The City of Santa Barbara should be able to craft an operating budget for next year without asking for employee labor concessions or making significant long-term cuts, according to the Finance Department.
A $2.7 million deficit was expected, but growing sales and transient occupancy taxes have made the city’s general fund better off, according to Finance Director Bob Samario.
“It’s really amazing,” he said. “The sales and bed tax going up have been a surprise; we knew they would recover eventually, but we didn’t think it would be this quick.”
One-time funds will be used to close the $800,000 gap, according to a staff report.
The biggest difference from last year’s budget is the elimination of the Redevelopment Agency, without which it will be difficult to fund big capital projects such as a new police station.
The city is the “successor agency” for the RDA and will handle business left behind, such as paying back debt and finishing projects that are in progress. An oversight board will supervise all spending.
Some staff members will need to be laid off or transferred to another department, and there are some RDA costs that, if the oversight board doesn’t approve them, would have to be discontinued or paid for out of the general fund, Samario said.
One of those is the restorative policing program, which was approved last year and added a full-time officer, three outreach workers and six part-time community services officers to help address the amount of incidents by the city’s homeless population downtown, many resulting in arrests.
The proposed budget assumes the oversight board will continue funding the program from money left over when state legislation dissolved the RDA, but since the rules for approving spending are vague, it’s not guaranteed.
“It’s a gamble in a sense,” Samario said. “We have no idea what the board eventually is going to decide. (State legislation) is very vague in terms of what’s an ‘enforceable obligation.’”
An overview of the proposed budget will be presented at Tuesday’s City Council meeting, at 2 p.m. at City Hall at 735 Anacapa St., and in more detail over the next three months.
No permanent structural changes have been made to the city’s retirement system or reserve policies, though council members have held recent meetings to discuss just that.
Staff reports say labor concessions will not be needed to close the deficit gap this year, though they have been used in the past. It’s good timing; the police and fire department contracts don’t expire until June 2013 and all other employee unions have “me, too” clauses in their contracts that make any concessions contingent on public safety bargaining units taking similar ones.
The city is looking at a $267 million shortfall in its pension system due to benefit enhancements and bad investment returns for the whole California Public Employee Retirement System, and its reserve funds are mostly depleted after they were spent during lean years in the past decade.
Council members are considering getting rid of the $1 million capital project reserve fund and establishing more rules for using reserves in the future.
The city expects to adopt a budget by June 19.