Labor Negotiations: Fiscal Implications for the City of Santa Barbara
By Bonnie Donovan
Overview of Proposed Labor Contract
The anticipated cost of the proposed labor contract for fiscal year 2026 is $3,148,334. This amount reflects the wage increases requested by the union representing city employees.
Given the scale of this financial commitment, it is prudent to examine the broader context, including political and financial influences. A review of campaign finance records may provide insight into contributions made by SEIU and the potential impact on decision-making processes.
Budgetary Concerns
The City of Santa Barbara is currently facing a concerning fiscal trajectory. Following the approval of the most recent budget, the city’s financial position shifted from a $800,000 surplus to a projected deficit within a single month. This rapid deterioration underscores the need for careful scrutiny of all new expenditures.
$500,000 to immigrant supporting non-profits
$5,000,000 to the Housing Trust Fund
$3,148,334 for union wage adjustments
These expenditures, while aligned with various policy priorities, must be evaluated in the context of the city’s overall financial health and long-term sustainability.
Otherwise, do you see bankruptcy in our City’s future?
The Big Hole: Development and Fiscal Challenges in Santa Barbara
Urban Development: A Hole Already Forming
During the City Council’s discussion of the Paseo Nuevo Housing Project, concerns were raised about the possibility of being left with a “big hole” in the heart of downtown—like past delays at La Entrada and the Canary Hotel.
But that concern is no longer hypothetical. The hole has already begun to form—and it’s expanding across Downtown, Upper State Street, and the Milpas corridor. This transformation is not the result of stalled private development, but of decisions made by elected officials and city departments. Just like a hole, you’ll be looking straight up to see the sky… No mountain or ocean views for us anymore. 😡
We are no longer debating two- or three-story buildings. The new standard is four stories and higher, often approved without adequate parking. These developments are reshaping the city’s skyline and infrastructure, with long-term implications for livability and mobility.
Major Projects Underway or Proposed
Look at the Additional Reserve Contributions!
That is coming out of our Rainy Day Fund aka for Emergencies Fund.
Clarifying Labor Negotiation Costs: A Direct Exchange
Last Friday, I sat down with Finance Director Keith DeMartini to clarify how the newly adjusted City of Santa Barbara budget was calculated following the latest changes.
After our meeting, we followed up via email to confirm the details before sharing them publicly.
Bonnie: Again, to make sure...
Just look at the Labor Negotiations Budget Impact.
Anticipated Labor Contract Cost: $3,148,334.00 just for 2026.
Again, it's anticipated raises, not total cost for labor?
What is the total labor cost without this anticipated raise?
Is labor funding allocated from the general fund for all departments, or does each department receive its own allocation?
Keith: The $3,148,334 is the cost of additional labor contract costs, above and beyond the assumptions included in the adopted budget, in FY2026. It’s the anticipated raises and other costs associated with the contracts, not the total cost of labor. The total salaries and benefits budget in FY2026 in the General Fund, before these contracts, is $155 million.
Labor costs are borne by all funds that pay for their services. The General Fund pays for Police, Fire, Parks and Recreation, Library, and many other functions.
The enterprise funds run more like a business and fund staff that work in Water, Wastewater, Golf, Waterfront, Clean Energy, Clean Community, Airport, and Downtown Parking.
Bonnie: It’s the anticipated raises and other costs associated with the contracts, not the total cost of labor. Is that where benefits etc. comes in, correct? Not just salary or hourly rate?
Keith: Yes, that’s correct. When we cost impacts from collective bargaining contracts, we cost the fully loaded impacts, including benefits, medical, and pension costs. Also, other staff salary adjustments occur through the year which staff also budgets for. Let me know if you have any further questions. Thank you!
You must appreciate how staff always ends their emails to me with:
Let me know if you have any further questions.
Thank you for your time, Keith!
Budgetary Challenges: A Fiscal Hole
Let’s go through this one more time!
In June, Finance Director Keith DeMartini presented a budget reflecting an $800,000 surplus. Within weeks, however, the City Council approved a $5 million allocation to the Housing Trust Fund, converting the surplus into a $1.2 million deficit.
Subsequent decisions further deepened the fiscal hole:
$500,000 allocated for “immigrant support services” (though some Council members seem determined to give the money to the unvetted 805 UndocuFund) does not appear in this latest budget deficit! The City Council will consider appropriating the $500,000 for immigrant support services at the regular council meeting next Tuesday at 2pm.
Additional wage increase demands from the union following a closed session
Resulting in a projected deficit of $8,052,695.00 for fiscal year 2025
This figure—eight million, fifty-two thousand, six hundred ninety-five dollars—represents a significant burden on Santa Barbara taxpayers. And remember our City Administrator Kelly McAdoo, reminded them they just left the closed session with the union before they went ahead with wanting the $500,000 for immigrant support services.
Revenue Measures: Insufficient Relief
Revenue from Measure I cannot offset the current deficit. The $15 million from Measure I is already accounted for in the budget and designated for essential services such as parks, public safety, and libraries. And so, they’re going after Measure C funds that we were guaranteed/promised wouldn’t be touched for anything other than Infrastructure. Call more social services for the undocumented Human Infrastructure. Problem solved!
Finally
The Santa Barbara Grand Jury has started up and is ready for your inquiries:
Maybe this is where you can ask where Joseph Holland is, and an explanation of his pay listed on Transparent California. And why the Santa Barbara Board of Supervisors haven’t followed up on his whereabouts.
Click on the link below to file a complaint.
File a Complaint - Santa Barbara County Grand Jury
Complaint Process
If you have an issue with a public agency, a Department of a City or County Government, school district, or special district, you can file a formal complaint with the Grand Jury. You can contact the Grand Jury through mail, phone, and email. The Grand Jury responds to the suggestions and complaints from citizens about issues the jury should investigate. Every suggestion is reviewed by the Grand Jury and may be assigned to one of the jury’s committees for consideration and/or investigation. Though the jury cannot investigate every issue, every complaint is duly considered. All complaints received by the Grand Jury are treated confidentially. The Grand Jury’s records may not be inspected nor subpoenaed. All Grand Jury investigations and interviews are kept confidential
Whistleblower Hotline
For Inefficiencies in Government, contact us below.
The purpose of the Whistleblower Hotline is to encourage employees and citizens of the County to report any suspected cases of fraud, waste, or abuse, of which they become aware. The Whistleblower Hotline is provided as an alternative reporting mechanism to ensure concerns are properly addressed and as a means for anonymous, confidential, reporting.
Confidential Hotline (844) 413-4025
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Bonnie, your articles on local public administration just get better and better.
As soon as I press Post on this comment I'm calling. Bonnie, you are our very own Lew Archer - as great a crime investigator as Ross Macdonald's fictional detective. “Where is Joseph Holland?” could have been the title of a Ross Macdonald novel. Have you all read Macdonald, the greatest Santa Barbara writer? If you haven't, pick up one of his novels this weekend - or better, three or four - and you'll have the greatest late summer reading ever. When I lived in NYC I was pleased to find out how many literary writers revered Macdonald. I'm talking about authors whose names you'd recognize and whose work was praised by The New York Times Book Review. When they found out I grew up in Santa Barbara they'd excitedly ask if Macdonald was accurately depicting the wealth, corruption and evil here. Yep. Just ask Bonnie.