The Campbell Reporter

News

Finance director foresees woes in the fiscal forecast

By Cathy Weselby

There are dark clouds looming in Campbell's financial forecast.

Finance director Jesse Takahashi presented the status of the city's mid-year budget to the Campbell City Council at its Feb. 5 meeting.

Takahashi said the overall economic picture for Campbell has not improved much from the previous year and has worsened over the past several months.

Expenses from the fiscal year 2007-08 budget were cut by nearly $200,000 in response to shrinking revenues, and the council unanimously approved the mid-year budget adjustment.

Takahashi said this adjustment is minimal compared to the anticipated budget for fiscal year 2008-09.

As the economy slows to a recession, Takahashi foresees budget woes due to flat sales tax revenue, stalled development projects and a decline in property taxes from the subprime mortgage crisis. The slowing of the economy, coupled with rising inflation, signal unsettled financial times ahead.

Takahashi said ongoing expenses are outpacing expected revenues. Sales tax continues to be the single largest revenue source for the city; however, that revenue source is slowing along with the economy due to the struggling retail sector.

The biggest increase for fiscal 2008-09 will be the fire contract with the Santa Clara County Fire Department. City officials are currently in negotiations with the county to renew the contract, and Takahashi estimates the $4.6 million cost will increase by $2 million annually.

Because of the imminent fire contract cost increase and cuts to city services, such as sidewalk and road maintenance over the past five years, council members discussed possible options in an October study session that would put them ahead of the deficit curve. Several options on the table include putting a 2008 measure on the ballot to increase Campbell sales tax, adding a Campbell utility tax or raising the transit occupancy tax--all of which would require voter approval.

City leaders hired a consultant in January to do a feasibility study to determine a revenue option for Campbell and produce a nonpartisan public education message to explain the need for these measures. The city will pay $100,000 for the study and the education campaign.