110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 06/03/2025
ITEM NO:7
DESK ITEM
DATE: June 3, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Adopt a Resolution Approving the Town of Los Gatos Fiscal Year (FY) 2025-26 Operating Budget and FY 2025-26 – 2029-30 Capital Improvement Program (CIP); Adopt a Resolution Approving Commitment of Fund Balances under GASB 54; and Approve FY 2024-25 Budget Adjustments and Reclassifications REMARKS:
Attachment 8 contains the staff presentation.
Attachments:
1. Resolution of the Town Council Approving FY 2025-26 Operating Budget and FY 2025-26– 2029-30 Capital Improvement Program (Attachment 1), including Exhibit A: Total Town Revenues and Expenditures by Fund
2. Resolution of the Town Council of the Town of Los Gatos Approving Commitments of Fund Balance under GASB 54
3. FY 2024-25 Year-End Budget Adjustments and Reclassifications
4. FY 2025-26 Financial Summaries
5. Public Comments
Attachment distributed with Addendum:
6. Public Comment Received Before 11 a.m. on May 30, 2025 Attachment distributed with Addendum B:
7. Public Comment Received Before 11 a.m. on June 2, 2025 Attachment distributed with this Desk Item:
8. Staff Presentation
FY 2025-26 Proposed Budget
Town Council
June 3, 2025
Item 7
ATTACHMENT 8
Agenda and Recommendations
• Adopt a Resolution Approving the Town of Los Gatos Fiscal Year (FY) 2025-26 Operating Budget and FY 2025-26–2029-30 Capital Improvement Program (CIP), including new appropriations, minor corrections, and carry-forward appropriations, as presented in Attachment 1 (with Exhibit A: Total Town Revenues and
Expenditures by Fund);
• Adopt a Resolution Approving Commitments of Fund Balances under GASB 54, as presented in Attachment 2; and
• Approve FY 2024-25 Year-End Budget Adjustments and
Reclassifications as listed in Attachment 3.
Budget Process
• February 11, 2025 – Strategic Priorities reframed and included prioritizing emergency preparedness, prudent financial
management and preserving unique small-town charm.
• Staff and Council discussed projected financial conditions and challenges
• April 21, 2025 – Proposed Operating and Capital Budget Released
• April 22, 2025 – Council Study Session with Direction to Finance Commission
• Review Five-Year Projection
• April 28, May 5, and May 12, 2025 – Finance Commission discussion and Recommendation to Council
Budget Process
• May 20, 2025 – Council Budget Discussion and Direction • Continue to Use the 4.6% Vacancy Factor
• Expenditure and Deficit Reductions – reducing the annual spend for the Town
• 100% Measure G Use for Operational Budget
• Revenue Increases – identifying and implementing measures increases available revenue to support Town activities
• $0.9 million use of General Fund Unassigned Fund Balance • Establishing a Tiered CIP program and accepted the Tier 1 projects in the 2025-26 Capital Improvement Program
FY 2025-26 Proposed Budget
Proposed FY 2025-26 Budget
Proposed FY 2025-26 Budget
Salaries and Benefits
66% of General Fund Expenditures
Departments
FY 2024-25
Authorized/Funded
Town Staff
Position
FY 2025-26
Authorized/Funded
Town Staff
Position
Town Council 0.50 0.50
Town Attorney 1.88 1.88
Administrative Services 21.42 22.88
Community Development 20.45 20.00
Police Department 60.00 60.00
Parks & Public Works 34.75 35.00
Library 13.50 13.50
Total Position 152.50 153.75
All Hourly Employee Staff Converted to FTE's 10.33 9.99 162.83 163.74
FY 2025-26 Capital Improvement Program
• Capital budget switches to Tier system focused on staff capacity and appropriating only Tier 1 projects.
