Despite a projected budget shortfall of $4.8 million in 2025, the Santa Barbara City Council on Tuesday opted against lowering its disaster reserves to make it easier to balance the budget in the upcoming years.
Councilwoman Meagan Harmon suggested the idea of reducing disaster reserves from 25% of the budget to 20%. She said the money could be better spent in the hands of workers and providing public services, rather than locked away.
“When we are faced year after year with budget cuts that make it impossible for our employees to live in the city they serve, when we are faced with cutting services to our residents, services that our taxpaying residents expect and deserve, I don’t believe it’s good fiscal policy to keep the same reserve policy just because it is what we have always done,” Harmon said.
The council, Harmon said, has maintained a high percentage of its reserves through the 2008 recession, the Thomas Fire, the debris flows, and the COVID-19 pandemic.
“Let’s keep our rainy-day fund, but let’s right-size it, so it reflects actual,” Harmon said. “We don’t need to continue to fund to an artificial percentage that doesn’t reflect our lived experience of disaster.”
Although some members of the council indicated support for changing the reserve policy during the budget season in June, they backtracked on Tuesday and took a more conservative fiscal stance.
“We really haven’t seen anything yet of the potential we could face,” said Councilwoman Kristen Sneddon. “With climate change, fires, sea-level rise, I don’t even want to say the word earthquake.”
The future likelihood of disaster is not going to go down, Sneddon said.
She said the city should figure out ways to increase revenues, rather than lowering the reserves policy.
Councilman Eric Friedman agreed with Sneddon.
“We haven’t had the double whammy of two disasters right at the same time” Friedman said. “
He added that even lowering the reserve policy alone would not solve the city’s budget shortfall problems.
Friedman also said reducing the budget reserves could jeopardize interest rates for the $100 million Santa Barbara Police Station. The city plans to issue municipal bonds to help fund the project.
“We need to make sure we get that rate as low as possible by having the strongest possible rating there,” Friedman there.
As a practical matter, Harmon’s temporary defeat will likely result in a long-term political victory. Employees and union representatives have pushed for years to lower the reserves policy and instead put the money in the hands of people and services in the present.
During the most recent budget season, City Administrator Rebecca Bjork asked each department to cut 5% to reduce its general fund subsidy. Funding for two police officer positions, a range master and a fire inspector II were on the table for cuts.
The council also found a way to restore library hours that were cut during the pandemic.
Also, Parks and Recreation Director Jill Zachary had proposed cutting an afterschool program at Monroe Elementary, which serves a school of about 70% Latino students.
She suggested that students could go to Washington Elementary for an after-school program, or that they could use a similar school district-funded program.
The council found the money to spare the program. But Harmon said rather than creating these last-minute, on-the-fly budget decisions every year, that the council should just tweak its reserves policy and put a small percentage of the money to public services.
Councilman Oscar Gutierrez agreed with Harmon.
“We keep doing the same thing and expect different results,” Gutierrez said.
He said every council member when compaigning for office promised voters that they would do things differently, and lowering the reserve funds to provide more public services is an opportunity to do that.
He said he was willing to take the risk of lowering disaster reserves and accepting the consequences.
“In order to achieve things, we currently do not have, we’re going to have to do things we’ve never done before,” Gutierrez said. “I know it’s difficult. I know it’s easier said than done, but I do agree that something has to be done. “