The ad hoc Vision committee, created last fall to examine revenue-generating options for the city, recently reported that a utility user tax is the fairest and most efficient way to fund maintenance and possibly other services.

Committee members commended the city council at its April 21 meeting for responding to continual revenue losses with efficient expenditure-cutting measures. But committee member and finance commission chairman Dick Allen said there is no longer an expense problem, but a revenue problem.

"Our observation is that there has been significant deterioration in the financial health of city over the last couple of years," he said. "The big reason for that is the state of California has decided to take some of the property tax we used to have away from us to support the Education Revenue Augmentation Fund—$2.9 million dollars worth of Saratoga city moneys have been taken by the state for the ERAF over the last decade."

Allen said the loss of property taxes to ERAF, a decline in sales tax revenue and the end of funding from a prior maintenance ballot measure have all contributed to the revenue shortfall.

Evan Baker, another committee member and former councilman, said infrastructure repairs could not be put off much longer. He said many of Saratoga's streets are at a 70 percent level of quality, when they should really be kept at about 80 percent.

"The longer you defer repairing a street, the more it costs you to fix it," he said. "It's not a crisis problem—you can push it under the rug a bit more. But every time you push it under the rug, the price goes up."

The committee determined that a usage-based tax of either 4 percent or 5 percent on cable television, water, telephone, gas and electric services is necessary to recover the shortfall and provide maintenance funding. It reported that the advantages of the utility user tax outweighed those of any other option the committee examined, including parcel, property, assessment district and other special taxes.

"It is a potentially substantial revenue source," he explained. "It is consumption-based, it's one to which we can make exceptions for those who can't afford it—it's common in other cities—and we have a precedent, as we have had a utility user tax in the past."

Allen recommended that a measure for the tax be put on the November ballot, as that would be the most cost-effective time to do so. Though the measure would cost the city $63,000, he said that the cost would be four times that amount if the city waited until 2005.

All of the council members said they felt the committee had found the most viable option. Mayor Ann Waltonsmith said she liked the utility user tax since it is not one the state can "get their hands on." But Councilman Stan Bogosian did say he wanted to be sure the revenue would be used for its intended purpose of maintenance.

"I think we have to be really careful," he said. "I don't share the level of confidence that a future council wouldn't take that money ... and pretty soon it's going somewhere else."

Councilman Nick Streit said that perhaps the money should not be so specifically earmarked, since the city's needs and priorities may change over time.

"This could also be used for the No. 1 issue we have in town, and that's public safety," he said.

City Attorney Richard Taylor said other jurisdictions have added advisory ballot measures allowing voters to state their preference for how funding is spent, but that further research would be required to determine the legality of such a measure.

Despite their concerns, the council members voted unanimously to approve the committee's recommendation, direct city staff to schedule community meetings on the topic, and authorize distribution of information about the recommendation.