So after much debate and hand-wringing, city staff finally presented an operating budget to the Saratoga City Council on June 16, and the council unanimously approved it.

City Manager Dave Anderson indicated that the preparation of the operating budget this year was especially challenging because of flat revenues over the last few years and corresponding increases in workers' salaries, insurance premiums and pensions, and increases in operating costs at the Sheriff's Department. The budget cuts include two employee layoffs at the city offices.

The city expects to get some more money in the 2004­05 general fund by way of increased revenues from vehicle licensing fees generated by increases in car sales. The expected increase from the licensing fees amounts to about $500,000.

The city contracts with the Santa Clara County Sheriff's Department for services. That cost went up by $350,000 in the proposed budget. "The city is struggling to keep up with increased costs associated with providing current service levels," said Anderson at the meeting.

Expenditure for the next year has been reduced by $1,037,000.

"We are underfunded, there are structural revenue problems, but this is the best we could do under the circumstances," said Dick Allen, chairman of the finance commission.

Councilman Stan Bogosian said that he was passing the budget reluctantly and with mixed feelings. "I am concerned with short-term fixes. But I will vote for this budget so that there can be cops on the street and the City Hall doors can remain open," said Bogosian.

Some citizens raised concerns about the proposed utility tax at the meeting. "We need your help for revenue enhancement," said Mayor Ann Waltonsmith at the meeting.