An independent audit of Los Altos’ most recently completed fiscal year reports that the city remains fiscally strong.
As in previous years, the city once again attained an unqualified audit opinion – also known as a clean opinion – by first-year auditors Burr, Pilger, Mayer for the fiscal year ending June 30.
Highlights of the comprehensive annual financial report presented during the Dec. 11 Los Altos City Council meeting included an expected surplus of $1.4 million in operating revenues over expenditures for the city’s general fund. Coupled with a 4 percent increase in operating expenditures, the 2012 surplus fell below the 2011 fiscal year’s excess of $2.1 million.
Revenues came in 1 percent over budget for the fund, with property, sales and hotel tax revenues experiencing an uptick. Specifically, property taxes – the city’s major revenue source – came in 4 percent above last year’s actual figure of $12.8 million.
Mayor Jarrett Fishpaw credited the city’s staff for their efforts in keeping the city fiscally sound during a time when economic recovery remains slow.
“We’ve had a kind of sluggish recovery from the recessionary period,” he said. “It’s good to see that even with sluggish returns, our city was able to increase the gap between our revenues and expenses by maintaining very prudent decision-making at the departmental level.”
The report also showed that the city executed an $850,000 planned pay-down of its CalPERS side fund liabilities, leaving a remaining balance of approximately $150,000. In addition, the city reported a $5.2 million balance in its emergency reserves, falling just short of achieving its overall budget reserve goal of 20 percent.
With this in mind, Fishpaw noted that once the city reaches its 20 percent threshold, it could consider taking steps to further increase reserves in the coming years to as much as 40 percent.
“It gives us a lot of options. … There’s the potential that in future years we might be able to consider, do we need to exceed this 20 percent?” he said.
At fiscal year’s end, the city’s capital improvement fund showed a balance at $6.3 million, with $4.1 million committed to authorized projects.
Overall, the city invested $5 million in capital improvements during the fiscal year, which includes $2.2 million for the city’s First Street streetscape improvements. The report also showed a planned transfer of $700,000 toward future capital project funding. The city’s community facility renewal fund saw a large increase of $3.4 million – leaving it with a balance of $7 million – as a result of development fees paid by the David and Lucile Packard Foundation.
The report also identified numerous ongoing challenges for the city. Among those are the “protracted and sluggish” economic recovery at the state and national levels, the overall health of the California state budget, tepid revenue trends, moderate CalPERS rate increases for the 2012-2013 fiscal year and expected increases in employee health-care costs and post-employment benefit liabilities.
Additionally, the report showed a downturn in sewer fund revenues as a result of residents’ water conservation efforts and highlighted the need to identify a dedicated capital project funding source in the future.
Finance Director Russ Morreale added that for the first time, the report included budget-to-actual financial status reports for all major and minor funds.