If you received or plan to receive an income tax refund, deciding what to do with the extra funds is a generally pleasant task. Even if you have difficulty deciding, a good financial planner can help you choose between spending, saving or investing your extra money.

When a city has surplus funds, deciding what should be done with them is a more complex, but still pleasant problem. The City of Pleasanton's financial planners will be studying the options available to deal with a budget surplus, in excess of Proposition 4 limitations, of nearly $680,000, when the city's fiscal year ends on June 30.

According to Assistant City Manager and Finance Director Emily Wagner, Pleasanton's excess revenues are directly attributable to development in North Pleasanton.

"The primary reason for the surplus is North Pleasanton development.”' she states. "Stoneridge Mall, Hacienda Business Park and Pleasanton Park have been major contributors to the tax revenue surplus.” Wagner noted that some other Northern California cities are in similar situations, citing Novato, Milpitas and Newark as examples.

What makes dealing with the surplus revenue a complex issue for financial planners is Proposition 4, passed in 1979, which limits the amount of tax revenues that cities can spend.

Under Proposition 4, cities exceeding their appropriations limit must either refund the surplus to the taxpayers or go to the voters to ask permission to exceed the limitation for a period not to exceed four years. In Pleasanton's case, if the voters support exceeding the limitation, the extra money may go into one-time capital Improvements such as a library or Valley Avenue extension.

"Proposition 4 did not take into account commercial and industrial development which former 'bedroom communities' such as Pleasanton are experiencing,” explains Wagner. "Proposition 4 was based on the consumer price index and only accounted for inflation and population growth.”

While Proposition 4 may make the decision on how to use Pleasanton's excess revenue more complex, the prospects are still quite pleasant.

To see a reproduction of the original article and edition of Pleasanton Pathways, visit: April 22, 1985