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Los Gatos council approves midyear budget adjustments after improved sales‑tax forecast
Summary
Staff told council an improved sales‑tax forecast reduced projected deficits; the council approved $3,581,888 in additional estimated revenues and $1,350,141 in added expenditures and agreed to replenish an interim community‑center fund from any year‑end surplus.
Los Gatos staff reported an improved midyear fiscal picture on Feb. 17 and the Town Council approved recommended budget adjustments that increase estimated revenues by $3,581,888 and increase authorized expenditures by $1,350,141.
Administrative Services Director Christina Alaro said sales‑tax projections from the town’s new consultant and several newly opening businesses have driven the revenue upgrades, while transient‑occupancy tax (TOT) collections are trending below expectations. “Sales tax is generally received about six months in arrears,” Alaro told council, and the midyear request relies on updated consultant forecasts.
Major revenue drivers in the midyear package include an estimated sales‑tax bump (including Measure G), higher license and permit revenues (including plan check revenues), and a one‑time pension trust contribution that staff recommends making now because of stronger year‑to‑date results. Staff recommended a cautious approach to equipment‑replacement funding, deferring some purchases and smoothing internal service fund charges.
On the expenditure side, council reviewed requests across departments: additional outside legal costs ($100,000), administrative-services transitional staffing, community‑development pass‑through consultant work (recognized as offset by permitting revenue), police overtime and a public‑safety study, and parks/public‑works repairs including tree work and traffic signal costs. Staff proposed a net decrease of $1,255,561 in other (non‑general‑fund) funds largely by deferring some equipment replacements.
Council debated the appropriate use of an existing interim community‑center fund: some council members said the fund was intended for improvements and not routine maintenance, while others cited immediate needs such as roof and mold remediation. Vice Mayor Risto offered a compromise motion that approved the midyear adjustments and authorized staff to use the community‑center funds for deferred maintenance with the caveat that, if the town ends the fiscal year with a surplus, the council will replenish the community‑center fund to its current balance. The motion passed unanimously.
Town staff will continue to monitor sales‑tax receipts and return to the council with updated five‑year forecasts as further consultant analysis is completed. Staff also said an audit of vehicle and equipment inventory is planned to assess replacement timing and potential opportunities to optimize fleet holdings.
