Los Gatos City Council
February 17, 2026

ITEM NO. 11.
3 of 3
Resolution 26 - _______ __, 2026

5. That the parcels resulting from the lot line adjustment will conform to zoning and building ordinances.

The three parcels resulting from the lot line adjustment will be in conformance with the Town’s Zoning and Building Ordinances.

PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the ___ day of _____, 2026, by the following vote:

COUNCIL MEMBERS:

AYES:

NAYS:

ABSENT:

ABSTAIN:

SIGNED:

MAYOR OF THE TOWN OF LOS GATOS

LOS GATOS, CALIFORNIA
DATE: __________________
ATTEST:

TOWN CLERK OF THE TOWN OF LOS GATOS

LOS GATOS, CALIFORNIA
DATE: __________________

ITEM NO. 11.

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EXHIBIT 10 Page 286
ITEM NO. 11.
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ITEM NO. 11.

LOS GATOS PLANNING COMMISSION 1/14/2026, Item #4,
16300 Greenridge Terrace, 16084 Greenridge Terrace,
and 240 La Terra Court
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A P P E A R A N C E S:

Los Gatos Planning
Commissioners:

Emily Thomas, Chair
Kendra Burch, Vice Chair
Jeffrey Barnett
Susan Burnett
Adam Mayer
Joseph Sordi
Rob Stump
Community Development
Director:

Joel Paulson
Town Attorney: Gabrielle Whelan
Transcribed by: Vicki L. Blandin
(619) 541-3405
ATTACHMENT 8

ITEM NO. 11.

LOS GATOS PLANNING COMMISSION 1/14/2026, Item #4,
16300 Greenridge Terrace, 16084 Greenridge Terrace,
and 240 La Terra Court
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P R O C E E D I N G S:

CHAIR THOMAS: We will now be moving on to Item
4, which is to consider a request for approval to modify Planned Development Ordinance 2281 to allow for a Lot Line Adjustment and Zone Change on property zoned HR-2½:PD and HR-1. Located at 16300 Greenridge Terrace, 16084 Greenridge Terrace, and 240 La Terra Court. APNs 527-12-003, 527-12- 004, and 527-15-002. Planned Development Application PD-25- 004, Lot Line Adjustment Application M-25-006, and Zone Change Application Z-25-001.

The request for a modification of a Planned
Development Ordinance is not considered a project pursuant to the California Environmental Quality Act. The request for a Lot Line Adjustment is exempt from CEQA as a
Ministerial approval in accordance with Public Resources Code Section 21080(b)(1) (CEQA Statute) and CEQA Guidelines Section 15268. The request for a Zone Change is also exempt pursuant to California Environmental Quality Act Section 15061(b)(3).

Property owners are 16300 Greenridge Terrace and
240 La Terra Court – Greenridge Development, LLC; 16084 Greenridge Terrace – Richard Luu. The Applicant is Hanna Brunetti.

ITEM NO. 11.

LOS GATOS PLANNING COMMISSION 1/14/2026, Item #4,
16300 Greenridge Terrace, 16084 Greenridge Terrace,
and 240 La Terra Court
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Before we get the Staff Report, can I get a show
of hands from Commissioners who visited the property,
although it is an interesting visit, because there’s not a… We understand; we all get it.

COMMISSIONER BARNETT: To the extent that it was
(inaudible).

CHAIR THOMAS: Yes, that it was visitable,
exactly, thank you. Then, are there any disclosures, more importantly for this one?
Mr. Mullin, will you be presenting the Staff
Report for us? Thank you.

SEAN MULLIN: Thank you, again. Before you
tonight are consideration of two Lot Line Adjustments, an amendment to the Greenridge Terrace Planned Development Ordinance, and a rezone. The three subject properties are located south of Blossom Hill Road. Two are located in the La Terra subdivision, which was created through that PD Ordinance, and one is just outside and adjacent to the
subdivision. All three properties are currently
undeveloped.

The Applicant proposes two Lot Line Adjustments
between the three properties, because the property
configurations within the PD area would change and
modification of the applicable PD Ordinance is required.

ITEM NO. 11.

LOS GATOS PLANNING COMMISSION 1/14/2026, Item #4,
16300 Greenridge Terrace, 16084 Greenridge Terrace,
and 240 La Terra Court
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Additionally, a portion of one property affected
by the Lot Line Adjustment in the PD would be transferred to the neighboring property outside the PD area, and that necessitates a Zone Change from HR-2½:PD to HR-1 to match the receiving property.

All proposed lots would meet the zoning
requirements for HR properties and all aspects of the PD would remain unchanged, except for what is proposed here to allow for the Lot Line Adjustment.

