Santa Monica Economic Outlook
This document provides a ten-year financial forecast for Santa Monica, highlighting revenue growth over time, major cost drivers, retirement costs, and projections for the general fund. It also discusses potential economic risks, pension advisory recommendations, and the status of various funds in the city.
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Presentation Transcript
Ten-Year Financial Forecast January 22, 2019
Economic Update Recession ahead? Future risks to State economy Global and regional behavior shifts affecting Santa Monica 2
Revenue Growth Over Time Property Tax 3.5-4.5% Sales Tax 2%-3% Recovery = 8% Last 3 years = 4% Next 10 years = 2.3% Transient Occupancy Tax 2.5% Business License Tax 1.5%
Retirement Costs What we ve done so far New challenges $77.5 million pay down of unfunded liability Changed assumptions Lowered discount rate from 7.5% to 7% More sustainable pension benefits for 1/3 of employees Future paydown of losses amortized over 20 years Prepayments provide discount Employees sharing more of pension costs Potential for 6.5% or even 6% return by 10 years
General Fund Ten Year Forecast: Revenues and Expenditures $25 $20 $15 $10 $6.5 $5 $1.4 $0.2 $0 Best ($0.8) ($1.7) ($3.7) ($4.9) ($5) ($6.8) ($7.7) ($8.5) ($10) ($11.6) ($15) ($16.4) ($16.9) ($20) ($20.8) ($24.7) ($25) Probable ($29.0) ($30) ($31.5) ($32.6) ($35) ($35.8) ($36.3) ($36.9) ($38.4) ($39.2) Recession ($40) ($42.8) ($44.4) ($45) ($46.3) ($49.6) ($50) ($52.1) ($53.7) ($54.4) ($55) ($55.3) ($59.0) ($60) Worst ($63.5) ($65) ($65.3) ($68.7) ($70) ($75) FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 7 Probable Case Best Case Worst Case Recession Case
Pension Advisory Committee 11-member advisory committee to City Manager Adopted Guiding Principles Recommended accelerated paydown of unfunded liability 8
Other Funds Status Self-Sustaining Wastewater, Water, RRR, BBB, Airport, Beach, Cemetery, Community Broadband Requiring Subsidy Pier, Housing 10
Grants Programs Human Services Grants Program Renew grant funding for two years Reimagined RFP released in Fall 2020 Cultural Arts Organizational Support Program RFP released in early February 2019 Two year grant cycle 11
Recommended Actions Receive the forecast and direct staff on budget strategy Renew grant funding for two years for Human Services Grant Program grantees Receive public comments for CDBG/ HOME funding plans 13
