Some members of the Santa Barbara City Council described the city’s proposed budget as “a mess” and “depressing” at a meeting earlier this week.

After months of financial staff warning the council about dwindling reserves — essentially the city’s savings — some councilmembers finally seem to be getting the message.

The city has already depleted its contingency reserves and is now faced with using emergency reserves. Under city policy, the city should have $57.2 million in its reserves. However, for the next fiscal year, it is projected to have roughly $27 million. 

Councilman Mike Jordan recalled how last year, money was taken out of the city reserves for the local housing trust fund, which is meant to fund affordable housing projects. There was council direction to replenish the reserves later in the year, but that didn’t happen.

City Administrator Kelly McAdoo explained at Tuesday’s meeting that there have been financial pressures on the city’s general fund due to the police station construction project, but the city will be working on a plan to get back to a balanced budget and contribute to reserves.

Councilwoman Kristen Sneddon argued that when expenditures came up throughout the year, the council wasn’t told that it would hurt the reserves.

“On what planet were we making further purchases?” Sneddon said.

She also expressed frustration that the plan to replenish the reserves was not followed, and that the local housing trust fund is once again facing the consequences. 

“We made the plan, executed the plan and then the options given to us were to spend the money elsewhere in other ways,” Sneddon said. “Not appreciating that, at this moment, to realize we spent away what we could have used to handle the reserves. None of us ever said we wanted to eat into disaster reserves.”

The city’s financial plan called for $2 million to go into the local housing trust fund in fiscal year 2027. To address the depleting reserves this year, city staff recommended only paying $1 million into the fund, according to the city staff report.

Sneddon made it clear that she wouldn’t approve a budget that took away the $2 million from the local housing trust fund.

Councilmember Eric Friedman was exasperated, having repeatedly raised concerns about the reserves over the last several months.

He added that that is why he, Jordan, and Mayor Randy Rowse voted against last year’s budget. 

“What do you think we voted against the budget for?” Friedman said. “For this very reason. So it’s frustrating to hear that this has happened because we’ve been talking about it.”

Friedman argued that the council should wait to pay the $2 million for the local housing trust fund, noting that money from local projects is expected to go into the fund. 

“Give us the time, don’t make us continue to bleed away our emergency reserves,” Friedman said. “If we don’t right the ship today, I won’t be able to support the budget for the second year in a row. I would hope that we could, but it doesn’t seem like my colleagues want to go in that direction.”

Jordan also said he wouldn’t support a budget that took more money out of reserves. 

Councilwoman Meagan Harmon said she was glad to see other members understand the reserve issues she’s been talking about for over five years. 

“I’m used to getting laughed out of the room,” Harmon said.

She added that the blame shouldn’t be on the local housing trust fund, but the council itself.

“It’s really unfair that that fund is the focus,” Harmon said. “This is a systemic issue that goes so far beyond that fund and really rests with us, and our inability to make hard decisions, our inability to – I guess — understand how to budget.”

The council was scheduled to adopt the budget on Tuesday, June 16. However, it’s unclear at this point if that will happen.