Staff recommends that the Planning Commission
forward a recommendation of approval to the Town Council, who will render the final decision on the project. This concludes my presentation and Staff is available to answer any questions.

CHAIR THOMAS: Questions for Staff? Vice Chair
Burch.

VICE CHAIR BURCH: Just to clarify, Mr. Mullin,
we don’t normally see Lot Line Adjustments. Are we seeing this specifically because of the modification to the PD? SEAN MULLIN: Yes, typically Lot Line Adjustments
are forwarded to the DRC since they’re a ministerial
action, but our Town Code requires that they go to a public hearing. Because there’s a PD Ordinance and a Zone Change here, in a vacuum the Planning Commission has the authority

ITEM NO. 11.

LOS GATOS PLANNING COMMISSION 1/14/2026, Item #4,
16300 Greenridge Terrace, 16084 Greenridge Terrace,
and 240 La Terra Court
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to grant approval of the Zone Change. Both of them would need to go all the way to the Town Council.

VICE CHAIR BURCH: Thank you.

CHAIR THOMAS: Any other questions for Staff? We
will now open the public portion of the public hearing on Item 4 and give the Applicant an opportunity to address the Commission for up to five minutes. Who will be speaking for the Applicant team tonight? Please state your name for the record, and you can adjust the microphone, and however you want to split your time, you have five minutes.

AMANDA MUSY-VERDEL: Good evening, Amanda MusyVerdel with Hanna-Brunetti. We’re doing a Lot Line Adjustment to a project that was approved it feels like yesterday, but I think it was six years ago. I think Vice Chair Burch was the only member on the Planning Commission at the time. At the time we got this approved we were like, thank God, it finally got approved, and now that we’re
going through developing the lots, we realized that maybe what we decided ten years ago wasn’t the best way of
developing the property within the eight-lot subdivision.

What we were doing is just aligning it so that
the house and yard and the trail that got added in towards the end develops better for our property, and while we were doing the Lot Line Adjustment, there is a little dog leg

ITEM NO. 11.

LOS GATOS PLANNING COMMISSION 1/14/2026, Item #4,
16300 Greenridge Terrace, 16084 Greenridge Terrace,
and 240 La Terra Court
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that our property has that just makes more sense to give it to Mr. Luu so that we could all develop our properties in a more Town-friendly manner.

If there are any questions, I’d be happy to
answer.

CHAIR THOMAS: Commissioner Sordi.

COMMISSIONER SORDI: More for curiosity than
anything, but do you have anything that shows the preferred layout and building footprint itself, bringing it up?
AMANDA MUSY-VERDEL: We don’t have building
footprints, but we have like the location of…
SEAN MULLIN: We’re having technical difficulty
with the screen share.

AMANDA MUSY-VERDEL: I really want your overhead
projector back.

VICE CHAIR BURCH: I have lobbied for that.

AMANDA MUSY-VERDEL: Yes, if this can make the
record. But that’s kind of the intent of the development, and so what’s there in the yellow is a trail easement, and you can see the topography of the lots and how the general house and yard locations line up better.

COMMISSIONER SORDI: Okay. So, it’s on existing
Lot 3, the one-acre lot that we’re trying to (inaudible)?

ITEM NO. 11.

LOS GATOS PLANNING COMMISSION 1/14/2026, Item #4,
16300 Greenridge Terrace, 16084 Greenridge Terrace,
and 240 La Terra Court
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AMANDA MUSY-VERDEL: That would be Mr. Luu’s lot.

That would gain extra property. Lots 1 and 2 within the subdivision is an even swap.

COMMISSIONER SORDI: Is it just one house that
you’re trying to improve the placement to jibe with the contours, or is it all?
AMANDA MUSY-VERDEL: Actually, the houses would
remain in the same location, it’s just making the yard… COMMISSIONER SORDI: Oh, it’s more for yard and
more for… Okay.

AMANDA MUSY-VERDEL: Yes, and more privacy and
more in line with the topography of the lots.

COMMISSIONER SORDI: Okay. Yes, I’m really
familiar with this area, because I actually go roaring
through on my gravel bike. I don't know if I’m going to be allowed to do it when you’re done building.

AMANDA MUSY-VERDEL: There’s a trail easement of
you.

COMMISSIONER SORDI: And I did do that just the
other day. That’s all I had, thanks.

CHAIR THOMAS: Commissioner Barnett.

COMMISSIONER BARNETT: This is also perhaps
theoretical, but I understand the easement is going to be preserved as part of this development.

ITEM NO. 11.

