Sunday, June 17 , 2018, 4:14 pm | Mostly Cloudy 67º

 
 
 
 

Local News

Pension Costs a Looming Challenge as Santa Barbara Council Ponders 2019 Budget

Rising pension costs represent the biggest challenge facing the city of Santa Barbara over the next several years.

Santa Barbara Finance Director Bob Samario presented the draft 2019 city budget at Tuesday’s council meeting. The city has an overall budget of $360.6 million and a general fund budget of $156.1 million.

The city must pay $23.3 million in pension costs for general fund employees in 2019, and that number is expected to reach $40 million by 2025.

“Pension is the major headwind,” Samario said. “By 2025 citywide, we could see our costs go up by 75 percent. It’s going to be kind of an exponential growth. It’s just really going to ramp up over the next seven, eight years.”

In his budget message, City Administrator Paul Casey said that the city is working on a plan to address the rising costs, but that some of the strategies include “controlling labor costs,” and “negotiating cost-sharing agreements with labor groups,” where employees pay more for retirement than they do now.

Today, for every $1 a firefighter earns, the city must pay the California Public Employee Retirement System 52 cents to pay for that employees retirement.

The city's sales tax revenues are expected to drop by 1.7 percent to end this fiscal year, largely due to the Thomas Fire. The city expects revenues to grow by 4.4 percent in 2019. 

The city plans several budget hearings between Monday, May 7, and council adoption of the budget on June 19.

Property taxes grew 5.6 percent in 2016 and 7.6 percent in 2017, and are expected to grow by 4.5 percent to end 2018. The city is projecting a growth rate of 6 percent in 2019. 

After several years of strong transient occupancy tax growth of 10 percent per year, TOT has softened, dropping by 1 percent in 2016, then growing by 3.2 percent in 2017.

The city expects 2018 to end with a drop of about about .04 percent, largely from the impacts of the Thomas Fire. The city is projecting a 3.4 percent growth rate in 2019. 

The city has also budgeted $22 million in Measure C money. About $17.1 will go toward streets and infrastructure, while some $2 million will be directed at the new police station. Construction on that facility is expected to begin in about five years. 

Noozhawk staff writer Joshua Molina can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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