The discussion of Santa Barbara’s budget troubles is likely to continue far into the next fiscal year. On Tuesday, the City Council voted to accept the year-end preliminary results for the fiscal year ending June 30.
The city’s general fund is expected to carry a deficit of about $2.4 million, based on preliminary year-end revenue and expenditure totals, according to the accounting division of the city Finance Department. Several one-time measures to address the deficit were recommended, and will be discussed further in later meetings.
Options include taking money out of self-insurance fund reserves, and using street-sweeping fund reserves, City Hall Allocation Fund reserves, capital reserves and budgetary reserves.
The reserves have increased because of fewer claims for workers compensation and liability programs, revenues from parking tickets exceeding costs in street sweeping, and various other savings that could provide relief during tighter economic times.
Some options already were used to help close the deficit projected for the middle of the fiscal year, and the police department was the only agency that went over its amended budget. However, the overtime and over-hirings were allowed and even encouraged by the council to make public safety as a top priority, Councilwoman Helene Schneider said.
But many worry that using reserves will leave the city vulnerable if the economy doesn’t bounce back as soon as expected.
“We should hang onto them as long as possible,” Councilman Das Williams said. In all likelihood, the budget situation could be worse next year, he said.
The city can’t rely completely on increasing revenues, since bed and sales tax revenues have taken “a precipitous drop we have seen in the last couple of months,” Councilwoman Iya Falcone said. The problems most likely could endure into 2011. “Have fun with that,” Falcone told the Finance Department.
Councilman Roger Horton, chairman of the Finance Committee, raised the possibility of the economy taking another downturn once the federal stimulus money has been spent.
Ideally, the city needs to increase revenues and lower costs, but it’s difficult to lower expenditures in a short amount of time, Interim Finance Director Robert Samario said.
“The revenue situation has continued to deteriorate at unprecedented levels,” City Administrator James Armstrong said.
The staff’s recommendations will be discussed in workshops and meetings.
Horton has said in the past that he expects millions of dollars in cuts, and Armstrong agreed. The current year’s budget was not conservative enough, and it most likely already has shortfalls, he said.
Santa Barbara Adopts Sixth Sister City
The council also approved the city of Kotor, Montenegro, as its sixth sister city, a recommendation of the Sister Cities Program.
It’s important to formalize the relationship with Kotor, “whose freshness and energy will be a great addition to the Santa Barbara Sister Cities Program,” chair Takako Wakita said.
George Lilly, who is representing Kotor in developing the relationship, visited Montenegro with a small delegation and said a reciprocal visit is expected in December. There are plans to exchange ideas with Kotor citizens about government issues, arts, sports and more, he said.
Santa Barbara’s other sister cities are Toba City, Japan; Puerto Vallarta, Mexico; Weihai, Peoples’ Republic of China; San Juan Metro Manila, Philippines; and Dingle, Ireland.
— Noozhawk staff writer Giana Magnoli can be reached at gmagnoli@noozhawk.com.