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More June Gloom for City Hall

City of Santa Barbara’s Bed Tax Receipts Lower than Expected

Monday, July 20, 2009
By Nick Welsh (Contact)

Bed tax receipts for the month of June were five percent lower than expected, coming in a full 20 percent lower than last June’s bed taxes. In real dollars, that’s a drop in revenues of $250,000.

City budget planners had been bracing for bad news, but not quite this bad. According to the recent budget approved by the Santa Barbara City Council, City Hall had projected bed tax receipts 15 percent lower than the previous year. Santa Barbara’s tourist trade typically kicks into gear in June and then really hits it stride for the months of July and August. June’s poor showing was especially discouraging for city administrators and bean counters who were hoping and praying to see some tangible evidence that the economy was starting to improve.

In addition, the city’s percentage of property tax receipts collected by the County of Santa Barbara is threatening to come in far less than projected. As a result, Santa Barbara budget analysts are now predicting that the budget approved three weeks ago by the City Council might be as much as $2.5 million out-of-whack. On the night the budget was adopted, City Budget Czar Robert Peirson declared it was already $1.5 million short.

The implications of the new numbers could be significant. City budget planners are already looking at a new round of cuts and fee increases. Already, councilmembers, administrators and department heads spent months scrambling to bridge a $10.5 million shortfall. This was achieved by exacting substantial concessions from several of the main bargaining units representing city workers, primarily Service Employees International Union Local 620. In exchange for these concessions, city administrators fashioned a budget in which no city employees were laid off against their will.

With the new numbers looming large, those agreements may be subject to re-examination. Likewise, the city police and firefighters got off relatively unscathed in the budget adopted by the City Council. If City Hall opts to pursue more cuts, police and fire services will inevitably receive closer scrutiny.

Adding to the complexity of the problem, the City of Santa Barbara is bracing for elections this November to determine who the new mayor will be as well as the make up of the new council. In all, four of the council’s seven seats are up for grabs. Given the significant political influence wielded by certain city employee unions - the Police Officers Association, for instance, and the Fire Fighters Association - the election year pressures could complicate any efforts to revisit the city’s budget, which even under the best of circumstances would be an unenviable task.

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