A midyear review at the Feb. 26 Los Altos City Council meeting revealed that the city is trending toward remaining within its fiscal year 2012-2013 operating budget.
According to the report to the council by Los Altos Finance Director Russ Morreale, the city’s general fund revenues are trending at 1-2 percent above budget – and 8 percent more than actual results from last year. Department expenses, he added, are currently at 8.7 percent less than projected but will likely come in at 3-4 percent below revenue by fiscal year’s end.
Morreale offered a “realistic” projection of a $1.19 million surplus at the end of the 2012-2013 fiscal year June 30.
“It continues to be a moderate and sluggish economy, but we’re starting to see some growth,” he told the council.
Morreale pointed to several positive economic indicators for Los Altos, including a 72 percent increase in real estate transfer taxes over last year and a 5.85 percent increase in property taxes. Recreation revenue is currently seeing a 12 percent bump in revenue, he added, while franchise fees are trending 6.5 percent above the previous year.
On the other hand, Morreale noted, sales taxes remained flat while interest income decreased. According to his report, Morreale expects interest earnings to come in under budget as a result of a 50-year low in rates.
Morreale received a unanimous council vote for an additional $185,000 in reserve fund transfers – taken from a fiscal year 2011-2012 surplus – to be applied to planned transfers totaling $465,000. The additional funds included a $150,000 payment (plus an original $100,000 planned transfer) to the California Public Employees’ Retirement System (CalPERS) reserve. A $215,000 planned transfer to the city’s Capital Improvement Program received an additional $35,000 boost as well.
The additional CalPERS payment, according to Morreale, will result in the city paying its side fund down in full – leaving a pension rate reduction of more than 8 percent.
“It’ll be virtually down to zero,” Morreale told the Town Crier. “There may be pennies left.”
Still, Morreale outlined several future challenges for the city, including still-sluggish regional and national economies. In addition, Morreale cited anticipated future increases in CalPERS pension rates, the costs of updating aging city facilities and the effects of new pension accounting standards, among other things.