‘This is not a fiscal emergency’

During the usual bi-weekly City Council meeting, which will be held tonight (Sept 9), the board will decide on a resolution of fiscal distress. 

Financial forecasts for the 2025-26 fiscal year show the city is expected to once again operate at a deficit of an estimated $10.8 million. During a meeting in June, the City Council approved a budget with an anticipated revenue of $473.5 million, with adjusted expenditures of $484.3 million. 

Santa Monica Mayor, Lana Negrete, has been utilizing social media in an effort to make local government more transparent and accessible to those living and working in the city. 

In an Instagram video posted Sept 8, Negrete commented on the financial issues the city is facing. 

“This is not a fiscal emergency. No one’s cutting services overnight, and it doesn't change any contracts or agreements that the city has already made. What it does is give us a tool in the toolbox, a way to clearly show in one official document, the financial challenges that we’re facing.” Negrete said.

The resolution will allow the City to compile a document that can explain, in writing, the current financial issues. This document can then be submitted for grants at the state and federal levels.

The issues were made worse by recent payouts to sexual abuse victims following a case involving Eric Uller, who worked for the City, and volunteered in the Police Activities League (PALs), which is a nonprofit owned by the city of Santa Monica. 

In 2018, Uller was arrested on charges of Lewd Acts with a Minor. He was formally charged in October 2018 for sexual crimes against four minors. He was found dead in his residence in November 2018 and the charges against him by the Los Angeles Police Department (LAPD), were halted.

Negrete said, “A big part of this challenge, as you all may know, comes from the Uller case. Santa Monica has already paid over 229 million to survivors and victims, and we continue to stand with them in their pursuit for justice, those that are legitimate claims. At the same time we have to protect taxpayers, and make sure fraudulent claims don't drain our ability to serve the community.”

Payouts for settlements in cases like abuse, are due upon judgement, or settlement, which has forced the city to pay much of these payouts using funds from the general fund and other areas of the city budget. 

Sean James is a hairstylist and business owner in Santa Monica. He asked Negrete why the city was paying these fees and not an insurance company.

Negrete said, “There’s a dispute with the insurance companies as to whether they will pay for each incident, or just a period of coverage. That is what we are dealing with on top of fraudulent claims being investigated.” 

The City has since implemented Administrative Instruction III-5-12 on Abuse Prevention which implements standards for preventing abuse and responding to reports of abuse and inappropriate conduct. The city still expects an additional 180 claimants. 

Additionally, lawsuits were filed Friday by two of the six Downtown Santa Monica (DTSM) board members ousted on June 24. The Council appointed board was removed citing favorability towards property owners, which was leaving businesses out in the sun. An interim board was then put in place during the search for their replacements.

The DTSM board rushed to amend their bylaws before the council meeting June 24 to allow the removal of board members only if there was “cause”. 

After the Council meeting to remove the board members, the City Attorney sent a letter to the board alerting them that the City would not comply with the provisions made to the board's bylaws. 

The Council will discuss this suit in a closed session before choosing between 12 candidates during tonight's meeting which consist of two former mayors, and the interim City Manager who were all appointed temporarily. 

Another discussion that will continue tonight, will be an ordinance aimed at allowing the retail sale of Marijuana in commercial districts. The city voted in 2023 to allow adult-use cannabis sales and delivery for the two medicinal cannabis retailers that held Conditional Use Permits.

The proposed ordinance would eliminate the discretionary review process, and allow for retail sales by permit. 

As it’s proposed, cannabis retailers must maintain a 300-foot distance from other businesses selling cannabis, and cannot do business on the same block as another cannabis retailer.

The hope is that tax money raised from these sales can help repair the wrongs done in areas disproportionately impacted during the war on drugs.

Equity applicants would receive priority permit processing, and connections to resources to help them succeed. One of the requirements in the proposal will also require cannabis retailers to hire a percentage of employees from ‘equity eligible’ populations. 

As the Council continues to address the many issues the City is facing, Negrete reiterated there is no crisis.

She said, “This is a tool, not an emergency, and it is a bigger part of a plan that staff will be bringing forward in October to realign and stabilize our city finances.”