LOS GATOS PLANNING COMMISSION 1/14/2026, Item #4,
16300 Greenridge Terrace, 16084 Greenridge Terrace,
and 240 La Terra Court
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AMANDA MUSY-VERDEL: Yes.

COMMISSIONER BARNETT: Can you describe what it
is? Is it an equestrian trail, or a pedestrian trail? Is it defined in some way.

SEAN MULLIN: There are actually a number of
easements affecting the subdivision. There are some scenic easements and there are some open space easements. Those two types of easements function basically as conservation easements where development can’t happen. There is also a trail easement, and I can’t remember the exact language of the trail easement, but I believe it’s multi-purpose or multi-use trail, so it’s not specific to hiking, cycling, or equestrian. That’s my recollection.

COMMISSIONER BARNETT: I see. Thank you.

CHAIR THOMAS: Any other questions? Commissioner
Sordi.

COMMISSIONER SORDI: Sorry, that raises another
question, just more out of curiosity. Would the trail
easement, once the development is complete, allow someone to connect from La Terra all the way through Greenridge? In other words, you would go from Shady Lane and you could go all the way to Blossom Hill Road and back again?
AMANDA MUSY-VERDEL: There is one trail easement
that will connect you into Francis Oaks Way, and one trail

ITEM NO. 11.

LOS GATOS PLANNING COMMISSION 1/14/2026, Item #4,
16300 Greenridge Terrace, 16084 Greenridge Terrace,
and 240 La Terra Court
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easement that will take you around to the future trail
that’s on the other side of (inaudible).

COMMISSIONER SORDI: Okay, thank you.

CHAIR THOMAS: Any other questions? Thank you
very much. I don’t think we have any other questions. Are there any member of the public that wish to speak on Item 4? Any hands raised on Zoom?
DIRECTOR PAULSON: No hands.

CHAIR THOMAS: Okay, if you need to come up to do
a closing argument. Okay, are there any additional
questions we have for the Applicant team before we close the public hearing? We will now close the public portion of the public hearing on Item 4, and I invite Commissioners to ask questions of Staff and make a motion. I can start off.

Yesterday when we met with Staff to get
clarification, it’s like a small Lot Line Adjustment.

Normally we would never see this, but because it’s Planned Development and the Zone Change with reassigning some land with the lot, it just ended up being something that came in front of us, but there are no major changes to the PD, and it is good to note, no changes even to where the plans are for structures to be. It’s just really more based on the topography and for yard usage and everything, so I feel

ITEM NO. 11.

LOS GATOS PLANNING COMMISSION 1/14/2026, Item #4,
16300 Greenridge Terrace, 16084 Greenridge Terrace,
and 240 La Terra Court
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very confident with approving this. If anyone has any other things or would like to make a motion. Commissioner Stump.

COMMISSIONER STUMP: Just had a question about
how the motion would be structured. There are a significant number of findings. I assume that all of these findings have to be made by the Commission.

SEAN MULLIN: That’s correct, and I would defer
to Ms. Whelan on whether you need to state those findings verbatim in your motion, or by reference.

DIRECTOR PAULSON: I’ll start. You don’t need to
reference them individually, you can say, “As stated in the Staff Report,” unless Mr. Whelan has a more proper way to say that.

ATTORNEY WHELAN: I agree.

COMMISSIONER STUMP: Well then, if I can, I’d
like to put forward a motion.

CHAIR THOMAS: Go for it.

COMMISSIONER STUMP: I move to forward a
recommendation of approval to the Town Council on a request to modify Planned Development Ordinance 2281 that allows a Lot Line Adjustment and Zone Change on property zoned HR2½:PD and HR-1. Located at 16300 Greenridge Terrace, 16084 Greenridge Terrace, and 240 La Terra Court.

ITEM NO. 11.

LOS GATOS PLANNING COMMISSION 1/14/2026, Item #4,
16300 Greenridge Terrace, 16084 Greenridge Terrace,
and 240 La Terra Court
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This motion includes recommending that the Town
Council make their required findings and approvals as
outlined in our document. I can make the required finding for CEQA, required findings for amending a Planned
Development, and required determinations for compliance with the Subdivision Maps Act provisions regarding Lot Line Adjustments as set forth in Government Code 66412D.

I can make the required finding that the Zone
Change is consistent with the Town’s General Plan and that there is required compliance with the zoning regulations.

CHAIR THOMAS: Is there a second? Vice Chair
Burch.

VICE CHAIR BURCH: I’ll second the motion.

CHAIR THOMAS: Any discussion? I’ll call the
question. All those in favor, please raise your hand. The motion passes unanimously. This was a recommendation, so no appeal rights.

