Realignment Plan - The Vision
On Oct. 28, 2025, the Santa Monica City Council approved the Realignment Plan, a coordinated renewal, or Renaissance, to restore and revitalize the city and well position it for the future.
Background / Understanding the Moment
Santa Monica finds itself at a defining inflection point. Once one of the most vibrant and prosperous coastal cities in California, our community has endured an extended period of decline since the COVID-19 pandemic.
Once a model of civic pride, safety, and economic vitality, the city has in recent years become marked by disorder, vacancy, and fiscal strain.
Today, discourse regarding the state of Santa Monica swirls around:
- Public safety concerns dominate community dialogue.
- Commercial vacancy rates across Downtown and the Promenade are among the highest in Los Angeles County.
- Public confidence in government performance has eroded.
- With TOT and sales tax revenues having plummeted during FY 2024/25, the City’s structural General Fund deficit is now projected to reach ~$29.1 million annually in FY 2026/27.
- Against that backdrop, the City’s available free cash reserves have fallen from over $435.8 million in FY 2018, to approximately $150 million today – with only $90M of that amount available.
The combined effect of these challenges has created a perception that Santa Monica’s best days may be behind it. To address this situation, the City Council has directed staff to develop an overarching plan to achieve Realignment for the city, such that we can reverse our current trajectory.
The Case for Action
The city's response begins from a simple premise: we must invest now to build capacity in Santa Monica to realign the city’s foundation – organizationally, operationally, and financially.
As part of our most recent budget cycle, the City Council set aside $60M in one-time funds to help stave off additional operational cuts during the next five years. However, the Realignment plan now proposes to deploy those funds strategically over a 24-month period to achieve the following:
- Stabilize the city’s overarching fiscal structure
- Rebuild private sector confidence in Santa Monica by implementing key strategies linked to the City Council’s three priorities of Safe & Clean, Economic Growth, and Housing for All.
This plan positions Santa Monica not for incremental change, but for a coordinated renewal – a Renaissance – and serves as the institutional reset required to restore long-term sustainability.
See the plan for each priority, including two additional priorities that address organizational operations and capacity.
- Achieving Safe Neighborhoods & Clean Streets
- Activating Economic Opportunity & Growth
- Developing Affordable, Livable & Secure Housing for All
- Creating Organizational Capacity
- Building Organizational Health
Fiscal Realignment Strategy
The proposed Realignment plan has to be fiscally sustainable for the city, and the overarching plan developed results in a projected structurally balanced budget within 24 months, by July 1, 2027.
Current fiscal situation:
- There is a structural General Fund budget deficit of approximately $30 million per year
- Free cash reserves are down from $435.8M in 2018 to approximately $150M now. Given that $60M allocated already by Council to bolster operation, existing cash available is actually approximately $90M.
The Realignment Plan seeks to restore balance by FY 2027 through both new revenues and disciplined expenditure controls, with key revenue generation concepts to include:
- Launch ambulance operator program - expected to generate $7M in revenue annually
- Adjust parking fees/resolutions - expected to generate $9M in revenue annually
- Large-format digital signage - expected to generate $4.5M in revenue annually
- Monetize city-owned land through development and value-capture partnerships
- Possibly pursue a parcel tax in 2026, sized to generate $12 million annually to fund the Joint Use Agreement with SMMUSD - which currently costs the city approximately $30 million annually
When the city implements this fiscal recovery plan, the city’s General Fund operating budget is projected to be net positive by July 1, 2027.