There’s trouble at Santa Barbara City Hall.
And everyone is pointing fingers.
The Santa Barbara City Council has burned through all of its financial savings, a surprising revelation that erupted Tuesday into a full-fledged free-for-all over how this happened and what to do next.
“I am pretty depressed about where we are at today,” councilman Mike Jordan said.
Councilwoman Meagan Harmon summed it up bluntly: “This is really a mess.”
With no savings, the council has resorted to plunging into emergency disaster relief funds.
The council was supposed to approve its $257 million budget on Tuesday, but the 7-member panel couldn’t pull the trigger on a vote. Now, for the first time, the City Council is in a position where it might not pass a budget by June 30, the state-mandated deadline.
The councilmembers over the course of three hours sparred over how to fix the budget problem. Councilman Oscar Gutierrez forced a few eye rolls and palms to the head from his colleagues with his two suggestions for raising revenues: Legalize gambling card tables and decriminalize psilocybin mushrooms.
“I know Ventura has card rooms,” Gutierrez said. “And from my knowledge they generate a few million dollars a year off of those card rooms.”
Gutierrez then said President Trump recently signed a bill “fast-tracking the FDA” to do more research and allocate $50 million toward decriminalization of psilocybin mushrooms.
“I would like a serious discussion about that,” Gutierrez said. “I can tell you there is a group of very invested people in our community that are 100% behind this. They are just waiting for us to back them.”
If the council doesn’t pass the budget by June 30, it would need to hold a special meeting in July to approve a spending plan. City Administrator Kelly McAdoo said there are no meetings scheduled for July, so the council might hold three more meetings in June to fast-track a plan to approve the budget.
Councilwoman Kristen Sneddon kicked off the conversation Tuesday, expressing frustration with the budget process. She said she was surprised to learn that the past few years the city was actually pulling money from its contingency reserves—essentially its savings account— to balance the budget.
It’s not actually balancing the budget if the city has to pull from contingency reserves, she said.
She said she was upset that the city spent $3.75 million to buy the Casa Cacique homeless day center at a time when its reserves were low.
“On what planet were we making further purchases,” Sneddon said. “When these expenditures come up throughout the year, it has never once been flagged ‘this is going to hurt your reserves.'”
Tuesday’s budget debate was fueled by a behind-the-scenes political battle between Sneddon and councilman Eric Friedman, who are both running for mayor. After Sneddon said that she was not told by city staff that the council was spending out of its reserve funds for purchases and projects throughout the year, Friedman jumped in and expressed disbelief.
Friedman was one of three councilmembers, along with Jordan and Mayor Randy Rowse, who voted against the city budget a year ago.
“What do you think we voted against the budget for?” Friedman said, looking toward Sneddon. “For this very reason. So it is frustrating to hear that this has happened because we have been talking about it.”
Friedman said the budget problems were obvious a year ago.
“It was very clear to me that we were going to be spending into reserves,” Friedman said. “And if we didn’t address the problem, this is exactly where we would be, we would be in emergency reserves right now.”
Some of the debate also centered on whether to give $2 million to the Housing Trust Fund, or put the money into its reserves. Several speakers from the audience during public comment said that the city should not be taking money away from housing to help fix budget problems.
“I don’t accept that it is the local Housing Trust Fund that is cutting into reserves,” Sneddon said. “I don’t think that’s where we need to be looking to balance the budget.”
The City Council’s policy states that its total reserve funds should equal 25% of the city budget, with 15% being for budget contingency funds and 10% for emergency disaster funds.
During the COVID-19 pandemic, the 15% contingency funds were used to prevent the city from laying off employees.
It is unclear what happens now. Several of the councilmembers said they were uncomfortable passing the budget without a plan to rebuild the reserves. City Administrator Kelly McAdoo also told the council that a lack of reserves could hurt the agency’s credit rating.
Councilmember Harmon suggested that the city set aside some sales tax money to replenish reserves. She said that it is time to make disciplined choices.
“This is how I do it in my personal life,” Harmon said. “If there is something I want to buy and I don’t have the money for it, I save, and when I get a little extra money I put it into the account, and I put it in the account, and put it in the account, and when I have enough money, I buy the thing.”
Santa Barbara Mayor Randy Rowse expressed the most dissatisfaction with his colleagues’ spending choices. He noted spending money on the State Street Master Plan, the rent stabilization ordinance and giving money to a variety of community organizations, including $500,000 for legal aid to help those families impacted by ICE deportations.
“Boy, big wonder where all the money went to,” Rowse said. He said spending down the budget reserves “makes zero sense to me.”