DIRECTOR PAULSON: That’s correct.

CHAIR THOMAS: Great. Thank you.
(END)

ITEM NO. 11.

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ITEM NO. 11.

PREPARED BY: Chris Constantin
Town Manager
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 2/17/2026
ITEM NO: 12
DATE: February 17, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Adopt Amendments to Council Policy 5-02 Flag Policy to Establish a Commemorative Flag Framework
RECOMMENDATION: Adopt amendments to Council Policy 5-02 Flag Policy to establish a formal framework permitting the display of commemorative flags as an exercise of government speech, when initiated by a
Councilmember and approved by resolution of the Town Council.

FISCAL IMPACT:

There is no direct fiscal impact associated with adoption of the proposed policy amendments.

The policy establishes a procedural framework only. Any future commemorative flag approved by resolution would involve minimal costs associated with procurement and installation, which would be addressed at the time of Council action.

STRATEGIC PRIORITY:

Adoption of the proposed amendments supports the Town’s 2025–2027 Strategic Priority to ensure that residents and visitors feel a sense of belonging in Los Gatos by establishing a transparent and structured process for potential commemorative flag displays.

BACKGROUND:

Council Policy 5-02 currently governs the official Town seal, the Town flag, and procedures for lowering and raising flags on Town property. The policy adheres to the United States Flag Code and California law and provides administrative direction for flag status. However, the existing policy does not address commemorative or ceremonial flags and does not provide a process for Council consideration of such displays.

ITEM NO. 12.

PAGE 2 OF 4
SUBJECT: Amendment to Flag Policy 5-02
DATE: February 17, 2026
On December 16, 2025, the Town Council considered whether to modify the Flag Policy to address commemorative flags. At that meeting, the Council directed staff to return with proposed amendments establishing a commemorative flag framework. The Council also requested research regarding how other Santa Clara County jurisdictions approach commemorative flag displays.

Staff subsequently reviewed policies from multiple jurisdictions within the County. The majority of cities that allow commemorative flags do so under a government speech framework, require formal Council authorization by resolution, limit the duration and location of display, and expressly state that municipal flagpoles are not public forums.

The proposed amendments to Policy 5-02 are consistent with those approaches and are designed to clarify the Town’s authority, preserve Council discretion, and minimize legal risk.

DISCUSSION:

Purpose of the Amendment
The proposed amendment updates Policy 5-02 to address commemorative flags while preserving the Town’s compliance with federal and state law governing flag protocol. The amendment establishes that Town flagpoles are reserved for official governmental expression and are not intended to serve as a forum for private speech.

When a municipality selects and displays flags on its own property, such displays may constitute government speech provided the municipality maintains control over the message conveyed.

The proposed amendment explicitly affirms that any commemorative flag display constitutes government speech and does not create a public forum.

Framework for Commemorative Flags
The amendment establishes clear parameters under which a commemorative flag may be displayed:
 A display must be initiated by a Councilmember.
 Approval must occur by formal resolution of the Town Council at a duly noticed public meeting.
 The resolution must expressly determine that the display constitutes government speech and relates to a legitimate governmental interest consistent with the Town’s strategic priorities.
 The display may occur only at a single designated flagpole within the Town Hall complex.

ITEM NO. 12.

PAGE 3 OF 4
SUBJECT: Amendment to Flag Policy 5-02
DATE: February 17, 2026
 The duration of any display is limited to a defined period stated in the resolution and may not exceed thirty-one consecutive days.
 Each commemorative display requires separate Council action.

The policy further affirms that approval of one commemorative flag does not obligate the Town to approve the same or any other flag in the future and that no individual or organization has the right to compel display of a flag.

In addition to the substantive amendments establishing the commemorative flag framework, minor formatting changes were made to improve clarity and organization. Specifically, the section describing the Town seal was moved to become a subsection under the Town flag, and the procedures section was relocated under the “Lowering and Raising the Flag” section and the sentence “The Town flag may be gifted or traded upon approval from the Town Manager” was moved from the procedures section to the Town flag section, where it was deemed more appropriate. These changes are purely organizational and do not alter policy content, procedures, or authority.

Administrative Clarity and Legal Considerations
By adopting clear procedural standards, the amended policy strengthens the Town’s ability to maintain control over its messaging and reduces the risk that the flagpoles could be construed as a public forum. The amendment reinforces Council discretion and ensures that any future commemorative flag display occurs through transparent public action.

The amendment does not authorize any specific commemorative flag. Any such display would require a separate resolution from the Town Council. Such a resolution is being considered tonight in the next agenda item.

COORDINATION:

The proposed amendments have been reviewed by the Town Attorney.

