Upbeat Report on SM Fiscal Health
Revenues top projections by $20 million, boosted by ‘vigorous consumer activity and strong housing market’
November 4, 2021
By Jack Simon, Observer Staff Writer
The Santa Monica City Council this week received an upbeat update on the city’s fiscal health and made small revisions to the 2021-2022 budget to reflect increases in revenues.
The 2020-21 year-end budget report shows revenues exceeded projections by $20 million, “reflecting the strong housing market; vigorous consumer activity once shelter-in-place restrictions were lifted, resulting in higher than anticipated sales, hotel tax and parking receipts; and the positive impact of the recently passed Measure SM Real Property Transfer Tax increase,” city officials said.
“As a result, the City will not be required to use the $20 million Shutdown Reserve to balance the budget, as had been anticipated,” the report said.
However, Santa Monica still had to use of $22 million in one-time reserve funds because revenues were deeply impacted by the COVID-19 pandemic, city officials said. The 2020-21 final budget totaled $325 million.
“Our financial outlook continues to be positive thanks to prudent financial management and the hard decisions this Council made over the last two years to see us through the pandemic,” said Mayor Sue Himmelrich.
At Tuesday night’s meeting, city staff also gave an update on the $29.3 in federal stimulus funds that Santa Monica received through the American Rescue Plan Act of 2021.
Most the stimulus funds were unspent in the 2020-21 budget but will be used in the next three years to bolster operating programs and cover unanticipated cost increases until revenues reach pre-pandemic levels, city officials said.
“The much-needed federal aid that makes up 15% of our total projected revenue loss and better than anticipated revenue returns are helping to slowly put us back on track as we continue to provide meaningful community services with fewer resources while making a difference in our priority areas,” Himmelrich said.
The Council directed staff to use $1 million to further efforts around a clean and safe Santa Monica. It also made modest budget adjustments that total approximately $0.6 million for this fiscal year and approximately $2 million for fiscal year 2021-2022.
On another note, city officials mentioned the fee for utility payments was revised from $2.95 per transaction to 2.95% of the transaction amount to be consistent with the charge for other transactions.
City staff will return to Council with the midyear budget report on February 8, 2022 to provide another assessment of the city’s finances and progress towards recovery, including an updated five-year financial forecast.