City budget looks good, but watch out for state
By Kate Carter
Saratoga is sitting pretty compared to many other cities trying to balance their budgets for the coming fiscal year. But the city could still be affected by the state's budget shortfall and a slow-to-recover economy, and so it is limiting additional expenditures for next year.
In addition, this year's budget review and adoption process, which began at the May 1 council meeting and will be completed June 5, wraps up an extensive effort by city staff to remove one-time capital improvement programs from the city's yearly operating budget.
"That way we can start to compare operating to operating annually," said Jesse Baloca, city administrative services director, who oversaw the creation of the preliminary budget. "One of the goals of this budget is to monitor reserves better than before."
When it comes to reserves, however, Saratoga is doing just fine and has been for the past several years. In fact, because its reserves have been so high, the city has been able to undertake projects by dipping into the reserve, Baloca said.
"We had huge reserves," he said. "We could afford to spend more."
This year, though, the city is hunkering down in case a return to normal over reduced revenues is slow to occur and out of fear that the state may take away $1.7 million of annual vehicle license fee backfill money to balance its own budget, possibly forever.
Baloca acknowledged that Saratoga's unique residential population, a limited reliance on retail sales tax--only about 10 percent of the budget--and reimbursements to offset revenue drops have helped it to remain solvent while other cities and governmental agencies have struggled to continue to provide basic services during these tough economic times.
For the first time since the 1999-2000 fiscal year, "we're bringing a balanced budget to [the council]," Baloca said before the May 1 meeting. "Most of our cutbacks are in capital and a cap on full-time employees. We don't plan on purchasing as much as we did last year."
The most significant reduction is in equipment purchasing and other capital costs, which staff has preliminarily reduced by 54 percent, or $551,000. At the May 1 council meeting, Mayor Nick Streit asked Baloca if that would increase the city's maintenance costs for equipment, and Baloca responded that the city could look into such alternatives as overhauling a truck engine next year rather than buying a new truck.
Vice Mayor Evan Baker raised concerns about the increase in staff compensation, which was indicated in the budget to be as low as 12 percent per individual, and as high as 30 percent. Baloca explained that all city staff members can only receive a maximum of a 12 percent salary increase each year, based on performance. He said numbers higher than that in the budget are for positions that were unfilled for a portion of the last fiscal year. He also said that the draft budget is a conservative estimate of how much the city might have to spend, but that it is very unlikely that every staff member will receive even the 12 percent increase.
Baloca also told the council that the city is preparing for long-term reductions in reserves, as the recent economic boom could be permanently over.
After little discussion, the council directed staff to continue as it has been, with possible minor changes to some confusing structures in the budget documents.
"We're budgeting for the max across the board, and we still have a balanced budget," Streit said.
The city is considering an approximately $11 million operating budget, based on its general fund money, with about $6.7 million projected to be in reserve. That reserve could be tapped into an order to make up for lost vehicle license fee backfill from the state, Baloca said, as well as for other expenses as they come up. Staff has also identified a three-year phaseout plan if the vehicle license fee backfill is permanently removed, he said.
In addition, the city is expecting to receive about $450,000 more each year of tax equity allocation from the county-as a result of passing the March 2000 library bond-which will continue for the length of the bond.
Separate from the general fund budget are other city funds: streets and roads- approximately $2.5 million budgeted, with about $2 million in reserve; development services-approximately $1.3 million budgeted, with about $1 million in reserve; and recreation-approximately $700,000 budgeted, with no reserve.
The city, which usually plans out the budgets for its upcoming two fiscal years, will this year only be addressing the 2002-03 budget, because in the past projections two years out were inaccurate, Baloca said. However, he said, he hopes to begin next year's budget process earlier in order to develop a more accurate budget for two years out at that time.
Instead, this year's process was occupied with moving capital improvement projects into a rolling five-year Capital Improvement Programs (CIP) budget all its own. Last December, the city council approved moving $5.2 million of the city's general fund into the CIP. The CIP's budget for the next five years is about $13 million, of which $8.5 million has already been funded. Among those projects are the already-started Quito and Saratoga-Sunnyvale roads improvements, the funded $1.5 million project to replace the Fourth Street Bridge over Saratoga Creek and the as-yet unfunded new civic center.
Saratoga, California Since 1955