ENVIRONMENTAL ASSESSMENT:

Adoption of the proposed policy amendment constitutes an administrative action and does not involve construction or physical changes to the environment. Under CEQA Guidelines section 15378(b), adoption of internal governmental policy is not a project. Alternatively, the action is exempt under CEQA Guidelines section 15061(b)(3), as it can be seen with certainty that no environmental impact will result.

ITEM NO. 12.

PAGE 4 OF 4
SUBJECT: Amendment to Flag Policy 5-02
DATE: February 17, 2026
CONCLUSION:

Policy 5-02 currently governs the Town seal, Town flag, and flag protocol but does not address commemorative flags. The proposed amendments establish a clear, legally structured framework allowing the Town Council to consider commemorative flag displays as an exercise of government speech, subject to defined limitations on initiation, approval, location, and duration.

Adoption of the amended Policy 5-02 will provide transparency, preserve Council discretion, and ensure that any future commemorative flag display is consistent with federal law, state law, and the Town’s strategic priorities.

ATTACHMENTS:

1. Current Flag Policy 5-02

2. Amended Flag Policy 5-02

ITEM NO. 12.

TITLE: Flag Policy POLICY NUMBER: 5-02
EFFECTIVE DATE: 10/19/16 PAGES: 3
ENABLING ACTIONS: REVISED DATES: 9/4/18
APPROVED:

PURPOSE
This Policy provides guidelines for the official appearance and colors of the Town flag and Town seal as well as guidelines for gifting or trading the Town flag. This Policy also provides direction for when to lower flags to half-staff and to raise flags flown on Town properties.

SCOPE
The Policy applies to all Town flags and Town seals as well as Town staff, volunteers, and residents managing flags flown on Town properties.

POLICY

TOWN SEAL
The official Town seal shall be in a circular format with a golden outer ring. At the top of the outer ring, bold-face, upper-case, black letters shall read 'TOWN OF' while similarly written letters at the bottom read 'LOS GATOS'. At the bottom and inside the outer ring, smaller, upper-case, regular-face, black letters read 'INCORPORATED 1887' against a white background.

The central image features a golden sun radiating narrow golden rays against a white sky peaking out from behind dark and light green mountains. The foreground displays nine rows of dark and light green grape vines on light brown earth. Flanking each side of the central image are two large white cats outlined in black. The cats are modeled after those which guard the entrance to "The Cats" estate just south of Town, sculpted from cement by Robert Trent Paine in 1922.

ITEM NO. 12.

TITLE: Flag Policy PAGE:
2 of 3
POLICY NUMBER:
5-02
There is also a black and white version of the color Town seal, which is acceptable for use.

TOWN FLAG
The official appearance of the Town flag shall feature the color Town seal, centered, on a white background. Directly below the seal shall read, in bold-faced, upper-case, dark green letters 'THE GEM OF THE FOOTHILLS'.

LOWERING AND RAISING THE FLAG
The Town of Los Gatos will adhere to the United States Flag Code, along with the California Governor's and the Town of Los Gatos Mayor's discretion on flag status for all flags on Town property.

For background, Title 4, Section 7 of the United States Code describes the United States Flag Code and the President's authority. This Code specifies that only the President can order federal flags to half-staff. The Code also indicates that state governors have the authority to issue flag status proclamations. The Town will follow this Code and the Mayor's discretion when managing the Town's flag procedures.

PROCEDURES
The Town flag may be gifted or traded upon approval from the Town Manager.

The procedures for lowering and raising flags on Town property are as follows.

1. The Town Council will establish the Flag Policy. The Town Manager and his or her designee will provide direction for flag status, and act as the final authority for the application of the policy according to federal and state declarations.

ITEM NO. 12.

TITLE: Flag Policy PAGE:
3 of 3
POLICY NUMBER:
5-02

2. The Town Manager's Office is responsible for the day-to-day operation of administering direction for flag status.

APPROVED AS TO FORM:

ITEM NO. 12.

ATTACHMENT 2

COUNCIL POLICY MANUAL
TITLE: Flag Policy POLICY NUMBER: 5-02
EFFECTIVE DATE: 10/19/16 PAGES: 3
ENABLING ACTIONS: REVISED DATES: 9/4/18
APPROVED:

PURPOSE
This Policy establishes guidelines for the appearance and use of the Town flag and seal, the raising and lowering of flags on Town property, and the gifting or trading of the Town flag.

It clarifies that flags displayed on Town property constitute official government speech and that Town-owned flagpoles are reserved for expressions of the Town’s adopted priorities, not for private expression. Commemorative flags may be approved by Council action only when the display advances a legitimate governmental interest consistent with the Town’s adopted strategic priorities and policies.

