SR-9-A (44)
4- A
JAN 2 5 1994
CM:JJ:LCB:dm:kf:srcpfc
council Meeting: January 25, 1994
Santa Monica, California
TO: Mayor and city Council
FROM: City staff
SUBJECT: BACKGROUND INFORMATION FOR PUBLIC HEARING ON THE FISCAL
YEAR 1994-95 CITY BUDGET
Introduction
Each year to initiate the annual budget process, the Council
conducts a January public hearing concerning budget priori ties
for the next fiscal year, and the City's current budget and
economic status. Such a hearing is held prior to preparation of
departmental
budget
requests
and
therefore
provides
an
opportunity for staff to share with the council proposed budget
priorities for the next fiscal year, and to obtain council
direction on these matters. This hearing also provides an early
opportunity for the public to participate in the budget
preparation process,
and for public education on budget
parameters and constraints.
It is important to note, however, that this early hearing does
not preclude or supplant the public review opportunity and
hearing process normally scheduled in early June each year.
Proposed Budget priorities
The
ci ty Manager has
asked
department heads
to think
strategically and collaboratively about how to change City
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JAN 2 5 1994
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systems and structures to address the following priorities for FY
1994-95:
o Improving Customer Service. The face staff presents to
citizens, the substance of the services staff delivers
and the public's perception of the value of the services
provided must be of great importance to us all.
o Minimizing the Impact of Homelessness on City Residents.
This problem challenges and divides our community and
staff must develop new methods for managing the local
effects of a complex national problem.
o Recognizing and Mitigating the Traffic and Environmental
Impacts of City projects and Policies. This is not a
responsibili ty that can be delegated only to traffic
engineering or environmental programs staff, as the
decisions and actions of many other departments also
create impacts.
o Addressing the Public Safety Concerns of Residents and
Visitors. The degree to which the public feels secure
in our Clty has far-reaching implications. Police and
Fire are not the only operations which play a role in
resolving real and perceived safety issues.
o Enhancing Our Public Spaces. The way in which staff
designs and maintains our libraries, park buildings,
parks, the Pier, the Promenade, and other public spaces
sends a message to the community. They are indicators
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of the well-being of the City, and the public will treat
them with greater care if city staff does so also.
The City Manager has also asked department heads to finance these
priority efforts by finding ways to redirect existing budgeted
resources, and/or by seeking new operational efficiencies and
cost savings through further organizational restructurings.
It is requested that Council provide staff direction concerning
these proposed FY 1994-95 budget priorities and policies.
Budget status
During the past two fiscal years, the City has taken aggressive
budget action to respond to declining revenues due to the
recession and on-going economic slowdown, and to the state taking
city revenues to help balance the state budget. These actions
have encompassed cost-cutting, restructuring, increased
efficiency, fine revision measures, tax increases and will
include user fee changes to be recommended to the Council
shortly. In combination with the final adopted FY 1993-94 state
budget which took less city revenue than expected and recent
voter extension of the 1/2 cent Sales Tax, these actions are
anticipated to result in a modest amount of General Fund revenue
in excess of expenditures for FY 1994-95.
This additional revenue, when combined with other possible
operating cost savings, could be used for further investment in
the city's capital equipment replacement program, capital
infrastructure maintenance and/ or improved services. However,
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such investments should be very cautiously undertaken. It is too
soon to tell if the recent earthquake will have any meaningful
on-going negative financial impact on the city. There are also
continuing substantial uncertainties concerning the status of the
state budget, the impact of Federal budget changes, and when the
regional economy will rebound sufficiently to return the City to
more normal revenue growth.
The recent earthquake will have a short-term negative financial
impact on the City in terms of additional costs and lost
revenues. As these factors are analyzed and appropriate Federal
and state aid claims are prepared, staff will also be determining
what will be the long-term negative impacts, if any, on the local
economy and city revenues.
The recently released Governor's proposed state budget for FY
1994-95 does not directly impact cities, but it is predicated
upon the state re.ceiving about $3.0 billion of Federal
reimbursement for services provided to illegal immigrants. since
the state will only receive about $300 million in reimbursement
from the Federal government this fiscal year, it is unlikely that
reimbursement of this magnitude will occur next fiscal year. The
Governor's budget also proposes that a substantial amount of
responsibility for significantly reduced state health and welfare
service programs, and their associated funding, be shifted to the
counties. However, it is not clear if the funds shifted will be
sufficient to maintain current health and welfare service program
levels. In light of these factors, the City may yet be adversely
impacted when the state budget is finally adopted.
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At the Federal level, the President's proposed bUdget for next
fiscal year reflects a policy of significant reductions in
non-entitlement domestic spending over the next five years in
order to reduce the Federal deficit. Further, impending Federal
health care reform will, more than likely, increase City costs.
Economic Status
At the national level, recent economic forecasts appear to
indicate that for FY 1994-95 real GDP will continue to be in the
2% to 3% range, with moderate growth in jobs resulting in an
easing of the unemployment rate to the low 6% range, inflation
remaining in the low 3% range, a moderate pick-up of interest
rates, and modest increases in consumer and business spending.
Counter-balancing these modest improvements will be some economic
dampening resulting from the Federal tax increases recently
approved by Congress, a continued decline in non-residential
construction, uncertainties over the effects of possible health
care reform, and further military spending reductions. Once
again, the mediocre national recovery will not be sufficient to
help turn things around soon in California.
In California, it appears that job losses will continue in FY's
1993-94 and 1994-95, with more severe reductions happening in
Southern California with a resultant increase in unemployment
rates. However, while the bottom may be reached about mid-FY
1994-95 for the state, the continuing cutback of defense and the
lack of meaningful non-residential construction will probably
prolong the downturn in Southern California until FY 1995-96.
