City keeps wary eye on state City keeps wary eye on state (March 19, 2004)

As budget discussion begins, finance chief wants 'hands off' local money

By Grace Rauh

Given Sacramento's history of looking to local governments to relieve its deficit, Mountain View officials are approaching this year's budget with one goal in mind: damage control.

The state withheld more than one million dollars in vehicle license fee, or car tax, revenues from Mountain View this year and the governor has already proposed lifting an additional $1.2 million from the city in next year's California budget. But the financial ebb may not stop there. The city is bracing for Sacramento to demand more local dollars.

"We don't always know what the state is going to do to us," said city finance director Bob Locke. "In prior years, we have adopted a budget with a contingency to absorb state impacts."

Locke said a balanced budget is in Mountain View's future as long as the state keeps its hands off local money. But there are no guarantees. He is trying to map a budget that can best handle blows from Sacramento.

The passage of Proposition 57 -- the governor's $15 billion recovery bond -- hasn't made city officials breathe any easier. The state still has its eyes on local revenues, City Manager Kevin Duggan said prior to the March 2 election.

The governor's proposed budget has increased Mountain View's state-mandated contribution to the Education Revenue Augmentation Fund by $1.2 million. The city currently pays between $4.3 and $4.5 million to the fund each year and since ERAF's inception in 1992, the city has forked over $34.9 million, according to Locke. The mandated money is divided among public schools.

It is unclear whether Mountain View will be returned the $1.3 million in vehicle license fee funding which disappeared when Gov. Arnold Schwarzenegger lowered the fee after coming into office last year. Despite the governor's promise to pay cities to cover their lost funds, the dollars never materialized. Meanwhile Mountain View had to fall back on the $2.5 million cushion the council set aside last year.

The city plans to create a contingency fund again this year, but Locke predicts the new pot will be smaller than past ones. Duggan will appear before the city council on March 30 to present budget recommendations for the general fund, which covers the bulk of city services, including the police and fire departments, libraries, recreation, parks, landscaping, City Hall and the Mountain View Center for the Performing Arts.

The finance department will present the council with a list of suggestions on how they can save money and every city department will be considered for cuts, Locke said. It will be up to the council to decide when and how to trim dollars and increase revenues as needed.

The finance department has set the draft general fund budget at roughly $71 million, Locke said. The total budget could fall between $160 and $170 million and may be larger than last year's due to capital improvement projects, said assistant finance director Patty Kong. Last year's budget totaled $160.6 million.

"In the general fund, we try to maintain a balanced budget and the problem is that ... the state could hit us from anywhere from a million (dollars) to a very high number," Locke said.

Locke and his financial team will return to the council on May 4 to present the rest of the budget -- including funds for water, waste, the Downtown Revitalization Authority and the North Bayshore community -- and answer any questions that arises at the March 30 meeting.

And as the city takes steps towards formalizing its own budget, Locke said he will keep one eye on Sacramento.

"It's complicated stuff and it only gets worse," he added.

Tracking the budget

March 30 Mountain View Finance Department presents recommendations for the general fund budget to the City Council May 4 Finance department returns to council with recommendations for the remaining budget funds and answers questions raised at the March 30 meeting June 1 First budget hearing June 3 Second budget hearing (if necessary) June 8 City Council scheduled to adopt budget June 15 Deadline for the Legislature to adopt state budget June 30 Deadline to adopt Mountain View budget

E-mail Grace Rauh at grauh@mv-voice.com

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