For over two years, a group of us have been looking at the town’s financial situation. What we recognized was that the town had a council Financial Committee made up of two non-financial Council members. No one on the council has a financial background. We therefore sought to have three Los Gatos citizens brought onto the committee who all were required to have a high level financial background. That effort to bring them aboard was successful in early 2017.
Two other Los Gatos citizens decided to evaluate Los Gatos’ financial performance based on how a business would evaluate it’s own performance. The picture is not pretty, and the indications are that we’re still sliding down a slippery slope of debt. From what we read from the California League of Cities, the debt problem is going to get significantly worse starting next year.
That is largely due to the high pension costs that affect all towns, cities and states. We do not see this as a bailout possibility, and the governments are going to have to grab their own bootstraps, pull those boots on and charge up the hill. It’s our problem to fix.
The staff and the council are aware of the problem and are working on solutions. However, we do not see how this town cannot avoid taxing ourselves to pay down this mounting debt or making a monumental change to its cash management policies. Keep in mind that Los Gatos has never imposed a sales tax on ourselves, but over the years, the county has. We have one small sliver of tax left that if we do not tax ourselves, the county will tax us and we’ll still have to pay down the pension debt. What might have been our tax revenue will go to other projects around the county.
To review our work on the town’s financial trends and how we compare to other cities, you can go to the Los Gatos 5 Year Financial Trend Analysis and Peer City Comparisons v 2-26-18
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