across all funds. The Citywide staffing plan includes 2,287.6 full-time equivalent (FTE) positions across all funds, including 112.3 FTE temporary and 2,175.3 FTE permanent positions.
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FY 2026-27 Citywide Expenditure Budget
(in millions)
Proposed Budget
(May 26) 1
Final
Changes 2
Proposed Budget
for Adoption
Operating Budget $916.0 $916.0
Capital Budget 109.8 0.6 110.4
Less reimbursements & transfers 3(117.6) 0.0 (117.6)
Total net of reimbursement & transfers $908.2 $0.6 $908.8 Citywide FTE Permanent Positions 2,176.3 (1.0) 2,175.3
Citywide FTE As-needed Positions 112.3 0.0 112.3
Total FTEs 2,288.6 (1.0) 2,287.6
¹ Includes changes presented on May 26, 2026, as well as Council-approved budget changes made in FY 2025- 26, including Realignment Plan changes.
2 Final changes reflect the adjustments to the CIP budget, per Council direction in May, as well as a clean-up adjustment resulting in the deletion of one FTE position in the Pier Fund. 3 These are technical adjustments to eliminate double counting of certain expenditures appearing in two funds.
These totals represent the complete, adoption-ready operating and capital budgets for FY 2026-27, consistent with the strategic and fiscal guidance established by Council in the Realignment Plan. Attachments A through C provide the appropriation actions necessary to implement the final budget beginning July 1, 2026.
Discussion
The budget presented for adoption is consistent with the version reviewed by City Council at the May 26, 2026 study session, with no changes to the General Fund. The only updates, which are listed below, are three targeted revisions to the Capital Improvement Program (CIP) in the Miscellaneous Grants and Big Blue Bus Funds. • Consistent with Council direction, the Santa Monica Neighborhood Greenways Project has been advanced from FY 2027-28 into FY 2026-27, along with its associated grant funding. The project is supported by a SCAG Sustainable Communities Program grant. While the total grant award remains unchanged, the amount incorporated into the CIP has been reduced to reflect SCAG’s decision to retain and directly manage the portion of funding allocated for consultant-led design, engineering, and stakeholder engagement.
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• The 4th Street Transit Priority Improvements have been accelerated to support transit efficiency and reliability ahead of LA28.
• Funding for an AHSC–supported project in FY 2027-28 has been reduced to align with updated scheduling and a refined distribution of costs compared to the amount originally included in the plan.
The tables below reflect the corresponding updates to FY 2026-27 revenues and the FY 2026-28 CIP budget necessary to implement these three adjustments.
Revenue Changes
Fund Description
FY 2026-27
Final
Change
Misc. Grants Santa Monica Neighborhood
Greenways Project – SCAG grant 440,552
Capital Improvement Program Changes
Fund Description
FY 2026-27
Final
Change
FY 2027-28
Final
Change
Big Blue Bus 4
th Street Transit Priority
Improvements 150,000 (150,000)
Misc. Grants Santa Monica Neighborhood
Greenways Project – SCAG grant 440,552 (437,500)
Misc. Grants 14th Street Two-way Protected
Bikeway – AHSC & future grants (403,975)
Total CIP Final Changes 590,552 991,475
Aside from these project timing changes, no additional budget changes have been made to the operating or capital budgets presented in May. These final changes are detailed in Attachment D.
With these refinements, the FY 2026-27 citywide budget for adoption totals $908.8 million, net of reimbursements and transfers. The adjustment does not alter the City’s 7 of 15
overall fiscal position; the General Fund remains balanced, and the CIP continues to reflect a focused, deliverable portfolio of priority projects.
Budget Adoption Resolutions
As part of the FY 2026-27 budget adoption, several resolutions are before the City Council. These resolutions fall into the categories outlined below.
Operating and Capital Budget Adoption
Adopting the resolutions in Attachments A, B, and C would:
• Formally adopt the FY 2026-27 budget, including revenues and the operating and capital spending authority for each department.
• Approve the City’s Fiscal Policies for FY 2026-27 (amended by Attachment L). • Authorize staff to carry forward unspent funds for multi-year grants and for goods and services that were ordered but not received by the end of FY 2025-26. • Allow staff to carry forward unspent balances for Measure GS, Council discretionary funds, and other General Fund and non-General Fund capital projects from FY 2025-26, so they remain available for their intended purposes in FY 2026-27.
