Although Los Altos Hills is in better financial shape than many California cities – with millions of dollars in reserves – the town will not escape budget cuts in the next fiscal year.
At Thursday’s joint meeting of the Los Altos Hills City Council and the Finance and Investment Committee to study the proposed 2012-2013 budget, participants discussed areas where the city could cut back on expenses.
“Los Altos Hills has a fund balance that most cities would die to have,” said Rob Stout, a Municipal Resources Group consultant.
But the city still faces a $255,000 general-fund deficit due to nonrecurring capital improvement projects and other one-time expenses.
The general fund supports personnel, public safety measures and operational needs. The general-fund deficit is due primarily to retiring a $1.4 million loan for construction of town hall this year, owing nearly $1.3 million for Roadway Impact Fee refunds and allocating $400,000 for Phase I of the Fremont Road Pathways project and approximately $500,000 for proposed Elena Road improvements.
Although Los Altos Hills boasts reserves for disaster relief of $1.2 million and $2.6 million for sewer maintenance, the city cannot apply those surpluses toward the general fund.
With the objectives of creating reserves in each operating fund equal to one year’s expenditures and saving for future capital projects, councilmembers expressed urgency in stabilizing the city’s financial solvency. In an effort to reduce the deficit, the city decreased street-fund expenditures from $800,000 to $500,000 for the next fiscal year and asked the Finance and Investment Committee to assess measures to slice another $100,000 from the budget.
Committee member Frank Lloyd voiced his reservations about additional cuts to what he deemed essential services.
“Not everybody uses the trails, not everybody goes to the town picnic, but everyone uses the roads,” he said. “If you don’t maintain the roads, you’re going to make people upset.”
The council is also considering an increase in planning fees, in addition to a decrease in pathways and tree maintenance, reduced workers compensation insurance costs and a lower level of funding for engineering supplies. Additionally, the Finance and Investment Committee suggested that the city search for more grants to supplement annual revenue, estimated at $6.76 million for 2013.
At the council’s June 21 general meeting, the committee is scheduled to present a revised multiyear budget and confirm the viability of reducing funds for road maintenance and other general-fund expenses.