Comprehensive Annual Financial Report - City of Santa Monica

amount of borrowed property taxes in two equal payments, in January and May. The California
Redevelopment Association estimates the share of the diversion assessed against the City’s Redevelopment
Agency to be $20.9 million for FY 2009-10. While redevelopment agencies have sued the State challenging
the constitutionality of this seizure of monies from redevelopment agencies, the City cannot predict the
outcome of this action.
Future State budgets will likely continue to be affected by national and state economic conditions, as well as
other factors over which the City will have no control. On November 18, 2009, the State Legislative Analyst’s
Office estimated the State could face a budget deficit in excess of $21 billion through Fiscal Year 2010-11.
To the extent that the State’s annual budget process results in reduced revenues or increased expenses to
cities, Santa Monica will be required to make adjustments to its budget. On Oct. 20, a coalition, which
includes the League of California Cities, local government, transportation and public transit leaders, filed a
ballot measure initiative - the Local Taxpayer, Public Safety and Transportation Protection Act - with the
California Attorney General's office. The coalition hopes to have this measure placed on the statewide ballot
for November 2010. The measure, if passed by voters, would close loopholes and prevent the state from
borrowing, raiding or otherwise redirecting local government (local taxes, property taxes, redevelopment),
transportation (Highway User Tax Allocation and Proposition 42 funds) and public transit funds.
Community Priorities
The City of Santa Monica conducts numerous meetings with stakeholders throughout the year and gleans
direction from Boards, Commissions, neighborhood groups, and individual constituents, who communicate
with City staff through Council meetings, the City’s website, and regular mail. This community input,
captured as community priorities provides the foundation for the City’s budget. For FY 2009-10 and beyond,
two specific areas of focus are Fiscal Stability and Land Use and Circulation (LUCE) and Other Long Term
Planning Efforts. Other community priorities spelled out in the City’s Budget Priorities include the
following: Homelessness, Sustainability, Education, Culture, Capital Needs and Infrastructure, Recreation and
Active Living, Youth and Customer Services.
Citywide Budget
The FY 2009-10 Adopted Budget includes $539.3 million in expenditures, net of reimbursements and
transfers, for all funds. This represents a decrease of almost 2.9 percent from the revised budget for FY 2008-
09. Citywide revenues are estimated at $539.6 million, a decrease of $4.2 million or 0.8 percent, from the
revised estimated for FY 2008-09. While the City continues to benefit from a diverse source of revenues,
particularly in the General Fund, numerous threats to those revenues exist.
The General Fund operating budget for FY 2009-10 is estimated at $239.4 million and Capital Improvement
Projects add an addition $25.0 million for a total General Fund budget of $264.4 million. Operating
expenditures increased $2.2 million, or less than one percent from the previous year. General Fund revenues
for FY 2009-10 are budgeted at $247.2 million, a decrease of $0.4 million or 0.2% from FY 2008-09 actual
revenues. Trends developing in FY 2009-10, however, indicate that revenues fall short of budget projections
by approximately two percent due to weakness in some local taxes and charges for services.
The FY 2009-10 Budget reflects major self-supporting funds of the City that are generally in sound financial
condition. Water and Wastewater funds remain healthy following five year rate increases approved in FY
2008-09. The Solid Waste Fund projects a positive fund balance in FY 2009-10 but is projected to enter
negative territory in FY 2010-11. The City recently entered into a private-public partnership with a local
solid waste company and has employed a consultant to conduct a rate analysis for the Solid Waste Fund. The
proposed rate structure will capture efficiencies afforded by the new partnership and will allow the City to
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