Santa Barbara City Council Wrestles with Budget Challenges

This year’s budget deliberations have been anything but easy, and on Tuesday night, discussion over the city budget unraveled as the hearing went late into the night and councilmembers fiercely debated about the city’s reserves, editorials written by councilmembers, and final policy directions before the looming June 30 adoption deadline.

As the City Council worked its way through more than a dozen individual policy questions, which led to rounds of split votes and failed motions, it became clear to City Administrator Kelly McAdoo that the council was not going to be able to get through the entire list in one sitting. The council just finished a tense decision over funding three police officer positions, and there was still a long list of items that needed council direction. Those included funding for holiday parades and revenue solutions such as increased in-lieu fees, a vacancy tax, or more outside-the-box ideas, including legalizing mushrooms or opening revenue-generating gambling rooms.

“I’m sorry, I’m just going to be frank with the council,” McAdoo said, suggesting the council break and continue discussion in an emergency hearing next week. “There’s no way we’re getting through all of these items in any short order.”

Tuesday’s hearing was the latest in a series of intense budget deliberations, which were highlighted by the revelation that the city’s contingency reserves have been completely depleted, leaving the city $30 million below its target reserve level and forced to dip into its disaster fund.

The proposed budget results in an operating surplus of a little more than $100,000, but the city would need to contribute at least $3.5 million into its reserve fund just to meet the minimum target level. With the contribution, the city would have $26.8 million in reserves — still far below the city’s goal of $56.7 million. 

The reserve level has forced the council to make tough decisions about its housing fund and vacant positions. 

In one of those split decisions, the council voted 4-3 to reduce the city’s Measure C capital budget by a million dollars to allow for a transfer to the Local Housing Trust Fund, resulting in $2 million total for the fund in 2027.

Mayor Randy Rowse and Councilmembers Eric Friedman and Mike Jordan opposed the decision. Friedman and Jordan expressed their support for another option, which would have allowed the city to hold the money in its reserve fund and reappropriate the money to the housing fund when a project was ready for financing.

When the council moved on to whether to unfreeze three vacant police officer positions at a cost of $576,000, Councilmember Wendy Santamaria was the sole member of the council to ask to keep the positions frozen to keep the money in reserves instead.

After Councilmember Kristen Sneddon rescinded her second and the motion failed, Santamaria called out her colleagues for their lack of support. Santamaria said she felt that her fellow councilmembers were willing to vote against the funding for housing but were more than willing to fund the police officer positions.

“You all need to know that the community is watching,” Santamaria said. “We are talking about working within our means, except when it comes to the police department. We are talking about prioritizing community well-being at the expense of housing, so long as the police department gets the funding.”

In the background of the budget discussions, there has been a public back-and-forth between Councilmembers Sneddon and Friedman, who are both running for mayor in the upcoming November election.

In an op-ed published in the Independent a day before the meeting, Councilmember Sneddon raised concerns about budget figures that were “glaringly different” in the city’s printed budget book and the online transparency tool.

Councilmember Friedman read a written response during Tuesday’s meeting, during which he defended the city’s Finance Department and Finance Committee, on which he serves as chair. Friedman said Sneddon’s allegations were “without merit,” and he praised the city’s finance staff for navigating the many challenges since the pandemic.

Sneddon said she spoke with finance staff, who helped explain that the inconsistencies were due to the reports including or not including Measure C funding in their accounting figures. According to Finance Director Keith DeMartini, some reports separate the Measure C funding from the operating budget figures since it is earmarked as capital funding.

On the suggestion of the city administrator, council agreed to continue the meeting to a special emergency hearing on June 23. The public comment portion is officially closed, and deliberations will begin at 10 a.m. The City Council must have a budget ready for adoption by June 30.