The City Council has started its review of Santa Monica's proposed $130.9-million budget for 1988-89. A public hearing is scheduled for June 21.
In study sessions this week, council members examined planned expenditures and revenues and heard reports from all city departments.
Income is projected at $135.8 million.
The budget calls for an additional police officer, an administrative analyst for the Fire Department, improved traffic controls, a renovation plan for Palisades Park, a multiservice center for the homeless on Colorado Avenue and additional Planning Division staffers.
General fund reserves are estimated at $7.3 million but are likely to be whittled down as council members add other projects to the list of expenditures.
City Manager John Jalili said a "prudent" reserve level is necessary because of what he called the unpredictability of federal money and the national economy.
"Generally this is a city in good shape financially," Jalili said.
Usually the City Council approves the budget immediately after the public hearing. It will take effect July 1.