Fees, Fines, and Rates
These resolutions update the City’s fees, fines, and parking rates to reflect cost-ofservices findings, operational needs, and program requirements. • Citywide Fee Updates (Attachment E). The master fee resolution contains user fees and rates, which are designed to recover the City’s costs, including staff time. Consistent with Council direction, most user fees reflect updated cost-ofservice calculations from the Citywide User Fee Study, combined with the applicable cost-of-living adjustment (COLA) where appropriate. For consistency in cash-handling practices and to facilitate ease of payment for users, most updated fee amounts have been rounded down to the nearest nickel. Where applicable, fees that were not included in the User Fee Study will increase 8 of 15
administratively by 3.3% on July 1, 2026, reflecting the FY 2026-27 increase in total City compensation (which includes salary, healthcare, retirement, and workers’ compensation costs) projected at the time of preparation of the Proposed FY 2026-27 Budget. The resolution also incorporates new fees and revised fees, as presented to Council during the budget study session.
Response to Questions on Aquatics Fees
At the May 26, 2026 budget study session, public comment was received regarding increases for adult aquatics permit fees and expressing concern about the cost recovery rate and comparability to other cities. Staff would like to address those concerns.
Santa Monica Aquatics fees have not increased since 2021. The proposed 8–9% adjustment, ranging from a $0.50 increase for Santa Monica–based nonprofit youth groups (short course) to up to $8 for non–Santa Monica organizations (long course), aligns with current aquatics programs and other Recreation and Arts Department fees. Upon additional review with the fee study consultant, staff reallocated support costs based on actual pool usage and updated the cost recovery calculations, which reflect a lower overall cost recovery level for aquatics permit groups. The updated analysis separately evaluated youth and adult permit groups, confirming that adult permit groups have a higher cost recovery level (58%) than for youth groups (44%), which is consistent with City policy to provide greater subsidies for youth programs. Staff analysis finds these fee adjustments reasonable and unlikely to cause significant hardship or displacement of users. These updated calculations do not change the fee schedule presented in May 2026. Staff conducted additional research and found that only a few nearby cities offer swimming lane rentals and that even with the fee adjustments, Santa Monica’s lane rental rates remain below those of nearby agencies, including the Cities of Long Beach, Torrance, and El Segundo.
Additionally, comments regarding Santa Monica College cost allocation, pool scheduling, and the Santa Monica High School Joint Use Agreement involve 9 of 15
separate agreements and policy considerations outside the scope of the proposed fee adjustments.
• Citywide Fines Updates (Attachment F). The master fine resolution includes non-standard administrative citation fines used to enhance compliance with the Santa Monica Municipal Code. As part of the annual budget review process, staff evaluated existing fines to ensure they remain aligned with enforcement needs, community impacts, and current operational practices. This year’s updates include targeted adjustments in areas where fine amounts no longer reflect the cost of administering and enforcing applicable regulations, as well as the removal of fines that are no longer utilized. As a result of the comprehensive review of the fines, staff recommend revising three existing fines and establishing one new fine to address emerging operational needs, as described below.
Revisions to Existing Fines
o Staff recommends increasing three existing Code Enforcement fines to strengthen compliance. The fines for Construction Work Without Permit, Construction Work with Expired Permit, and Non-Compliance with an approved Means and Methods Plan would each increase to $1,000, as current fine amounts do not provide a sufficient compliance-driven deterrent.
New Fines
o The Community Development Department is proposing a new non-standard fine with a base penalty amount of $500 for violations of the Tenant Protection During Construction Administrative Regulations (SMMC 8.100.70) to support enforcement of regulations that protect tenants’ health, safety, and welfare.
These changes are limited in scope and are intended to maintain consistency, support efficient administration, and strengthen the City’s ability to address specific code-related impacts.
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• Parking (Attachment G). There are no proposed rate changes to transient and permit parking lots/structures at this time. The resolution provides for the following changes: 1) Extend the downtown discount validation program through June 30, 2027; 2) Extend the bulk parking fee agreement for the State of California Judicial Council through June 30, 2027; 3) Increase preferential parking permit fees by 3.3%, reflecting the FY 2026-27 increase in total City compensation; and 4) Continue the Pilot Electric Vehicle Parking Permit for Lots 7, 8, 9, and 11.
