The Santa Barbara City Council is looking to cut itself off from the cookie jar. 

With the city $23 million away from its policy reserve target, the council on Tuesday unanimously approved stricter language to restrict its own access to the city reserves. 

The new language prevents the council from using funds reserved for disasters to fund normal city operations.

Councilwoman Meagan Harmon supported the changes but said it wasn’t enough.

“I think both that the changes don’t go far enough, and I don’t think they do enough to reconcile the reality of how we budget, with our policies,” Harmon said.

Harmon reiterated some policy suggestions she made during a Finance Committee meeting in August, which at the time didn’t receive support from her colleagues. 

She proposed changing the target reserve level from 25% to 15%, completely removing the contingency reserve category, in an effort to have a policy that more honestly reflects how the city is spending.

“Year after year after year, we have spent these contingency reserves as if they are money for us to just sort of hand out in an ad hoc way,” Harmon said. “We have not taken seriously the requirement either to maintain those reserves or to not touch them except in very extreme circumstances.”

She added that she believes it’s better to have a policy that the city will actually follow and be honest about the cost to maintain the city and provide services. 

Some of her colleagues, including Councilwoman Wendy Santamaria, weren’t convinced that was the right path, but they were willing to consider it.

“Personally, I would rather have a higher goal of reserves that we are aiming to fill because that’s setting the standard higher for us,” Santamaria said. 

She added that lowering the goal might give the city a “false sense of accomplishment” when the city may need more reserves as financial support from the federal government diminishes. 

Santa Barbara is meant to have 25% of its general fund budget in reserves, representing three months of operating expenses to cover one-time expenses or support the city in case of an emergency.

That means the city should have $56.7 million in reserves, but it actually has only $33 million in reserves, according to Finance Director Keith DeMartini.

If the city keeps spending those funds and doesn’t replenish them, DiMartini has warned that disaster reserves would be fully depleted by the end of fiscal year 2028-29.

The reserves include contingency reserves and disaster reserves. Per city policy, 10% of the operating budget is meant to go into contingency reserves, while 15% is meant to go into disaster reserves. 

The city has already fully depleted its contingency reserves and is now left with only its disaster reserves.

Councilman Mike Jordan said he would like to see stricter guidelines to prevent the council from using reserve funds and worsening the deficit multiple years in a row. 

“We need to shut the door a little harsher on the seven personalities of whoever is sitting up here and what they’re bringing personally to the discussion and what’s important to them, and resolve that with something that’s more black and white that protects the city,” Jordan said.

Councilwoman Kristen Sneddon said she wanted to see a new policy for a supermajority vote to take money from the emergency reserves, meaning that at least five council members would have to approve it rather than the standard four out of seven majority.

City staff will come back to the council at a later date to discuss how the change could impact the city budget process.

On Nov. 17, the Finance Committee is scheduled to do a first-quarter financial review and look at further ways to balance the budget, replenish reserves and find a dedicated funding source for the local housing trust fund.