Every year the city budget process comes along. For the overwhelming majority of city residents, a city budget is, well, overwhelming. Then there’s the city audit. Over 230 pages of financial statements, balance sheets, multiple categories (governmental funds, proprietary funds, fiduciary funds) and a myriad of subcategories, line items, tables, commas, and decimal points! Only a couple of beautiful Santa Barbara pictures are interspersed. The public isn’t dumb, it’s just that the city audit is a fire hose of finance numbers that can drown any one of us. Really, who has the time to dive into a riptide of numbers?
A city audit is called the Annual Comprehensive Financial Report, or ACFR for short. The ACFR has a couple of pages that are very telling. For instance, PDF page 217 of the fiscal year 2025 ACFR lists the city reserves over the past 10 years. If you get to this page you think you got the information you need, until you learn that the five fund balances are a summary of, get this, nearly two dozen other sub-line items! And those important sub-line items are back on page 112. It’s among those money lines that you can actually find the city reserves.
But the financial labyrinth doesn’t end there because as it turns out the reserve numbers can be numerical goals and not actual money. To find out the actual amount of reserves you may have to take away the one negative number that is listed in its own separate category. If you happen to learn this somehow, you can actually figure out the city reserves are $35.1 million or 15 percent of the audited general fund expenditures (earlier on Table 4, page 43). A Government Finance Officers Association (GFOA) recommended option is to set a reserve range, say 15 percent to 25 percent. “Conversely, a single point [reserve goal] leaves ambiguity over whether actual reserves are too high or too low.” (Risk-Based Reserve Analysis p.13)
Over the past decade (2016-2025), city audit records reveal that reserves have fluctuated between a low of 15 percent in 2019 and 2025 to a peak of 35 percent in 2022. Go figure. In the middle of a deadly pandemic when workers were out of work and trying to pay their multi-family overcrowded rental apartment — so as not to get evicted and end up homeless — the city hit its peak of reserves. As it turns out, the city is living proof that actual disasters — as bad as a deadly pandemic — don’t automatically decimate reserves.
When it comes to the proposed budget, who knows what’s going on? The city numbers presented publicly for the past three fiscal years don’t match the city audits. What does it matter that the prior fiscal year numbers don’t match the audits? It’s impossible to assess the accuracy and reliability of a projected budget when the prior years’ numbers that serve as the basis for the new budget differ from the already verified numbers. The public needs to know, where do the unaudited prior fiscal years numbers come from?
While the city reserves are presently okay and the basis for the proposed 2027 budget remains a mystery, what is neither okay nor a mystery is the disaster that is housing affordability in the City of Santa Barbara (and throughout the county). As of December 2025, only 200 (4%) of the 4,969 affordable housing units that Santa Barbara city workers, seniors, unhoused people, and families need was built or on its way to being built. A 96 percent shortfall of affordable housing is the disaster that everyday city residents and people working for local businesses, medical clinics, city and county agencies, schools, and nonprofits know for a fact.
On Tuesday, the City Council can vote to allocate the contested $2 million to the Local Housing Trust Fund in an effort to address the affordable housing disaster everywhere in the City of Santa Barbara. No one needs an audit to say that.