• Support Core Goals of Good Governance and Fiscal Stability • Tier 1 – In Progress, Grant Funded, Substantial Progress Expected in FY 2025-26
• Tier 2 – All Remaining Projects in Prior CIP’s
• Tier 3 – Other Known Needs
• Recognizes Staffing Levels are Limited, and Carryforward Funding has Been Excessive in Recent Years
Changes
Compared
to the April
21, 2025
Proposed
Budget
Budget
Resolution -
Operating &
Capital
Revenue Changes
Expenditures Changes
(3) Tiered Operational Savings in the amount of $1,137,095 All Tier 1, Some Tier 2, and Some Tier 3 Reductions
Reduce Membership and other Operational Reductions $ (245,358) Reduce Boards and Commissions Budget (17,500)
Add Bulk Purchase Items to Boards and Commissions 5,000 Reduce Hotel Program (8,700)
Reduce Outside Legal Services Hours (138,000)
Remove Decorative Tree Wrap Lighting (67,650)
Reduce Library Offerings (104,350)
Reorganize Community Police Complaints (60,000)
Reduce Block Tree Pruning (100,000)
Pension Benefit Savings (255,196)
Increase Community Grant Funding 23,200
Internal Service Funds Operational Savings (168,541)
Total Expenditures $ (1,137,095)
Resolution - Fund Balance Commitments
Actual
General Fund
Reserves
June 30, 2024
FY 2024-25
Budget, GF
Reserve Policy,
and this
Resolution
Approved
Increase
FY 2024-25
Budget, GF
Reserve
Policy, and
this
Resolution
Approved
(Decrease)
Estimated
General Fund
Reserves
June 30, 2025
FY 2025-26
Budget
Resolution
Approved
Increase
FY 2025-26
Budget
Resolution
Approved
(Decrease)
Estimated
General Fund
Reserves
June 30, 2026
Restricted Fund Balances
Pension $ 2,188,659 $ 690,000 $ - $ 2,878,659 $ 390,000 $ - $ 3,268,659 Porperty Held for Resale 344,338 - (344,338) - - - -
Nonspendable
Rehab Loan Reserve (Nonspendable) 159,000 - - 159,000 $ - $ - $ 159,000 Committed Fund Balances
Budget Stabilization 6,736,781 $ 1,133,858 - 7,870,639 - - 7,870,639 Catastrophic 6,736,781 $ 1,133,858 - 7,870,639 - - 7,870,639 Pension/OPEB 300,000 1,000,000 (300,000) 1,000,000 - - 1,000,000 Measure G District Sale Tax - Operating 590,581 (590,581) - - - - Assigned Fund Balances
Capital/Special Projects 8,651,056 - (7,144,607) 1,506,449 - - 1,506,449 Compensated Absences 1,555,478 - - 1,555,478 - 1,555,478 Open Space 410,000 - - 410,000 - - 410,000
Sustainability 140,553 - - 140,553 - - 140,553
Market Fluctuations 1,712,246 - - 1,712,246 - - 1,712,246 Carryover Encumbrances 85,861 - - 85,861 - - 85,861
Council Priorities - Economic Recovery 20,684 - (20,684) - - - - ERAF Risk Reserve 1,430,054 - (1,430,054) - - - -
Unassigned Fund Balance - 4,000,000 - 4,000,000 - (905,060) 3,094,940 FY 2024-25 Revenue Budget
Adjustments for Year End
Fund Program Account Amount
111 1201 41211 Sales & Use Tax $ 145,138
111 1221 41214 Measure G - District Sales Tax 34,243
111 2101 43208 Emergency Managament Performance Grant (15,300) 111 3501 45921 BMP Housing in Lieu Fund for Unit Purchase (476,154) 111 5202 42514 Encroachment Permits 70,000
111 5202 44623 Engineering Review Surcharges 54,000
111 5301 42515 Tree Removal Permits 91,000
TOTAL GENERAL FUND REVENUES $ (97,073)
General Fund Revenues
FY 2024-25 Expenditure Budget
Adjustments and Reclassifications
Fund Program Account Amount Comments
111 1201 99611 To General Liability 60,000 Funds Partially Expended 111 Town-wide 5XXXX Salaries and Benefits Varies
Up to 4.6% Salary Saving Factor Applied Up to
the Amount of $1,788,636 by
Programs/Departments
111 Town-wide 5XXXX Additional Expensed due to Protective Leaves Varies Up to the Amount of $320,000 111 3501 82202 BMP Housing Unit Purchase (476,154) BMP Program is not Purchasing the House TOTAL GENERAL FUND EXPENDITURES $ (416,154)
Plus Anticipated Salaries and Benefits
Adjustments
Fund Program Account Other Fund Revenues Amount Comments 611
1302 49111 60,000 From General Fund
Total Liability Self Insurance $ 60,000
General Fund Expenditures
FY 2024-25 YEAR-END BUDGET ADJUSTMENT REQUESTS - OTHER FUNDS Liability Self Insurance
Future Outlook
• Using 4.6% vacancy savings and $0.9 million from
unassigned reserves to balance budget
• Budget is legally balanced, but the Town has a structural imbalance which will grow if not addressed
• Current level of programs and services are not
sustainable – expenditure growth exceeds revenue
• Town will continue to use limited reserves to maintain program and services
• Existing capital obligations (buildings, parks, public infrastructure) will add to financial pressure
Future Outlook
• Refining understanding of financial condition, outlook, and scope of the structural deficit
• Stronger budget monitoring and response approach
• Continuing work in defining what is important and how to do it well – dealing with tough tradeoffs
• Securing fiscal impact of existing capital assets
• Finding opportunities for improving efficiency,
effectiveness, and economic development
• Engaging the public, Council, and staff in balancing the budget
• Goal: Mapping a course towards financial sustainability
QUESTIONS
Actions Requested
• Adopt a Resolution Approving the Town of Los Gatos Fiscal Year (FY) 2025-26 Operating Budget and FY 2025-26–2029-30 Capital Improvement Program (CIP), including new appropriations, minor corrections, and carry-forward appropriations, as presented in Attachment 1 (with Exhibit A: Total Town Revenues and
Expenditures by Fund);
• Adopt a Resolution Approving Commitments of Fund Balances under GASB 54, as presented in Attachment 2; and
• Approve FY 2024-25 Year-End Budget Adjustments and
Reclassifications as listed in Attachment 3.