City hopes that state budget woes will not trickle down
Energy crisis and economy may affect funds from state
City installs safety measures
By Oakley Brooks
The giant clipping sound coming from Sacramento is starting to rattle some of Saratoga's city officials.
With the California budget surplus being paid to cover energy costs and the economy slumping, Gov. Gray Davis' staff is applying the scissors to next year's state budget.
Saratoga is set to ride out the surrounding storm with a sizable budget surplus and a reliable revenue base in property taxes. But on May 16, officials cautioned that even Saratoga, which operates on a relatively small budget, might lose valuable state funds, or even local property tax money.
What started as a debate over $50,000 of computing equipment during city council's recent review of the budget, boiled quickly into a sobering look at possible state-inflicted scenarios.
Councilman Evan Baker said the state's outlook over the next 12 to 24 months wasn't good, and he feared that, if the state slipped into a deficit, it might start looking at local governments for money. The last time the state was mired in dire straits during a recession in the early 1990s, it used local property taxes to round out the state education budget.
"Every single warning is going up the halyard," said Baker.
City Manager Dave Anderson replied that recent cuts in Sacramento--the elimination of $250 million of discretionary funds sent to local governments and a freeze on funds for streets and highways over the next two years--would not affect the city.
"Stay tuned," said Mayor John Mehaffey.
The colliding forces of the economic slowdown and the energy crisis are creating what League of California Cities' Communications Director Megan Taylor calls a "perfect storm," engulfing the state coffers.
The latest casualty is the state housing and community development budget, which was reduced by $200 million last week.
Taylor says that Saratoga's concerns about the state turning to local jurisdictions for money are real, along with fears--expressed by council members at the May 16 meeting-- that the city could lose money from state vehicle license fees. Vehicle license money is still scheduled to flow to the cities, but the League is concerned those fees could be kept in Sacramento, to cover holes in the state budget.
"We're in such uncertain waters," said Taylor.
License fee money accounts for roughly $1.5 million of the city's $16.7 million income for the next fiscal year, and it's second only to property taxes, as the largest steady form of revenue for Saratoga.
To brace for possible financial changes at the state level, the city plans to set aside emergency funds from its surplus. City council recently gave preliminary approval for an "economic uncertainty" fund of $1.5 million, in addition to the $2.2 million the city budgets every year as operating reserve.
The states' budget tightening has not prevented city officials from pursuing a citywide capital improvement project. The finance committee recommended that $2 to 4 million of the projected $10.4 million surplus--amassed during prosperous economic times over the last decade--be used for the building effort.
On May 16, city council agreed on the scope of capital improvement suggested by the finance committee, though members wanted to see a more detailed project list, before deciding on an exact amount.
The biggest chunk--$14 million--of next year's $34.2 million proposed budget will be allocated to the Saratoga Community Library expansion. Saratogans agreed to an increase in property taxes in March to help pay for the library construction.
Over $3.5 million is slated for infrastructure improvements at the Quito Road bridge and on Saratoga-Sunnyvale Road. Both of those projects will be funded almost entirely by state money that has already been designated.
Several groups made requests recently to have their programs added to the budget.
The coalition of teachers and parents that wants more affordable housing in the city reiterated its petition for $2 million of the budget surplus, for low-interest loans, on May 16. City council members did not respond to the request, but Mehaffey said, on May 14, at the finance committee meeting that money for the loans might have to come from a voter-approved tax, instead of the surplus.
The council decided not to fund a $19,000 increase requested by the Saratoga Chamber of Commerce without further discussion.
Council did ask that $19,499 be added into the budget, to study linking communication between different fire and police jurisdictions in Santa Clara County.
The council will see the final budget on June 6, and will likely adopt it the same night.
Saratoga, California Since 1955
