October 27, 2021 10:17 am
SANTA MONICA, California – Last night, Santa Monica City Council received an update on the Santa Monica City’s financial condition, closed the 2020-2021 fiscal year, and made small corrections to the 2021-2022 fiscal year through the year-end budget report.
“Our financial outlook remains positive thanks to the prudent financial management and tough decisions this council has made over the past two years to get us through the pandemic,” said Mayor Sue Himmelrich. “The much-needed federal aid, which accounts for 15% of our total projected sales loss, and the better-than-expected sales are helping to slowly get us back on track as we continue to provide meaningful community services with fewer resources while making a difference in ours priority areas. “
The city’s budget continues to be in an active recovery, with reserves helping to fill the gap for a balanced budget. Since income is six percent higher than expected due to the active housing market, fewer reserves have to be leveraged; higher sales, hotel taxes and parking tickets; and the positive effects of the recently passed SM real estate transfer tax increase. This means the city will receive the $ 20 million shutdown reserve originally needed to balance the 2020-2021 budget. However, the General Fund will continue to require the use of $ 22 million in one-time reserve funds as planned, as revenues continue to be badly hit by the ongoing COVID-19 pandemic.
To support emergency response, affordable housing, and community priorities for homelessness, clean and safe spaces and services, and economic recovery, federal stimulus funds have been made available under the American Rescue Plan Act (ARPA) that were not spent in the 2020-2021 budget due to their receipt at the end of the financial year is allocated to the financial year 2021-2022. For the next three years, employees will continue to use ARPA funds and consider the need to reallocate funds that would have gone into capital improvements in the past to strengthen operating programs and cover unexpected cost increases until revenues reach pre-pandemic levels.
To encourage efforts to keep Santa Monica clean and safe, the council ordered the immediate use of $ 1 million in existing funds. Staff will now prioritize these funds in the areas of greatest community need through February 2022.
The council made modest budget adjustments that amount to about $ 0.6 million for fiscal 2020-2021 and about $ 2 million for fiscal 2021-2022, of which $ 1.1 million in general Funds.
Outside of the General Fund, the majority of the city’s other funds met revenue projections or had nominal deviations and the projections are positive.
The utility payment fee has been adjusted from $ 2.95 per transaction to 2.95% of the transaction amount to match the fee for other transactions. There is still no charge for using paper checks, electronic checks, and cash. For a full list of fee adjustments, see the Employees report.
The staff will return to the council with the semi-annual budget report on February 8, 2022 for a more comprehensive assessment of the city’s finances and progress on the recovery, including an updated five-year financial forecast.
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