SCOPE
The Policy applies to all Town flags and Town seals as well as Town staff, volunteers, and residents managing flags flown on Town properties.

POLICY

TOWN FLAG
The official appearance of the Town flag shall feature the color Town seal, centered, on a white background. Directly below the seal shall read, in bold-faced, upper-case, dark green letters ‘THE GEM OF THE FOOTHILLS’.

1. Town Seal
The official Town seal shall be in a circular format with a golden outer ring. At the top of the outer ring, bold-face, upper-case, black letters shall read ‘TOWN OF’ while similarly written letters at the bottom read ‘LOS GATOS’. At the bottom and inside the outer ring, smaller, Small Town Service Community Stewardship Future Focus

ITEM NO. 12.

TITLE: Flag Policy PAGE:
2 of 4
POLICY NUMBER:
5-02
upper-case, regular-face, black letters read ‘INCORPORATED 1887’ against a white background. The central image features a golden sun radiating narrow golden rays against a white sky peaking out from behind dark and light green mountains. The foreground displays nine rows of dark and light green grape vines on light brown earth. Flanking each side of the central image are two large white cats outlined in black. The cats are modeled after those which guard the entrance to “The Cats” estate just south of Town, sculpted from cement by Robert Trent Paine in 1922.

There is also a black and white version of the color Town seal, which is acceptable for use.

LOWERING AND RAISING THE FLAG
The Town of Los Gatos will adhere to the United States Flag Code, along with the California Governor’s and the Town of Los Gatos Mayor’s discretion on flag status for all flags on Town property.

For background, Title 4, Section 7 of the United States Code describes the United States Flag Code and the President’s authority. This Code specifies that only the President can order federal flags to half-staff. The Code also indicates that state governors have the authority to issue flag status proclamations. The Town will follow this Code and the Mayor’s discretion when managing the Town’s flag procedures.

1. Procedures
The Town flag may be gifted or traded upon approval from the Town Manager.

The procedures for lowering and raising flags on Town property are as follows. a. The Town Council will establish the Flag Policy. The Town Manager and his or her designee will provide direction for flag status, and act as the final authority for the application of the policy according to federal and state declarations. b. The Town Manager’s Office is responsible for the day-to-day operation of administering direction for flag status.

ITEM NO. 12.

TITLE: Flag Policy PAGE:
3 of 4
POLICY NUMBER:
5-02

GOVERNMENT SPEECH AND USE OF TOWN FLAGPOLES
Flagpoles located on Town-owned property are reserved exclusively for official governmental expression and are not intended to serve as a forum for private or public expression. Any flag displayed pursuant to this Policy represents the official sentiments of the Town and constitutes government speech. Nothing in this Policy shall be interpreted to create a public forum or limited public forum for private expression, nor shall it be construed to grant any individual or organization the right to require the Town to display a flag. The Town retains full control and discretion over the selection, approval, and display of any flag flown on Town property.

1. Authorization
A commemorative flag may be displayed only when all of the following conditions are met:
a. The display is initiated by a member of the Town Council. b. The display is approved by resolution of the Town Council at a duly noticed public meeting.
c. The approving resolution expressly determines that the display constitutes government speech and relates to a legitimate governmental interest consistent with the Town’s adopted strategic priorities and policies.

The Town Council retains sole discretion to approve or deny any proposed commemorative flag display.

2. Location
Commemorative flags may be displayed only at a single designated flagpole within the Town Hall complex. No other Town facility, building, park, street, or location shall be used for commemorative flag display.

3. Duration
The duration of any commemorative flag display shall be limited to a defined period stated in the approving resolution and shall not exceed thirty-one (31) consecutive days. Each commemorative flag display requires separate Council action and approval by resolution.

Approval of a commemorative flag for one occasion does not obligate the Town to approve the same or any other flag in the future.

4. Precedence
At all times, the United States Flag and the California State Flag shall maintain precedence consistent with federal and state law. Any commemorative flag shall be displayed in a position subordinate to those flags.

ITEM NO. 12.

TITLE: Flag Policy PAGE:
4 of 4
POLICY NUMBER:
5-02
APPROVED AS TO FORM:

Gabrielle Whelan, Town Attorney

ITEM NO. 12.

