Santa Clara’s operating reserve has grown $45.5 million since 2010, a year when Santa Clara faced a $13.5 million budget deficit.
Between 2000 and 2011, reserves were used six times to balance the City budget in the face of deficits – 2001-02, 2002-03, 2003-04, 2007-08, 2008-09, and 2009-10. Then-City Manager Jennifer Sparacino warned in 2004 that the city faced ongoing “structural” – rather than “emergency” – operating budget deficits and dangerously declining reserves.
But it wasn’t until 2010, when reserves were almost completely depleted, that the City Council found the political will to address the deficit and cut operating expenses – two-thirds of which pay the employees providing City services.
Even then, the choice was for short-term savings with employee furloughs, a moratorium on raises (but no limits on employees being classified into higher pay grades), and leaving about 100 positions unfilled. The cuts reduced services and amenities for residents – some of which have yet to be restored five years later – and do little to address underlying expense drivers, such as escalating mandatory contributions to California’s public employee pension program, CalPERS.