State of the Town is Strong, Mayor Says

Los Gatos is in good financial shape this fiscal year, thanks to an increase in sales and property taxes, said during his State of the Town address Tuesday evening.

"... By prudent and strategic planning, we have navigated through this fiscally challenging time and preserved core service levels for the community," he said. "Through it all, life has remained good in Los Gatos. We continue to be one of the most desirable places to live and visit in the Bay Area."  

About 80 people gathered to hear him deliver the much-anticipated speech inside council chambers at Town Hall.

"The state of our town is strong, vibrant and successful ... There is no limit to what we can accomplish together," Pirzynski said, asking Los Gatos residents to serve their town.

The town's ongoing fiscal stability is also the result of strategic efforts made in staffing levels and salary reductions through vacancy eliminations, staff furloughs and cuts to overtime pay, the mayor added. 

And discussions are underway with employee bargaining groups to address benefit-cost containment, including a two-tier pension system, he said.

The town has also reduced operating expenses by joining with the Los Gatos Saratoga Recreation Department to deliver senior services, he noted. 

Former Los Gatos Mayor Randy Attaway praised Pirzynski for his leadership and for helping the council focus on what's important. "The [town's] general plan is important," said Attaway, who served as mayor in 1994, 1996 and 2002.

"The state economic crisis will impact us, but because the town has reserves, we will weather it better than other communities," Attaway said. "We're very fortunate to have such good management." 

Pirzynski dedicated a portion of his speech to the town's blueprint document, which has been guided by a General Plan Advisory Committee.

Kiwanis Club of Los Gatos member Marlyn Rasmussen said she thinks Pirzynski's work has helped the community of about 30,000 residents ride out the economic downtown. "The mayor has a program outlined that can all go forward and join," she said. "The town is fortunate to always do well, and it's because of volunteers and council people who give half their lifetime to serve the community." 

Fiscal Year 2010-11 Mid-year Budget Report

After the mayor's speech, council members unanimously approved their mid-year budget report ending Dec. 31, 2010. General fund revenues have increased by $750,000 because of higher sales taxes coming from Netflix, the Los Gatos-based subscription service that streams movies and TV shows over the Internet. 

Stephen Conway, Los Gatos finance and administrative services director, said the town projects a surplus of $35,000-$50,000 in the 2010-11 fiscal year. However, Conway explained the town will have a budget gap of $2.1 million in its $34.5 million operating budget during the 2011-12 fiscal year and another budget deficit of $1.1 million in the 2012-13 fiscal year. 

"The success of Netflix has allowed the town to sustain the loss of other significant sales tax generators in recent years without a dramatic decline in total sales tax," the report indicated.

Also good news is that the town's restaurant sales taxes, the second-largest economic contributor, have increased by 1.7 percent compared with the prior year for the period ending Sept. 30, 2010, the report said.

The Report's Highlights:

• $750,000 increase in sales tax from $8.3 million to $9.1 million.
• $75,000 increase in franchise fees from $1.9 million to $2 million.
• $175,000 increase in licenses and permits from $1.9 million to $2.1 million.
• $45,000 decrease in fines and forfeitures from $645,000 to $600,000.
• $100,000 decrease in investment earnings, reflecting lower revenues on average investment balances, from $1.2 million to $1.1 million.