It is the City of Mountain View’s goal, especially in the current economic environment, to keep residents informed about the budget process, how the City is financed and its relationship to City services. The City provides a brief primer on budgeting challenges for the City, and some key concepts that are helpful for understanding how your tax dollars are at work providing City services, as well as some of the core concepts of municipal budgeting on this website.
The City of Mountain View is beginning its budget development process early for the Fiscal Year 2010-11 budget because the fiscal challenges ahead are considerable. Traditional City budget cycles generally begin in the Spring, but to meet the challenges ahead the City started the Fiscal Year 2010-11 budget process immediately after the Fiscal Year 2009-10 budget adoption this past Summer.
Past, Present and Future Challenges for City General Fund
The City recently completed a Long- Range Financial Forecast to project revenue and expenditure trends for the next ten years. The purpose of the report was to provide the City Council with reasonable projections of Mountain View’s future financial situation in order to facilitate current decision-making. Trends in the report pointed to a continuation of a deficit based on status quo budgets throughout the 10-year forecast period and point to the difficulty of maintaining a positive balance of revenues and expenditures. This long-range financial forecast is helping to guide the City as it confronts the need to balance expenditures and revenues. The challenges ahead include confronting issues of declining revenues and increasing expenditures while attempting to maintain current service levels, City facilities and infrastructure. The City of Mountain View is a service organization and the complex variety of services the City provides includes public safety, water and sewer, park maintenance, recreation, senior services, arts and culture, street maintenance, water, planning and zoning, building inspection, economic development, library, trash and recycling, and Shoreline Regional Park. The General Operating Fund is the main component of the City’s operating budget and funds core programs and services. Other special funds are restricted by law for the purpose of such funds (such as water and wastewater enterprise funds) and cannot be used for general operational purposes. The General Operating Fund revenues are subject to changes in economic conditions and can fluctuate significantly. Decreases in revenues are most significantly impacting the City’s “General Operating Fund” that is used to provide most City services, such as public safety, libraries, parks and recreation programs. Regular cyclical fluctuations can usually be factored into longer-term analyses, but the dramatic downturn of this current recession has significantly impacted revenues and creates increased uncertainty. Other major funds include the Revitalization Authority, the Shoreline Regional Park Fund and the Water, Wastewater and Solid Waste Management Enterprise Funds. They are not subject to as significant fluctuations as the General Operating Fund.
Over the last decade, a series of General Operating Fund reductions in department budgets ranging from 2.2 percent for the City’s Fire Department to 27.9 percent for the City Manager’s Office were completed to reduce expenditures. These reductions were designed to have the most limited impact on the community by looking at all possible efficiencies. The City had been able to approach budget reductions by focusing on cost-saving measures that were not as apparent to residents. However, the choices ahead are more difficult.
For the City of Mountain View, sales tax revenues peaked in Fiscal Year 2000-01, during the height of the dot-com boom. The City experienced a decline in revenues of approximately $12.0 million over the next two fiscal years. From Fiscal Year 2002-03 through Fiscal Year 2005-06, the City reduced General Operating Fund expenditures by $10.8 million, eliminated 66.25 positions, with 58.5 of those being from the General Operating Fund, and made adjustments to revenue transfers and charges for services of $2.5 million.
The original projection for the Fiscal Year 2009-10 “General Operating Fund” budget included an approximate $6.0 million deficit (compared to $86.5 million in estimated General Operating Fund revenue). In Fiscal Year 2009-10, the City reduced General Operating Fund expenditures by another $4.0 million, eliminated funding for 15.25 (13.0 in the General Operating Fund) filled/unfilled positions and made adjustments in fees for services of $190,000. Subsequently, the City Council also adopted modifications to employee compensation in collaboration with employee groups saving $377,000 for FY 2009-10 ($852,000 for FY 2010-11). Recognizing the service reductions due to cuts of the past and the significant impacts of achieving the additional $1.6 million in deficit reduction to structurally balance the budget, the City’s budget contingency reserve was used to eliminate the remaining deficit. The goal in doing so was to allow additional time to address the remaining structural deficit.
For Fiscal Year 2010-11, the City is currently facing a projected structural budget deficit (operating revenues not meeting operating expenditures) of $5.0 million. Strategies to eliminate the projected deficit could include additional efficiencies, service reductions, and revenue increases. The structural deficit is both part of a very challenging financial time in which the City has been confronted with a decline in a number of revenue sources as well as operational cost increases. The challenges ahead are significant and as the City works to reach a structurally balanced budget (operating revenues that are greater than or equal to operating expenditures).
