The provided direction on a number of aspects of its 2012-13 operating budget during its meeting Monday night.
While action won't be taken on adopting the budget until June 4, the Council heard staff recommendations on ways to keep the town in the black as well as got a picture of future storms it will have to ride out.
The Council then offered its own recommendations to staff, including a direction to allocate $20,000 to the as well as allocate $65,000 to modify the library's weekend hours to be from 10 a.m. to 5 p.m. on Saturdays and 12 p.m. to 5 p.m. on Sundays.
The town has been experiencing a "budgetary roller coaster," according to Town Manager Greg Larson, with declining revenue from —the largest tax payer in town—combined with the recession, county and state "takes" of local funds and rising pension, medical, police and environmental expenses taking their toll on the town.
Despite staff's prediction last May that the town would be experiencing a $7 million budget shortfall next year, the town has crafted a budget that is balanced and "manageable."
"Manageable does not mean easy," Larson said. "But it is manageable for the future with the continuation of the prudent fiscal practices that the town has exercised for more than a decade."
The budget amounts to $35.3 million for the general fund. One interesting, though not uncommon element of the budget, Los Gatos Town Finance Director Stephen Conway pointed out, is the "fund balance for designated uses," which comes out to $2.4 million and will serve as a "piggy bank" for capital projects.
Staff reduced a $1.8 million budget gap projected in January by quantifying Tier 1 reductions and adjustments at $1.1 million, increased revenue projections to $500,000 and turning to the 2011-2012 fund balance or seeking other revenue alternatives.
However, staff had to factor in $300,000 in predicted increased operating costs.
Tier 1 reduction and adjustment recommendations include:
- Administrative Services: A vacant staff technician seat be eliminated while a reduction in training, travel and other expenses are implemented.
- Community Development: A temporary planner be reclassified as a senior planner position, a previously shared building inspector be reclaimed and temporary staff hours cut.
- Police: A vacant officer position be eliminated and a mid-year consolidation of community/personnel and traffic sergeant positions upon the retirement of a sergeant position anticipated within a year occur.
- Parks and Public Works: A PPW manager would be eliminated though the position would be Capital Improvement Program funded through November and some engineering/inspection expenses would be transferred to CIP.
- Library: Hourly staff for essential customer service be added and funding sought for teen services and collections.
- Town-wide: Continue non-sworn employee unpaid furloughs for five days, amounting to $200,000.
Staff also recommended to council to adopt Tier 2 reduction proposals that would "entail continued service reductions and staff workload considerations."
Conway said that even though tax revenue from Netflix is projected to continue to decrease, other town revenues are slowly trending upward, demonstrating a 3.5 percent growth. However, pension and health costs are on the rise.
The town's five-year forecast points to several future challenges, such as tackling $2.4 million in future adjustments. If the economy does not pick up, the town will likely need to cut more services and will have to dip into reserves to bridge those gaps, Conway said.
Future budget issues also include incomplete redevelopment projects, technology investments, the “rapidly growing cost” of environmental services funding, police staffing, overtime and training and labor negotiations with all the town's bargaining groups.
The town currently has $20.7 million in reserves. The Budget Stabilization Reserve sits at $7.4 million and the Catastrophic Reserve at $3.7 million, a situation that Conway said exceeds the town's requirements on those reserves.
Town staff specifically sought direction on the library's weekend hours, the senior center's day services and case management and arts funding allocation.
Larson said that the staff recommended $13,000 for the senior center "to maintain their essential and high quality programs to the town."
"Additionally, with the transition of the former neighborhood center to the adult recreation center, we have not had dedicated senior case management staffing, so we are recommending an additional $7,000 allocation for that purpose," he said.
Statistical data on the expanded weekend library attendance will be presented to the Council at the end of the year and adjustments will be addressed then.
Since the Council recommended allocating a total of $85,000 to these services, the budget's gap jumped to $550,000.
The Council directed staff to use $500,000 in undesignated fund balance monies from this fiscal year as well as $50,000 from other revenue sources and $50,000 from governmental grants to cover the gap and create a buffer for the town.
Per the request of several councilmembers, staff also presented an update on issues related to redevelopment.
Larson informed the council that it "is taking an extraordinary amount of staff time to deal" with the interpretation and implementation of state law regarding the dissolution of redevelopment.
“What we’re finding through county and state actions are that town resources are being minimized in a number of areas,” Larson said.
Larson laid out several redevelopment issues facing the town:
- While state law is "quite clear" that local government are to receive $250,000 per fiscal year in redevelopment reimbursements, in implementation, the town has found that the reimbursement for this fiscal year has been cut in half.
- There are innumerable county overhead costs that are being taking off the top for audit work that reduces the amount of taxes received by the taxing entities, a.k.a. the town.
- The tax increment being proposed by the state actually penalizes the town, fire and other municipal services and is most beneficial to the schools and county.
- The town has faced a narrow definition of "incomplete" projects, which links to funding projects involving planned improvement for Almond Grove, Pageant Grounds and library related projects.
- The status of affordable housing in the area remains unknown as well.
Larson concluded staff's presentation on the budget by adding that there will be no building fee rate or fee changes but instead an updated basis for construction valuation. This will likely increase most building fees by 10-12 percent.
Most planning fees will likely see a maximum increase of 10 percent while certain fees, such as the non-residential and multiple dwelling Architectural and Site Applications and a new second tier for major restaurants are recommended to go up by 30 percent.
CDAC and administrative land use permits for wireless telecom businesses are the only planning fees proposed to go up higher than 30 percent.