Priority 2: Balanced Budget/Healthy Reserves

By Joe Kornder

Achieving a balanced budget while protecting reserves

As a result of savings from freezing personnel positions and slight economic recovery, this year and the next year, the City will enjoy a 1-2% surplus (about $1.2 million each year), amounts that should be used to begin the restoration of the Reserve. A good start. Several months ago, the forecast coming from City officials was that beginning 2007-2008, deficit budgets would return, and that, despite significant cost-saving efforts, the Working Capital Reserve would be entirely depleted by 2009-2010.

Thankfully, the news as of August 2006 is better. A combination of factors has brought a more optimistic face to this huge issue. First, increased tax revenues, including the Transient Occupancy Tax that tells us tourism and business travel to Santa Clara are coming back, has improved. The cumulative effect of freezing and/or eliminating thirty-two personnel positions has brought a $3 million dollar annual savings. Modest increases in fees, part of the recently adopted 2006-2007 budget, are contributing to the recovery as well. (Note: we need to reevaluate the planned $30 per month fee for using the new Senior Center.) The benefits of fiscal prudence and care are beginning to show.

We are not out of the woods. The prognosis continues to show deficits in coming years. The complete depletion of the Working Capital Reserve now seems unlikely. But the full restoration of the reserve, along with maintaining our traditional superb level of service, must be one of our highest priorities. Perhaps our highest. Additionally, four years of struggling with deficits has resulted in many needs, capital and programmatic, once delayed or cancelled, that are waiting anxiously for restoration of funding. We have much work to do. And we must not forget how vulnerable we are to the vagaries of the national economic scene.

I fully support the City's newly-approved 5 Year Budget Plan, which appears ready to guide our efforts toward recovery. We must be especially vigilant and creative in managing our resources, in making decisions that affect the bottom budgetary line. Hopefully a recovering national economy will help. We are working our way out of a huge fiscal problem We must and will solve it.