Updated 4/15/20 12:01 p.m.

City facing multi-million dollar budget deficit

By Sam Catanzaro

Facing a major budget deficit the City of Santa Monica took action last night that may lead to cuts in services and buyouts to hundreds of employees. In addition, a source has told the Santa Monica Mirror, however, that more cuts are looming that may lead to one-quarter of employees seeing their positions terminated and the elimination of programs such as the Santa Monica Swim Center.

On Tuesday night, Santa Monica City Council City instructed staff to implement a Voluntary Early Separation Incentive Program (VESIP) for eligible staff this week. According to a staff report, these buyouts are for permanent employees with a minimum of five years of service and employed in a job classification that is not deemed by the City Manager to be essential.

Staff with 10 or more years of service would receive $15,000 and 18 months of City-paid medical benefits. Staff members with a minimum of five years would get $10,000 and 18 months medical coverage.

According to the City, while the cost of the VESIP is difficult to estimate because it is unknown how many of the eligible staff will avail themselves to this program, the City has set aside $1,800,000 from the general fund for this program

These buyouts are intended to mitigate some of the impacts the COVID-19 outbreak has brought upon the City’s budget, which the City says “is facing massive deficits.”

“Because the City relies heavily on revenues impacted by the quarantines including shopping, tourism, dining and entertainment, our City is facing massive deficits to our budget as a result of the pandemic,” reads the staff report, approved by City Manager Rick Cole and Gigi Decavalles-Hughes, Director, Finance Department. “The City relies heavily on revenues impacted by the quarantines including shopping, tourism, dining and entertainment. Staff projects that in the period through June 30 (the end of the fiscal year), the City will have a $72 million budget gap in its General Fund in large part due to the sudden loss of revenues. We expect to use all of our Economic Uncertainty Reserves and some of the City’s rainy day fund to fill this General Fund gap.”

In addition, the City says current projections indicate that if reopening begins in July the City will face a $154 million deficit from July 2020 through June 2021.

The staff report also indicated that City programs and services may be cut.

“The financial impacts of the emergency force us to quickly consider what are the essential services that the City must provide and only the City can provide. We think public health and safety must be maintained as much as possible. To navigate this emergency and restructure our City, we will have to focus on the few things that only we can provide. It does not mean the city is forsaking our values and priorities. Rather, it means we are pushing the pause button on many of our ambitious and successful programs, services and initiatives,” the staff report reads.

On top of these cuts, a former senior city employee who wishes to remain anonymous told the Santa Monica Mirror that on top of the cuts mentioned in the staff report, City Manager Rick Cole will propose during closed session additional reductions.

According to the source, under these additional reductions one-quarter, or more than 500, city employees will lose their jobs, including a couple of top-level department heads.

The source went on to say that some departments will be combined and that all department assistant director positions will be eliminated.

In addition, the source says that the Office of Sustainability and the Environment will be reduced to all but four staff members.

Regarding services, the source said that the Santa Monica Public Library system may be reduced to two branches.

According to the source, department heads were made aware of these cuts in a directive from the City Manager specifying what to cut.

When reached for comment, the City said these facts are “not accurate”.

A petition circulating online shared with Santa Monica City Council, however, lists some of the programs and services slated to be cut.

The former city employee told the Santa Monica Mirror that the petition contains “clear and correct information.”

Among the programs and services listed as slated to be cut are closing the Santa Monica Swim Center, reduce street sweeping to once per month, combining and reducing the Virginia Avenue Park and PAL youth programs, eliminating the Office of Sustainability and Environment and most, if not all, of the sustainability policies and programs.

In addition, the petition says that there will be a reduction in the frequency of beach restroom cleaning from eight times per day to two-three times per day, while close some beach restrooms completely, even during summer.