[Noozhawk’s note: This is the first in a series of articles on Noozhawk’s Santa Barbara Challenge, our public-engagement project on the city of Santa Barbara’s budget. Related links are below.]
Drop the words “budget” or “city finance” into your next conversation and it’s likely to induce some spacing out among your family and friends. Unless you’re an accountant or a numbers geek, reading through the city of Santa Barbara’s nearly 200-page annual budget document probably isn’t how you’d prefer to spend your spare time.
But the natural inclination to tune out Santa Barbara’s budget business is unfortunate; how the city conducts its financial affairs is vitally important, now more than ever. Taking this esoteric — and we admit, sometimes dull — budget process and infusing it with meaning is the center of Noozhawk’s Santa Barbara Challenge, a unique project we’re launching in partnership with the Davenport Institute for Public Engagement and Civic Leadership at Pepperdine University’s School of Public Policy in Malibu.
We know that right about now “normal” people might be hearing a noise akin to the droning of Charlie Brown’s teacher, especially when we start throwing around words like “General Fund” and “revenue stream.” You’re asking, “Why?” We’re here not just to answer that question but to convince you to take the next step and get involved.
We think everyone living in Santa Barbara cares about how many police officers are on the streets. Ditto for how streets are maintained and what programs the Parks & Recreation Department can offer. The city made nearly $9 million in cuts just for last year’s budget, and 32 full-time positions were eliminated. Some of the proposals put forward to help with that deficit are one-time measures to come up with cash. These short-term solutions don’t take into account the systemic issues facing Santa Barbara — year after year — like the rising costs of salaries and benefits for municipal employees.
But before we get into Santa Barbara’s ongoing issues, some basics: The extent of most people’s budget knowledge comes from how they deal with their own money. Municipal governments are a little different. One of the most important things to remember has to do with what’s called the General Fund. That’s where most of the city’s important services — like fire and police, parks, recreation and libraries — all get the money they need to operate. The money that makes up the General Fund comes primarily from three different types of taxes that you pay at one point or another: property taxes, sales taxes and the transient-occupancy tax, or bed tax. We’ll go more in depth with each of these in subsequent stories.
What’s important to know now is that because each of these taxes are at all-time lows because of the lousy economy, the General Fund has taken a hit. A big one. City reports say that sales tax has been set back 10 years in terms of growth, with five years of setback for the bed tax. Although revenues are starting to recover, it may be some time before they rebound fully.
“Ultimately, given the city’s dependence on tourism and consumer spending, we will likely not see strong growth until statewide unemployment levels improve and consumer confidence is restored,” the city’s most recent financial document stated.
Most of the General Fund goes to pay for the salaries and benefits of city employees, and each department is represented by one or more unions. Any cuts to those departments must first go through sometimes lengthy discussions among all of the stakeholders.
And if the problems weren’t bad enough on a local level, the state of California can swoop in and borrow redevelopment money from cities, without asking. That’s what the state did in June 2010, and Santa Barbara had to hand over nearly $7 million. Santa Barbara County is also gouging costs from its balance sheets, and the county’s cuts have a trickle-down effect at the municipal level.
There are other funds besides the General Fund, like funds specifically for the waterfront and the Santa Barbara Airport. Another big one is the Redevelopment Agency fund, which is a self-imposed tax district downtown that pays for improvements in that area. It’s important to remember that, by state law, cities can’t use those funds to pay for general services. So don’t tell city staff they should quit putting in bulb-outs downtown to pay for more police officers. It can’t happen.
Throw in a dwindling middle class as a tax base and the South Coast’s eroding population, which has been on the decline for the last decade, and you get a pretty good picture of where Santa Barbara, as a city, is financially.
A few odd ratios also add to the problem: While Santa Barbara’s population dropped by 2 percent between 2000 and 2010, to 90,893, the city’s general fund expenditures increased almost 50 percent during that time. The fund’s revenues couldn’t keep up with those outlays over the decade, and only increased 35 percent.
Meanwhile, city officials are counting on the economy bouncing back for tax rates to return to the way they were. The recession may have been declared officially over, but many Santa Barbarans — like many Americans — don’t seem to be feeling the confidence.
Last June, the City Council passed a budget for 2010-2011, but many of the city’s big policy issues still must be addressed before the council passes the 2011-2012 budget this June. This is where you can help.
Over the next couple of weeks, Noozhawk will be providing a comprehensive look at Santa Barbara’s finances. After we’ve given you the context for how we got to this point and helped to educate you on the process, we’ll be opening an online survey through which you can recommend ways the city can fix its budget or spend our money more wisely.
What should the city continue funding in these hard times? What are some creative solutions that haven’t been explored yet? We want to hear from you, and so do your city leaders. We need your help to make Noozhawk’s Santa Barbara Challenge project a success, and we hope you’ll be as excited about this project as we are. After all, why shouldn’t you be the one to save the day?