By Lauren McSherry
Now that the city of Los Altos Hills has completed the largest capital improvement project in its history, its new town hall, the city council needs to focus on building something else - city reserves.
That’s the recommendation Sarah Joiner, the city’s administrative services director, recently gave the city council.
“It may be very difficult in this economic climate to do that, but even a small (amount) set aside might be in our best interest,” City Manager Maureen Cassingham said. She added that it would be up to the council to adopt or reject the recommendation at a future meeting concerning the city’s proposed budget for 2005-2006.
Expending the $3 million in reserves, recently applied toward constructing the $5 million town hall, is one of the reasons the city’s coffers are low. But limited reserves are nothing new for the city, which has few sources from which to accumulate reserves.
About 46 percent of its income comes from property taxes, and a significant portion of the rest is acquired from development-related fees, Cassingham said.
Unlike Los Altos, the Hills has no established businesses, so it cannot benefit from sales tax revenue.
Joiner informed councilmembers at their joint meeting with the finance committee May 14 that their priorities, such as providing financial aid to Bullis Charter School, redistricting and undergrounding utilities, “cannot be covered by the operating budget.”
The council has about $4 million in General Fund reserves in the 2005-2006 fiscal budget. About $500,000 exists as excess revenue over operating expenditures.
Joiner presented three options for funding new projects: dip into city reserves, take funding away from existing projects or find outside funding.
“(The council) can’t cut operating expenses since we operate pretty close to the bone,” Cassingham said. “As we spend down reserves, it’s important to have a plan to replace them.”
The reserves have been amassed over years and it takes an equal amount of time to replenish them, she said.
Since money is currently tight, there are numerous projects that the council may have to consider putting on the back burner. According to a March 3 report by Cassingham, the council, volunteer committees and staff are currently handling 88 “projects and tasks,” the majority of which have been undertaken over the last year.
“That’s the way it is with virtually every community,” she said. “Resources are finite. We will need to look to our reserves to fund some of these things, and it’s up to the council to weigh where we’re going with our resources.”
Joiner said that staff time is also finite and adding more projects that require outside consultants or additional staff time would add to the city’s operating budget.
