Santa Barbara City Council Doesn’t Budge on Budget Reserve Policy

During the most recent budget season, after realizing that the city was projecting an operating deficit over the next few years, Santa Barbara’s city council floated the idea of rethinking its reserve policies to allow the city to make any necessary changes or free up money for emergencies.

But when the potential changes came before the council Tuesday, they rejected all Finance Committee recommendations except one — a technical fix that combined the two separate waterfront reserve funds into one without making any changes to the policies or reserve target levels overall.

The Finance Committee had recommended other options — the city could consider opening a line of credit; it could reduce its disaster reserve target level from 15 percent to 10 percent; or it could free up 3 percent of its Fiscal Year 2025-2026 budget with a plan to replenish it back to its current level by 2030 — but all suggestions fell flat during discussion.

Currently, the city’s reserves stand at 25 percent of the most recently adopted expenditure budget, with 15 percent considered “disaster reserves” and 10 percent earmarked as “contingency reserves” to address fiscal impacts of unexpected events.

Councilmember Meagan Harmon said that it was important for the city to exercise “careful conservative financial planning,” and find a balance before dipping into the reserves unnecessarily. “Why do we have a policy if we are so flexible about it?” she asked.

“What we should do is maintain what we have going forwards,” said Mayor Randy Rowse, “Save the status quo.”

During public comment, city worker Zac Smith expressed his frustration with the council holding firm on its reserves, which Smith said could be used to help employees who are being slowly priced out of town with low wages and a high cost-of-living. 

“If you all don’t budge, what’s going to happen in the city?” Smith asked. “I mean honestly, who’s gonna be left?”