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While new economic growth is therefore now proj ected for the
state during FY 1995-96, a similar upswing will probably not be
seen in southern California until FY 1996-97.
Given this economic context, the city's economy, which is driven
by its underlying strength, diversity and competitive edge in the
region, should continue to grow modestly for the next two fiscal
years at the same rate of growth experienced last fiscal year,
and then see a quickening of growth begin in FY 1996-97.
However, even these conservative economic projections may have to
be tempered due to possible long-term impacts of the recent
earthquake.
BUd~et structure
To assist the Council and the public in assessing existing
service priorities, the following is a brief description of the
City'S budget structure. Attached are also a series of pie
charts showing the largest funds, as well as the major revenue
and expenditure components, of the General Fund.
For budget purposes, the financial operations of the City are
organized into twenty-three separate funds. The largest fund is
the General Fund which constitutes about 51% of total city
revenues.
For ease of discussion, these funds can be grouped into three
major categories:
Enterprise and Internal Service Funds which operate much
like private businesses where the services provided are
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financed primarily from fees.
Examples are the Water
Fund,
Solid Waste Management Fund,
and the City
self-insurance funds.
special Revenue Funds which are used to keep track of
expenditures that can legally only be made for specific
uses and where the revenues come from specialized
sources.
Examples are the Community Development Block
Grant Fund and the Beach Fund.
The General Fund in which revenues and expenditures
associated with providing basic City services such as
POlice, Fire, and Library are tracked. About 71% of the
General Fund is financed from tax revenues such as the
utility Users Tax, the Sales Tax, Property Taxes, the
Business License Tax, the Transient Occupancy (or bed)
Tax from hotels and motels and the Real Property Transfer
Tax.
Remaining revenues primarily corne from other
governmental agencies, various fines and cost offsetting
fees and charges.
Reconunendation
It is recommended that the Council conduct a hearing to consider
staff-recommended budget priorities and policies, receive public
input, and direct staff concerning preparation of the FY 1994-95
City budget.
Prepared by: John Jalili, city Manager
Susan McCarthy, Acting Assistant City Manager
Mike Dennis, Director of Finance
Attachments
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THE SANTA MONICA JAYCEES
1993-1994 PROPOSED BUDGET
INCOME
1) Membership fees
a) new members (1st quarter)
II II (2nd, 3rd, 4th)
b) renewals (85%)
c) sustaining membership
PROFIT
20 @ $60... 1200
25 @ $75... 1500
46 @ $60... 2760
10 @ $100.. 1000
$6460
2) Donations
a) OYFF (Westec) 500
b) OYPSO (Westec) 500
c) Haunted House (misc. donors) 650
d) DSA (misc. donors) 900
e) Newsletter paper & printing (Copyspot) 600
f) Shopping spree (Mervyn's) 500
3) other Revenues
a) Dinner meetings
b) Bank interest
** Total Gross Income:
EXPENSES
1) Membership dues
a) new members to state
b) renewals to State
c) Chamber of Commerce
2) Dinner meetings
guests meals
member meals
tips
$3650
mea 1 s . . .
5400
30
$3630
$13,740
53 @ $33... 1749
46 @ $30... 1380
180
$3309
+3151
24 @ $15... 360
360 @ $15.. 5400
12 @ $30.. 360
$6120
/I/d:/o9/!
LOSS
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<-
CA:F:\MUNI\LAWS\JL\QUAKE.RES
City Council Meeting 1-25-94
Santa Monica, California
RESOLUTION NUKBBR 8714 (CCS)
CITY COUNCIL SERIES
A RESOLUTION OP THB CITY COUNCIL
OF THE CITY OF SANTA MONICA DECLARING
THE EXISTEBCE OF A LOCAL EMERGENCY
WHEREAS, on January 17, 1994, an earthquake struck Southern
California causing severe damage within the City of Santa Monica;
WHEREAS, on January 17, 1994, as a result of the earthquake
the City'S Director of Emergency Services issued a declaration of
local emergency;
WHEREAS, on January 17, 1994, as a result of the earthquake a
state of emergency was declared in the County of Los Angeles by the
federal, state and county governments;
WHEREAS, as a result of the earthquake a state of local
emergency continues to exist within the City of Santa Monica.
NOW, THEREFORE, the City Council of the city of Santa Monica
does resolve and proclaim as follows:
SECTION 1. The City Council declares that a state of local
emergency exists within the City of santa Monica.
1
..
SECTION 2. The City Council directs the Director of Emergency
services or his or her designee to take such actions as are
appropriate to the fullest extent provided by federal, state and
local law, to protect the public health, welfare, safety and
property of the residents of the city of Santa Monica.
SECTION 3. The City Council further authorizes the Director
of Emergency Services or his or her designee to negotiate or
execute such contracts, agreements, applications or other documents
with such other federal, state or local agencies or other groups
and organizations as are necessary to provide to obtain emergency
aid, assistance or services to the city of Santa Monica.
SECTION 4. A copy of this Resolution shall be forwarded to
the State Director of the Office of Emergency Services with a
request that he or she find it acceptable.
SECTION 5. The City Clerk shall certify to the adoption of
this Resolution, and thenceforth and thereafter the same shall be
in full force and effect.
APPROVED AS TO FORM:
~ ~ ""'~ ,OJ' ~ ,<-r, 7>-
~_~,~ ~,_'- ~ .~v
SEPH \LAWRENCE
ing City Attorney
'" 1
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2