The Santa Cruz City Council listens to a resident during its May 14 meeting. (Marcello Hutchinson-Trujillo — Santa Cruz Local file)

Editor’s note: New to the city and county budget process? Check out Santa Cruz Local’s recent guide to local budget hearings.

SANTA CRUZ >> As the City of Santa Cruz weans itself from the last of its Covid relief money, a draft city budget presented Tuesday avoids service cuts but leaves gaps in long-term savings and investments. The city council is set to approve a final budget in June.

The city’s General Fund budget is about $150.6 million, compared with about $139.6 million from the prior fiscal year. The draft budget balances income and expenditures, and doesn’t draw from the city’s reserve funds.

Since 2020, the city budget has been buffered by state and federal Covid relief grants. Now, the city must draw more from its own money to sustain services. 

Those services include homelessness response, which for the last three fiscal years was mostly funded by a $14 million state grant. Although the city continues to apply for and receive state grants for homelessness services, it hasn’t found a replacement for the state money. The draft budget includes $9.6 million of the General Fund for homelessness response.

The draft Santa Cruz city budget includes spending totals from the city’s General Fund. (City of Santa Cruz)

Measure L, a half-cent tax hike approved by Santa Cruz city voters March 5, has prevented major cuts in public works, climate change adaptation, homelessness service and other efforts, said Santa Cruz Finance Director Elizabeth Cabell. 

“It’s allowing us to maintain our services, even though costs are increasing,” Cabell said.

The draft budget includes 24.5 new full-time equivalent employees, including:

  • An administrative assistant for Santa Cruz City Council and the Commission for the Prevention of Violence Against Women. The council does not currently have any dedicated staff support.
  • An assistant urban forester to help care for street trees and help carry out the city’s goal of planting 3,000 new trees by 2030.
  • A development manager and a principal management analyst for the economic development department to oversee state housing grants and affordable housing budgets.
  • A police investigative analyst to do forensic investigations for court cases and internal reviews.
  • Two new librarians, including one dedicated to outreach.

Long-term gaps

Although the draft budget avoids cuts, it doesn’t allocate much money to the city’s long-term goals, like infrastructure or savings.

The city aims to have two months of expenses saved in an unrestricted reserve fund, but it hasn’t met that goal for the past two years and is set to miss it again this year. For now, the city aims to balance income and expenditures “so we can hopefully get to a point where we can build up our reserves,” said Cabell. “But we continue to struggle with that.” 

The General Fund is also set to skip its annual $5 million contribution to the Capital Investment Project, a pot of money for major projects like building repairs and fire engines. The city also didn’t contribute any General Fund money in last year’s budget. 

Instead, city staff would focus on existing capital projects that have other sources of money, like grants. “Things are not slowing down,” Cabell said.

Though Measure L has boosted the city’s income, costs are still set to outpace revenue over the next 10 years, Cabell said. That means the city will need other ways to bring in money. 

In October, city staff are set to propose increased city fees for services like building inspections that would fully recoup the cost to the city. 

Next steps

The council did not vote on the budget, but gave city staff suggestions for the next draft to be considered in June

  • Santa Cruz City Councilmember Sandy Brown suggested boosting money for the Eviction Defense Collaborative, a group of nonprofits, to $75,000 from $50,000.
  • Councilmember Sonja Brunner requested a plan for replacement of the Fire Department’s aging engines.
  • Councilmember Shebreh Kalantari-Johnson requested an additional goal for the Planning and Community Development Department to improve community outreach for new developments.

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Jesse Kathan

Reporter / California Local News Fellow

Jesse Kathan is a staff reporter for Santa Cruz Local through the California Local News Fellowship. They hold a master's degree in science communications from UC Santa Cruz.