Saratoga News

News

Revenue exceeds expenses in city's 2006-2007 budget

By Jason Sweeney

The dot-com bust resulted in six years of cost-cutting, restructuring and the scaling back of services for the city of Saratoga. However, the budget for the new fiscal year has things looking a little brighter around City Hall.

The budget City Manager Dave Anderson and finance director Michele Braucht have been working on since January was passed by the city council in May. "This is the first budget in my six years of being here that we've had any real substantial revenue growth over expenses," Anderson said.

In addition to the growth in revenue, the city has an extra $1.2 million it still has to figure out what to do with. That money comes from "one-time payments" from the state of California and from the Association of Bay Area Governments. The passage of Proposition 1A in November 2004 limited the state of California's ability to take money from local governments in order to subsidize its own budget. The measure also meant the state had to repay money it had taken. Proposition 1A means Saratoga is getting a $1,037,100 payback from the state in the upcoming fiscal year. Another $176,400 is being reimbursed to the city by ABAG for statutory disability payments.

One-time revenues were not mixed in the budget with regular revenue, Anderson said; instead, the city council will determine where to allocate the money at a special meeting July 6 from 6 to 8 p.m. at the Senior Center. Burying the money in the budget could give the appearance of a permanent increase rather than a temporary one, Anderson said.

"The good news is this year, there's extra money from the state and federal government," Anderson said. "The same is true for next year, so we're getting closer to where we need to be."

Braucht said the city's motto during tight times has been: "Doing more with less." But she said that began to feel more like "doing less with less." Now that revenues are up, the phrase of the day is "cautious optimism."

During the dot-com boom of the late 1990s, budget surpluses were the order of the day, Anderson said. "Back then, we were under the impression that we had an expanding revenue base that we could use to increase government programs. Now we know better, and we're more cautious."

Anderson said for the last three years, the city council cut $1 million out of the budget each year. "The city did more than just cut the paper-clip money," he said.

Although revenues are up $1,121,200 this year over last, Anderson said caution is still warranted. "We don't know if this is a trend or not."

The budget for the 2006/2007 fiscal year beginning July 1 slates $10,986,800 in total funds against $10,807,400 in expenses. That leaves an extra $179,400 in undesignated money.

The increase in revenue this year came mainly from five sources: the passage of Proposition 1A, an increased take from property taxes due to appreciating home prices, a supplemental vehicle license fee, a documentary transfer tax and an increase in interest earnings on city money.

In 2003, an analysis of city infrastructure determined Saratoga had a $17 million backlog in street repair. In the budget this year, an extra $400,000 has been allocated to the pavement management program, increasing the line item budget from $600,000 to $1 million. "We need to spend about $1.8 million a year to keep up," Anderson said.

A potential windfall might still lie ahead for the city if AB117 passes in Sacramento this year. That bill would require Santa Clara County to repay Tax Equity Allocation funds to Saratoga, Monte Sereno, Cupertino and Los Altos Hills. For Saratoga, passage of AB117 would mean another $1,040,000 for the general fund.

Unlike the "one-time revenues" windfall this year, this would mean a permanent increase each year. "It would be a real structural change," Anderson said. But both Anderson and Braucht are taking a conservative wait-and-see approach as AB117 works its way through Sacramento.