PREPARED BY: Chris Constantin
Town Manager
Reviewed by: Town Manager, Assistant Town Manager, Town Attorney, and Finance Director 110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 2/17/2026
ITEM NO: 13
DATE: February 17, 2025
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Adopt a Resolution Authorizing the Display of the Progress Pride Flag at Town Hall During the Month of June 2026
RECOMMENDATION: Adopt a Resolution authorizing the display of the Progress Pride Flag at Town Hall during the month of June 2026, consistent with the Town’s amended Flag Policy permitting commemorative flags when initiated and approved by the Town Council by resolution and constituting government speech.

FISCAL IMPACT:

The fiscal impact is limited to the purchase of one Progress Pride Flag and routine installation.

The estimated cost for the purchase should be under $200, depending on size and material, and installation will be performed by existing staff. Funding will be absorbed within the adopted Fiscal Year 2025-26 operating budget. No additional appropriation is required.

STRATEGIC PRIORITY:

This action aligns with the Town Council Strategic Priority for 2025-2027 to ensure all residents and visitors feel a sense of belonging in Los Gatos.

BACKGROUND:

On December 16, 2025, the Town Council considered an agenda item regarding potential modification of the Town’s Flag Policy to address commemorative flags. At the meeting, a motion was made to direct staff to return with a commemorative flag policy allowing the display of a commemorative flag and to bring forward a Progress Pride flag resolution.

Additionally, an amended request was made for staff to research policies from other Santa Clara County cities. The motion passed by a vote of 4 in favor and 1 opposed.

ITEM NO. 13.

PAGE 2 OF 4
SUBJECT: Resolution for the Pride Flag
DATE: February 17, 2026
Results of Santa Clara County Policy Review
Staff reviewed flag display policies from 10 Santa Clara County jurisdictions for which policy documents were obtained. Of the jurisdictions reviewed:
 Five jurisdictions have formalized Pride flag displays through Council resolution or an annual commemorative flag calendar, including Milpitas, Morgan Hill, Mountain View, San José, and Sunnyvale. In each case, display of the Pride or Progress Pride flag is authorized by formal Council action and is limited in duration and location.  Three jurisdictions allow commemorative or ceremonial flags by Council resolution under a government speech framework, but do not establish automatic or standing Pride flag displays in their base policies. These cities included Gilroy, Los Altos, and Los Altos Hills. In these cities, any Pride flag display would require separate Council approval.
 One jurisdiction, Santa Clara, limits flag displays to governmental and narrowly defined ceremonial flags approved by resolution and does not establish an automatic Pride flag display in its base policy.
 One jurisdiction, Campbell, does not provide for commemorative flag displays on flagpoles but recognizes Pride Month through its Water Tower lighting policy rather than by raising a Pride flag.

The policies reviewed consistently affirm that municipal flagpoles are not public forums and that any commemorative flag display constitutes government speech. Where Pride flags are displayed, they are authorized by formal Council action, are limited in duration, and are displayed at designated civic locations, most commonly City Hall.

A separate item on the February 17, 2026, agenda amends the Town’s Flag Policy to allow commemorative flags when initiated by a Councilmember and approved by resolution as government speech. Adoption of that policy amendment in the previous item establishes a consistent framework for Council consideration of specific commemorative flags as an element of government speech.

This item represents the culmination of the December 16, 2025, direction and presents the requested Progress Pride flag resolution for Council consideration.

DISCUSSION:

Government Speech Framework
Under the established First Amendment doctrine, including the United States Supreme Court decision in Shurtleff v. City of Boston, 596 U.S. 243 (2022), when a municipality selects and

ITEM NO. 13.

PAGE 3 OF 4
SUBJECT: Resolution for the Pride Flag
DATE: February 17, 2026
displays flags on its own flagpoles, the display constitutes government speech rather than private expression, provided the municipality maintains control over the message conveyed.

The amended Flag Policy affirms that Town flagpoles are not public forums and are reserved for official governmental expression. This resolution expressly finds that the display of the Progress Pride Flag constitutes government speech and does not create a forum for private expression.

In executing the direction of the Council, Attachment 1 provides direction and authorization to display the Progress Pride Flag. The Progress Pride Flag incorporates additional colors to the Pride Flag in a chevron pattern to emphasize inclusion of marginalized communities, including people of color and transgender individuals.

Through this resolution, the Town Council would determine that displaying the Progress Pride Flag during the month of June 2026 expresses the Town’s commitment to inclusion, equity, and belonging and aligns with one of the Town’s strategic priorities.

Display of the Commemorative Flag
If approved, the display will be at Town Hall, 110 E. Main Street, during the month of June 2026.

The Progress Pride Flag will be displayed in a subordinate position consistent with the United States Flag Code and Town policy. Staff will obtain a compliant Progress Pride Flag, install and display the flag for the month of June 2026.

COORDINATION:

Not Applicable.