Fiscal and Compliance Requirements
These resolutions ensure the City remains in compliance with state law and funding requirements related to appropriations limits and transportation revenues. • Gann Appropriations Limit (Attachment J) - State law requires all state and local governments to adopt an annual spending limit, commonly known as the “Gann Limit.” This limit caps how much tax revenue can be used for public services. The cap is adjusted each year for changes in population, inflation, and shifts in responsibility between different levels of government. When tax revenues exceed this limit, the excess must be returned to taxpayers through rebates or future tax reductions.
Each June, concurrent with the budget adoption, the City Council adopts a resolution establishing Santa Monica’s Gann limit for the upcoming fiscal year.
For FY 2026-27, the proposed limit is determined by applying adjustment factors from the California Department of Finance to FY 2025-26’s limit.
Adjustment Factors:
City Non-Residential New
Construction Assessed Valuation
.
1.08530
City Population Growth x 1.00385
Adjustment to current year = 1.08947
FY 2025-26 (current year) Gann Limit x $ 3,271,593,616
Proposed FY 2026-27 Gann Limit = $ 3,564,303,096
Appropriations Subject to Gann Limit 357,121,031
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Net Under / (Over) Limit $ 3,207,182,066
The City’s FY 2026-27 appropriations subject to the Gann Limit, primarily in the General Fund, are projected to be $3,207,182,066 below the allowed maximum. Tax revenues counted under this limit include property, sales, transaction and use, transient occupancy, utility, parking facility, and business license taxes. These amounts are reduced by refunds, certain benefits payments, qualified capital projects, and court or federal mandates. • SB1 Gas Tax Revenues (Attachment K) - In April 2017, SB1, formally known as the Road Repair and Accountability Act (RMRA) of 2017, was signed into law.
SB1 establishes the Road Maintenance and Rehabilitation Program (RMRP) to address deferred maintenance on the state highway and local street and road systems. Current fund estimates provided by the League of California Cities indicate that the City of Santa Monica will be eligible to receive approximately $2.6 million in SB1 funding in FY 2026-27, in addition to the City’s existing annual gas tax revenues of approximately $2.6 million. Staff recommends approving the attached resolution identifying the use of FY 2026-27 SB1 estimated allocation of $2.6 million for the Annual Paving and Sidewalk Repair Program capital improvement project, which was already included in the FY 2026-28 Proposed CIP Budget that was presented to Council on May 26.
Other Organizational Actions
These resolutions support the City’s administrative framework and ensure alignment between staffing, governance, and operational standards. • Salary Rates (Attachment H) - The salary resolution includes adjustments to existing classifications, updates to the City’s living and minimum wage rates, and the establishment of new classifications. Attachment I, Position and Classification Changes, identifies additional operational changes that were not included in the budget presented to Council on May 26, 2026.
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Pier Corporation Governance Update
As noted in the related Pier Corporation Services Agreement item (under Consent Items for June 23, 2026), increased event activity at the Pier has created a need to further clarify the respective roles of the City and the Pier Corporation. A subsequent services agreement update will formalize these roles, while preserving Pier Corp’s core function in supporting the visitor experience and community-based programming. Future agreement updates will also address related budget and funding implications as part of the broader Pier governance review anticipated for early winter.
Council Discretionary Funds Updated Balance
Each year, Council allocates discretionary funds to assist the community in special projects or support important but otherwise unfunded priorities. Historically, Council has supported community partners like the Business Improvement Districts, Santa Monica traditions such as the Fourth of July Parade, and grants that allow Santa Monica youth to participate in special events.
On October 14, 2025, Council updated its Council Discretionary Funding Policy whereby allocations to long-standing community events, such as the Business Improvement Districts, Fourth of July Parade, Westside Coalition Martin Luther King Jr.
Celebration, Santa Monica Pride, and Santa Monica High School Grad Night, would be funded through the City Manager’s Office budget. Furthermore, additional funding was appropriated so that the Council discretionary fund budget would total $140,000, which would allow each Councilmember to direct allocations of up to $20,000. As of June 10, 2026, Council has allocated $46,000, leaving a remaining balance of undesignated Council discretionary funds of approximately $94,000.
