[ From "City faces $3 million hole in 2-month-old budget," by Eric Lindberg, Daily Sound, Sept. 4, 2009 - Please see original article for full text and comments. ]


Just two months after signing off on a then-balanced budget, Santa Barbara city leaders took their first stab yesterday at grappling with a $3-million chasm that has already emerged in this year’s financial plan.

Options for closing the gap include using excess reserves from several city funds, holding a slew of vacant positions unfilled throughout the year, and stripping away a few line-item expenses.

“We’re really scraping the bones at this point,” Mayor Marty Blum said...

At the root of the city’s money woes are tax revenues that continue to plunge precipitously, a trend that has stubbornly stuck around ever since sales taxes started their downward decline with a 7.4 percent drop in September 2008.

“We started to see the signs then, but we had no idea it would become what it is today,” said Robert Samario, the city’s interim finance director.

Although expected to continue to drop somewhat this year, sales and bed taxes are showing some signs of bottoming out, he said, but not before wiping out 10 years of substantial growth.

Finance officials expect to see sales taxes drop 3.5 percent this year, more than double what had been originally budgeted and thus leaving a $1 million hole to fill. Bed taxes are expected to decline more than initially budgeted as well, adding another $675,000 to the deficit.

However, bed taxes should level out by the end of the year, Samario said, which must be somewhat gratifying for the city’s finance staff after watching that key revenue stream take double-digit hits in seven of the past nine months.

And despite the dour financial forecasts, city officials remained relatively upbeat about closing the gap in the current budget without using the largely depleted budgetary reserves or laying off any employees...

Potential one-time strategies include using excess workers’ compensation reserves and street sweeping reserves, as well as dipping halfway into a built-in budget cushion known as appropriated reserves.

The remaining deficit would be wiped out largely by holding 12 city positions vacant throughout the year and keeping nine other jobs vacant through a portion of the year for a total savings of $1.7 million.

Some line-item cuts include suspending stipends for members of city boards and commissions, and charging a 50-cent fee on holds for children’s materials at the library...

“I would like to see no cuts to public safety and restoration of a full force,” Councilmember Iya Falcone said, advocating that the city send enough recruits to the academy to bring the department back to full strength.

Dep. Chief Frank Mannix said the department is also considering converting two administrative jobs currently held by sworn officers to civilian positions — namely a special events coordinator and training officer. The move would save $170,000 a year, but would reduce the city’s sworn force to 138 personnel, a concept that didn’t sit well with some city leaders.

Councilmember Das Williams said it would not be prudent to reduce sworn staff at all and supported Falcone’s concept of bringing in at least seven new officers.

“That would prevent us from falling below the 140 [threshold] … especially at a time that Santa Barbarans, because of the high-profile gang violence we’ve had, don’t feel as safe,” he said...

As far as the longer-term financial picture, finance officials said there are signs that the economy is stabilizing. By current estimates, revenues should bottom out by early next year and start to recover slowly...

Councilmember Roger Horton was decidedly less optimistic, cautioning that true signs of economic recovery, such as improving employment numbers, have yet to emerge.

“What really concerns me now is the next few months and the next year,” he said, noting that an improvement in some economic indicators may simply be the result of a bounce from federal stimulus funds. “The facts remain that the economy is still in pretty bad shape.”

City revenue streams could just as easily slide further into the hole, Horton continued, adding, “We certainly can’t go much further without reducing staff.”

Labels: budget