After a tense budget season, during which the City of Santa Barbara had to reckon with the reality of depleted reserve funds, the City Council officially passed its precariously balanced budget in a unanimous decision on Tuesday.
The finalized budget crossed the finish line following several months of budget workshops, public hearings, and council deliberations highlighted by tough decisions about the city’s long-term financial stability. After several budget sessions and last-minute adjustments, the operating budget came in with a projected surplus of a little more than $400,000, including a plan to use extra revenues to replenish the city’s emergency reserve shortfall.
City finance staff worked wonders before this budget season even began, taking what was originally projected to be a deficit of more than $10 million and presenting council with a proposed budget with a more palatable deficit of $3.5 million. The city achieved this by looking at more than 200 budget solutions and putting together a patchwork of expenditure savings and revenue boosts that helped balance the budget without any major program cuts.
But the budget plan highlighted a larger problem, with Finance Director Keith DeMartini revealing that the city had completely depleted its contingency reserves and was now “far below” the city’s stated reserve policy target. Even more alarming to councilmembers was the fact the city had dipped into its emergency reserve funds by nearly $6 million.
Instead of using city funds to try and get the reserve funds to minimum policy levels, the council and city staff worked out a solution with additional adjustments and the relief from more than $3 million in revenues from a digital streaming settlement that the city could use to refill emergency reserves.
“We have an opportunity to refill that $6 million by this time next year — it’s not guaranteed, but it’s a path to get there,” said Councilmember Eric Friedman. “Then, once we can get out of the emergency reserves, it’s a different conversation in the city, in terms of what we can afford and not.”
The full council supported the plan, which will utilize $2.2 million the city was awarded in a recent legal settlement, plus an extra $600,000 in additional settlement funds the city expects to receive in the next year.
The council budget was adopted in a series of unanimous approvals, with two votes regarding fee updates taken separately due to conflicts of interest (Mayor Randy Rowse, a boat owner, could not vote on harbor fees; and Councilmember Friedman, who works at a grocery store, could not vote on an item on shopping carts).
Councilmember Kristen Sneddon also asked for a specific motion directing the city’s Finance Committee to identify an ongoing source of funding for the Local Housing Trust Fund. The motion was supported unanimously.
To view the entire city budget, visit santabarbaraca.gov/finance/budget-reports.
