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Cupertino explores revenue options as sheriff contract projections threaten a multi‑million deficit
Summary
Staff told council a proposed county sheriff contract could add $1.9M–$7.6M annually depending on the increase; council directed more study on revenue options (quarter-cent sales tax, UUT renewal, business license tax, ride‑share or vacancy taxes), asked for cost and timeline estimates and comparative property-tax data.
City staff reconvened a conversation about possible revenue measures after presenting new projections for the county sheriff contract that could create a structural deficit in future years.
Acting Director Jonathan Orozco summarized the options under consideration — a transaction and use tax (TUT), adjustments to the transient-occupancy tax (TOT), a parcel tax (square-foot basis or land area basis), and modernization of the business license tax — and reminded council that polling and business outreach had been paused in 2023. He flagged the sheriff’s contract as the immediate driver: ‘‘A 10% increase in the contract would cost the City an additional $1,900,000 per year, which means a 20% increase would equate to $3,800,000 and a 40% increase would equate to $7,600,000 annually,’’ Orozco said. Staff also noted the city’s current utility user tax brings in about $4,000,000 annually and is set to sunset in fiscal year 2030/31.
Council members asked whether other, less‑direct taxes could be considered (ride‑share fees, transit pass‑through taxes, vacancy taxes, real‑estate transaction levies), how a quarter‑cent sales-tax increase would interact with VTA or other regional measures, whether Cupertino could realistically place a measure on the 2026 ballot if needed, and what revenue would be generated by a quarter‑cent increase (staff estimated just north of $5,000,000). Public commenters offered mixed views: some urged exploring business-license modernization; others argued the city should cut spending rather than raise taxes. Staff agreed to return with updated revenue projections, a scope of work for outreach and polling, and estimated consultant and election costs.
Next steps: staff will provide cost and timeline estimates to place measures on a 2026 ballot if council directs, comparative analysis of property-tax shares with peer cities, and more detail on possible non‑resident taxes (ride‑share, hospitality), vacancy tax experience in other cities, and options for development impact fees to help fund public safety.
