Mountain View updates budget forecast amid slowing revenue and rising expenses

The Mountain View City Council and Shoreline Regional Park Community held a joint meeting on February 25, 2025, where they discussed the midyear budget status and adjustments for the fiscal year 2024-2025, as well as preliminary forecasts for the following year. The meeting highlighted the city's financial health amid a cooling economy, with officials noting a significant drop in projected operating balances compared to previous years.

Grama Zhang, the Assistant Finance Director, presented an overview of the city's current fiscal status, revealing an estimated ending operating balance of $8.2 million for the current fiscal year, a stark decrease from $16.1 million the previous year. This decline is attributed to flattening revenues, particularly in sales tax, which is expected to fall by $3 million due to reduced consumer spending and state audits.

The council members expressed concerns about rising expenditures, which are projected to increase by nearly 7% next year, outpacing revenue growth of only 3%. This imbalance raises questions about the sustainability of funding for essential city services. Councilmember Hicks emphasized the importance of monitoring this trend, while Councilmember McAllister called for a comprehensive review of all revenue sources, noting that many fees have not been updated in over a decade.

A significant point of discussion was the potential for increasing the Transient Occupancy Tax (TOT), which is currently the lowest in the region at 10%. Staff recommended considering an increase in 2026, as neighboring cities have rates exceeding 13%. The council also discussed the need for a user fee study to evaluate and potentially adjust various fees that have not kept pace with inflation.

The meeting concluded with a commitment to continue analyzing the budget and exploring options for revenue enhancement, including a potential ballot measure for the TOT in the upcoming election cycle. The city aims to maintain its strong fiscal practices while addressing the challenges posed by a changing economic landscape.