• City of Santa Maria Budget Status

    November 12, 2020
    City of Santa Maria Budget Status

    On behalf of the City Council, the City of Santa Maria is providing a financial status update. When the 2020-2022 Budget was adopted, the City was amid the unprecedented health emergency and economic crisis of COVID-19. Budget impacts resulting from COVID-19 were addressed in the 2020-2022 Budget primarily by using reserves to make up for the expected loss in revenues in 2020-21 and 2021-22. The City was able to adopt a balanced budget using reserves prudently saved by the City Council for such a need.  

    Even before the pandemic, the City was facing a budget deficit due to rising costs, mostly attributed to pension costs, that are expected to continue to outpace revenue growth for the foreseeable future. One way the City has approached this on-going issue is by reducing the departments’ operating budgets, including a reduction in the number of budgeted positions while avoiding layoffs. Departments recommended position reductions that would least impact their core services.  

    The first-quarter financial report was presented at the November 3, 2020, City Council meeting and the report showed that some revenues, specifically sales tax, are coming in higher than expected. When asked of the Director of Finance Mary Harvey what this means for those position cuts identified in the budget, she stated “Although sales tax is coming in better than expected, this is only one quarter and it is too early to predict if this is a trend that will continue. We are still dealing with COVID-19 and there may be more impacts in the coming months.”

    City Manager Jason Stilwell weighed in on the status, “I agree with the Director of Finance that it would be prudent to see a trend first because not only do we need to be shrewd with the current budget, but we are also anticipating significant cost increases over the next five years that will outpace revenue and we want to preserve City services.” In reference to the increases, based on the most recent CalPERS actuarial valuations (pre-COVID-19) provided to cities across the State of California, CalPERS costs paid by cities are projected to increase at least 30 percent by 2025-2026. 

    Mayor Alice Patino stated, “We want to make sound decisions, we do not have an interest in closing fire stations, we do not have an interest in having fewer patrol vehicles in our neighborhoods, we want to continue to have Library services, Recreation programs, Paul Nelson Aquatic Center, Parks, and developments throughout the City that the community values and depends on. We are taking steps that will enable the City Council to keep the City’s financial strength now and into the future.” City Manager Jason Stilwell agreed, “First and foremost, the City of Santa Maria has an obligation to provide services to the residents. With City Council’s principal to maintain financial stability, we are identifying strategies to do this while avoiding employee layoffs and sustaining employees’ retirements.”

    The City will continue to keep the community apprised of its fiscal situation and how the volatility can impact public service.