Saratoga balances budget as deficit looms
City's expenditures expected to increase faster than revenues in next 3 years.
The lone member of the public who spoke at a Saratoga budget hearing June 5 advocated for revitalizing downtown businesses, but the city council took a different tack to balance Saratoga’s $30.6 million budget for the coming fiscal year.
A man, who city staff identified as Gabe, urged city council members via Zoom to direct funds from the budget to support economic development in the Saratoga Village.
“Please recognize the importance of Saratoga Village for our community and families. These are reasonable expenses we ask you to please prioritize,” he said.
Staff instead balanced the budget using returns on the city’s investments and excess funds from the Educational Revenue Augmentation Fund, property taxes typically reserved to help fund school districts.
The balanced budget comes as Saratoga faces a forecasted structural deficit in the next three years. The forecast anticipates that in fiscal years 2024-25 through 2026-27, total expenditures will increase by 4.9% while revenues will only increase by 3.6%.
“Solutions to a structural deficit must be long-term, as the underlying conditions causing the deficit will not improve through economic upswings,” city manager James Lindsay said in the proposed budget document.
Ryan Hinchman, the city’s administrative services director, said some of the deficit is the result of slowing property tax growth in recent years following the pandemic, with only a 3% growth in the current and upcoming fiscal years compared to an 8% growth in fiscal year 2020-21.
Council addressed economic development in May by approving the formation of an ad hoc committee to look into the matter. The committee scheduled its first community meeting on June 11 to hear suggestions and ideas from the public on how to revitalize the city’s commercial areas.
Saratoga’s second-largest expenditure, according to the budget report, is its contract with the Santa Clara County Sheriff’s office, which provides law enforcement for the city. The report states that city staff plan to work with the sheriff’s office and neighboring cities like Cupertino to find opportunities to stabilize the expenditure, which has been increasing in recent years.
The city council also voted to renew Saratoga’s contract with the sheriff’s office through July 1, 2026.
Other key budget items include $150,000 for the eventual implementation of the city’s housing element, which has been awaiting state approval since March, and $180,000 to improve the maintenance of Saratoga’s tree canopy.
The council is set to vote on the budget’s adoption on June 19.