Including unprogrammed FY 2025-26 discretionary funds ($94,000) and FY 2026-27 discretionary funds ($140,000), the Council has access to $234,000 in discretionary funds in FY 2026-27. A five-year history of the projects and programs supported by Council discretionary funds may be found in Attachment M. 13 of 15
Council may direct staff to allocate a portion of the available funds tonight as part of budget adoption or at any time throughout the year. No action is required by Council at this time.
Past Council Actions
Meeting Date Description
05/26/26
(Attachment N)
Fiscal Year 2026-27 Proposed Budget and Fiscal Year 2026-28 Biennial Capital Improvement Program Budget
Environmental Review
The actions to adopt the FY 2026-27 Operating Budgets, establish the Gann Appropriations limit, and amend the City’s Fiscal Policies are exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines (common sense exemption), which states that CEQA does not apply, “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” Operational budget and fiscal policy are administrative and programmatic in nature. Therefore, it can be seen with certainty that the actions would not result in adverse physical impacts on the environment, and as such, is exempt from CEQA.
The changes to Citywide Fees and Fines and parking rates are exempt from CEQA pursuant to Section 15273, which states that CEQA does not apply to the establishment, modification, structuring, restructuring, or approval of rates, tolls, fares, and other charges. The actions for budget adjustments and salary rates and reclassification of positions are exempt pursuant to Section 15324 (Regulations of Working Conditions), which exempt actions to regulate employee wages, hours, or working conditions. Additionally, these changes are exempt pursuant to Section 15061(b)(3) of the CEQA Guidelines (common sense exemption), which applies when “it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.”
Funding advancement of the Greenway is project statutorily exempt from the provisions of California Environmental Quality Act (CEQA) pursuant to 21080.20.5 of the State 14 of 15
Implementation Guidelines as the project is consistent with a bicycle plan prepared pursuant to Section 891.2 of the Streets and Highways Code. This project was previously deemed to be statutorily exempt in 2014.
Financial Impacts and Budget Actions
The FY 2026-27 Citywide Budget as revised, including operating and capital budgets, is $908.8 million, net of reimbursements and transfers, as described below:
Revenues (in millions, rounded)
FY 2026-27
Proposed
Budget
General Fund $509.5
All Other Funds 526.5
Total, before adjustment for reimbursements & transfers $1,036.0 less reimbursements & transfers (117.6)
Total, net of reimbursements & transfers $918.4
Operating Expenditures (in millions, rounded)
FY 2026-27
Proposed
Budget
General Fund $525.2
All Other Funds 390.8
Total, before adjustment for reimbursements & transfers $916.0 less reimbursements & transfers (117.6)
Total, net of reimbursements & transfers $798.4
Capital Expenditures (in millions, rounded)
FY 2026-27
Proposed
Budget
FY 2027-28
Budget
Plan
General Fund $19.9 $17.6
All Other Funds 90.5 98.0
Total $110.4 $115.6
Full-Time Equivalent (FTE) Positions
(rounded to the nearest tenth)
FY 2026-27
Proposed Budget
Permanent Temporary
General Fund 1,397.2 103.7
All Other Funds 778.1 8.6
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Total Citywide FTEs 2,175.3 112.3
Adoption of the Proposed Budget as amended by Attachment D would formally adopt the FY 2026-27 Operating and CIP budgets and approve the second year of the City’s FY 2026-28 Capital Improvement Program Budget.
Prepared By: Oscar Santiago, Director
Approved Forwarded to Council
Attachments:
A. Attachment A - Budget Resolution (City Council)
B. Attachment B - Budget Resolution (Housing Authority) C. Attachment C - Budget Resolution (Parking Authority) D. Attachment D - Final Changes Budget Adjustments FY 2026-27 E. Attachment E - Master Fees Resolution
F. Attachment F - Master Fines Resolution
G. Attachment G - Parking Rates Resolution
H. Attachment H - Salary Resolution
I. Attachment I - Position and Classification Changes
J. Attachment J - FY 2026-27 Gann Appropriations Limit Resolution K. Attachment K - Resolution for RMRA
L. Attachment L - Update to Fiscal Policy (Procurement) M. Attachment M - Council Discretionary Funds
N. Attachment N - May 26, 2026 Staff Report
O. Written Comments
P. PowerPoint Presentation