The city council passed a balanced budget last night that appears forward-looking and optimistic about better times ahead for Santa Monica.
The combined city operating budget and capital improvements budget that was adopted nets out at $908.8 million, after reimbursements and transfers, for fiscal year (FY) 2026-2027 and the first year of the fiscal 2026-2028 capital improvements plan.
Among the city’s operating expenses are 2,287.6 full-time equivalent staff positions, a few hundred of which are temporary.
The overall package continues priorities established with 2025’s City Realignment Plan.
On May 26, the council held a study session where several details of the city’s Operating Budget and Capital Improvements Budget were discussed. We covered that session here.
Since last month’s study session, only a few changes were made based on the council’s satisfaction with the budget presented by staff. But among the things that were updated are three capital improvement projects:
- Advancement of the Santa Monica Neighborhood Greenways Project from FY 2027-28
- Acceleration of 4th Street Transit Priority Improvements in preparation for the 2028 Olympic Games
- A reduction in FY 2027-28 funding for an Affordable Housing and Sustainable Communities (AHSC) supported project
Overall, and as was stated in May, the staff report states the capital improvements plan (CIP) “Continues to reflect the City’s structural shift to relocate recurring maintenance, technology, and fleet replacement back into the operating budget. This allows the CIP to remain focused on true capital improvements, including park enhancements, major event readiness, mobility investments, and infrastructure renewal.”
The budget that was passed also included updates to the city’s master fee and fines schedules and parking rates schedule. It also falls far below the state-mandated “Gann Limit” for authorized spending.
Several fees are expected to rise by 3.3% to equal the cost-of-living adjustment given to city workers.
The city can also expect about $2.6 million in state gas tax revenue to improve roads.
The council resolution also authorizes staff to “carry forward unspent funds for multi-year grants and for goods and services that were ordered but not received by the end of FY 2025-26. Further, it allows staff to carry forward unspent balances for Measure GS, Council discretionary funds, and other General Fund and non-General Fund capital projects from FY 2025-26, so they remain available for their intended purposes in FY 2026-27,” according to the report.
Matt Goldenberg, Co-Chair of the North of Montana Association (NOMA), speaking on his own behalf, told the council, “I know this budget carries a lot of hard choices.” But he was particularly grateful for one aspect, saying, “This budget reflects real investment in our parks, and that deserves to be recognized.”
He added, “For decades, Santa Monica’s parks have been overlooked. We have just 1.55 park acres for every 1,000 residents. This is the council that inherited that challenge and chose to act on it,” citing the council’s new ambitious plan to deliver five park acres for every 1,000 residents.
Karen Melick, a member of the Santa Monica Aquatics Advisory Committee, argued against new aquatics fees for local swimmers, stating, “The increases in fees for aquatics are not aligned with other recreation fees. Aquatics fees are being increased eight to 10%; most other increases are only three to six percent.” She further argued that the staff’s claim that the new fees do not represent a major hardship isn’t based on any financial analysis.
A procedural motion by Councilmember Dan Hall combined the budget discussion with the previous minutes and agenda for the Santa Monica Housing Authority Board (HAB), which welcomed additional members to the dais.
HAB member Hajar Muqtasid St. Claire asked that more staff commitment be placed in the budget to meet with Resident Advisory Board (RAB) members about their priorities and concerns. “After four years of making requests for staff to provide a minimum of quarterly communications from RAB reps to RAB members, which should include all Santa Monica Housing Authority clients, not just HCV staff, have previously stated, ‘it’s not in the budget.’” But she contested that the HAB is required to provide those communications and should therefore be part of the Housing Authority budget. She asked that the changes be made immediately.
Both Hall and Mayor Pro Tem Jesse Zwick expressed support for more communication in the spirit of the law.
Hall then moved for the passage of Subsection One of the budget, “Adopt a Resolution of the Housing Authority of the City of Santa Monica adopting the FY 2026-27 Operating Budget and adopting the first year and approving the second year of the FY 2026-28 Biennial Capital Improvement Program Budget.” He was seconded by Councilmember Barry Snell.
That portion of the budget was passed, 9-0, with the council joined by St. Claire and HAB member Jonathan Eady.
In response to comments on the aquatics fees, Mayor Caroline Torosis asked staff to speak to cost recovery for the expense of operating recreation programs. Staff member Jenny Rogers responded that they expect an across the board cost recovery in the 80 to 90 percent range for the expense of recreation programs, but that they have traditionally allowed a lower cost recovery rate for aquatics given the aquatics center’s larger expenses.
Rogers argued that while there have been no increases in aquatics fees in the last five years, the costs to the city of operating aquatics programs has increased more than 20%.
Torosis also asked staff if code enforcement will have the capacity to enforce a new penalty of $500 for violations of tenant protections during phases of construction. Community Development Director Jing Yeo responded essentially yes, and explained they are looking at the issue of tenant protections during construction holistically through a number of definitions and channels.
Hall rhetorically asked the city’s Finance Director, Oscar Santiago, to remind the public what will allow the city budget to come into full structural balance by next summer. Santiago stated it will be the $12 million joint use agreement with the school district coming off the city’s books that will get them over the hump. But without a parcel tax making it to the ballot and passing in 2026 to replace those funds, Santiago acknowledged there will be some tough decisions ahead for the council.
Councilmember Lana Negrete asked how budget and other administrative reforms will be assessed and measured pertaining to the public’s perception. “In reality, how are we going to go back and really assess if our return on investment with all these different things are being felt in the community?” She was curious if there would be a community survey or survey of businesses speaking to the effectiveness of regulatory changes.
In response to these and other benchmarks, City Manager Oliver Chi assured, “These are all things we will continue to refine and measure.” But he said he considered the most important measure to be the level of economic growth that is visible downtown and in the city over the next few years.
Snell then moved for the complete passage of remaining items in the Operating and Capital Improvements budget, save for one discretionary measure, and was seconded by Torosis.
That passed, 7-0.
A separate vote was taken for discretionary funds to support the school district’s grad night. The item was divided from the other vote to allow Negrete to recuse herself given that her Santa Monica Music Center rents musical equipment to the district. It was also passed unanimously, 6-0 in her absence.
But the budget considerations weren’t complete.
Hall then proposed allowing councilmembers to roll over any unspent allocation of their discretionary budgets into the following budget year. Councilmembers rolling off the council in any given December would be allowed a prorated amount that year until they leave the dais. Torosis seconded.
That was passed 7-0.
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