Santa Barbara finance committee forwards third-quarter budget adjustments, salary reclassifications to council

The Santa Barbara City Finance Committee on May 20 reviewed the third-quarter financial position for fiscal year 2025, received staff projections for the general fund and eight enterprise funds, and voted unanimously to forward staff recommendations — including proposed budget adjustments and position reclassifications — to the full City Council.

Staff member Mister Demartini led the presentation, saying, "Today's presentation is to give an overview of the third quarter financial review for fiscal year 2025," and recommended that the committee receive the interim financial statements for the first nine months of the fiscal year and recommend that council adopt a resolution approving the third-quarter budget adjustments and a resolution approving listed salary and position changes.

The report showed the city projecting a deficit for the current fiscal year, and Demartini said the city remains structurally out of balance in later years: staff presented a multiyear forecast showing the gap between revenues and expenditures narrowing in fiscal 2026 but widening thereafter. Demartini noted that the presented figures include Measure C revenues and the city's required contribution to reserves under its reserve policy.

Staff reported key figures: the projected fiscal-year 2025 deficit including the reserve contribution was about $7.3 million; Demartini said excluding that required reserve contribution the shortfall would be roughly $4.6 million. The presentation included a $3.0 million projection for Measure I revenue (the tax rate took effect April 1 and three months of receipts will be available before fiscal-year end), and staff said major general-fund taxes generally track near adopted budget levels with some smaller variances across tax lines.

Miss Liccoli reviewed the short-term rental and departmental spending details. She said the short-term rental program, at the nine-month mark, resulted in an additional $1,000,000 posted to the general fund with $185,000 allocated to Measure B for quick restoration. Department-level summaries showed most general fund divisions projecting to finish near their revised budgets, with salary savings offset by some professional services increases in selected divisions.

Enterprise fund results were mixed. The Water Department was reported at roughly 78% of budgeted revenue for the nine months and added about $7.9 million to reserves compared with a budgeted loss; Westwater (sewer) was at about 77% of revenue and projected to align with revised budget; Solid Waste showed a $3.2 million operating gain for the period; Clean Energy experienced a loss of about $7.2 million at quarter three after a midyear Southern California Edison rate decrease that reduced revenue projections; the Airport, Waterfront, Downtown Parking and Golf funds each reported specific revenue and expense variances summarized in staff materials.

Demartini highlighted several routine, technical budget adjustments listed in Attachment 3 of the committee packet and asked the committee to note one clerical correction: a golf-course capital appropriation line reads $20,000 in the packet but should be $200,000. He said the revenue appropriation tied to that request is correct and asked the committee to forward the staff recommendation with the clerical fix.

Committee members asked clarifying questions on Measure I reporting and on an independent review of the city's multiyear forecasting. Demartini summarized the independent review by NHA Advisors, saying their model was largely aligned with staff's but generally more conservative on revenues such as sales tax and transient-occupancy tax; staff attributed differences to local knowledge and direct engagement with hotel and sales-tax auditors.

In public comment, Emiliano Campobello identified himself as an environmental scientist and urged the city to consider energy-efficiency and green-technology approaches to reduce operating costs; he said he would present additional information on June 3.

Member Harmon moved to forward the staff recommendation to the City Council, with the update to the Golf Course Capital Fund appropriation as described by staff; Member Santa Maria seconded. The motion passed unanimously on a roll call of the three committee members present (Chair Friedman, Committee Member Santa Maria, Committee Member Harmon).

Votes at a glance: the committee moved, seconded and unanimously approved forwarding staff's recommended resolutions to the City Council (third-quarter budget adjustments and the updated position-control/salary schedule), with a clerical correction to the Golf Course Capital Fund appropriation (packet line shows $20,000; intended amount $200,000). The committee asked staff to include that correction when sending the recommendations to council.

The committee adjourned after the vote; the forwarded items will appear on an upcoming City Council agenda for final action.