ENVIRONMENTAL ASSESSMENT:

This action constitutes an administrative activity and does not involve construction or physical changes to the environment. Under CEQA Guidelines section 15378(b), adoption of internal governmental policy and authorization of flag display is not a project. Alternatively, the action is exempt under CEQA Guidelines section 15061(b)(3), as it can be seen with certainty that no environmental impact will result.

CONCLUSION:

On December 16, 2025, the Town Council directed staff to return with a commemorative flag policy and a Pride flag resolution. The amended Flag Policy presented under a separate agenda item establishes a framework allowing commemorative flags when initiated and approved by the Council through formal resolution.

ITEM NO. 13.

PAGE 4 OF 4
SUBJECT: Resolution for the Pride Flag
DATE: February 17, 2026
Adoption of the attached resolution would authorize display of the Progress Pride Flag at Town Hall during the month of June 2026, as an exercise of government speech consistent with the amended policy and the Town’s Strategic Priorities.

ATTACHMENT:

1. Resolution Authorizing Display of the Progress Pride Flag

ITEM NO. 13.
1 of 2 ATTACHMENT 1
RESOLUTION 2026 -xxxx

A RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS AUTHORIZING THE

DISPLAY OF THE PROGRESS PRIDE FLAG AS GOVERNMENT SPEECH WHEREAS, the Town of Los Gatos displays the United States flag, the California State flag, and the Town flag on flagpoles located at Town facilities; and WHEREAS, on December 16, 2025, the Town Council acted to direct staff to return with a Flag policy authorizing the erecting of commemorative flags and to return with a resolution authorizing raising the Progress Pride Flag for the month of June 2026; and WHEREAS, the Town Council has determined that its flagpoles are not intended to serve as a forum for free expression by the public, but rather as a means for the Town to express its own official sentiments (Government Speech); and
WHEREAS, the first Pride flag was created by American artist and gay rights activist Gilbert Baker in 1978 to be a symbol for the LGBTQ+ community; and WHEREAS, the Progress Pride Flag, designed by Daniel Quasar in 2018, adds a chevron of black, brown, light blue, pink, and white stripes to the standard six-color Rainbow Flag to represent marginalized people of color, trans individuals, and those living with HIV/AIDS; and WHEREAS, the Town Council finds that the display of the Progress Pride Flag constitutes government speech in that the history and symbolism of the flag constitute a message of inclusion, equity, and diversity that the Town of Los Gatos desires to convey on behalf of its residents; and
WHEREAS, the display of this flag is consistent with the Town’s 2025-2027 strategic priority to “Ensure all residents and visitors feel a sense of belonging in Los Gatos, maintaining and enhancing the Town as a welcoming, family-oriented, safe, and inclusive community,” and does not convey any message promoting religion, political candidates, or commercial transactions.

NOW, THEREFORE, BE IT RESOLVED by the Town Council of the Town of Los Gatos as follows:

1. Authorization: The Town Manager is hereby authorized and directed to display the Progress Pride Flag on the official flagpole at Town Hall located at 110 E. Main Street, Los Gatos, CA during the month of June 2026.

2. Government Speech Finding: The Town Council expressly finds that this display is an exercise of the Town’s government speech, meets the Town’s governing interest in furthering its Strategic Priorities, and is not intended to create a public forum for private expression.

ITEM NO. 13.
2 of 2 ATTACHMENT 1

3. Precedence: The Progress Pride Flag shall be displayed in a position subordinate to the United States Flag and the California State Flag, in accordance with the United States Flag Code and Town policy.

PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California, held on the ____ day of __________ 2026, by the following vote:

COUNCIL MEMBERS:

AYES:

NAYS:

ABSENT:

ABSTAIN:

SIGNED:
_______________________________

MAYOR OF THE TOWN OF LOS GATOS

LOS GATOS, CALIFORNIA
ATTEST:
___________________________________

TOWN CLERK OF THE TOWN OF LOS GATOS

LOS GATOS, CALIFORNIA

ITEM NO. 13.

PREPARED BY: Kristina Alfaro
Administrative Services Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney 110 E. Main Street Los Gatos, CA 95030 ● 406-354-6832
www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 02/17/2026
ITEM NO: 14
DATE: February 11, 2026
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Receive the FY 205-26 Mid-Year Budget Report, including the FY 2025-26 Year End Projections
RECOMMENDATION: Staff recommends that the Town Council take the following actions regarding the Mid-Year Budget Performance Report - July 1 - December 31, 2025:
a. Receive the FY 2025-26 Mid-Year Budget Report, including the FY 2025-26 Year End Projections;
b. Authorize budget adjustments of $3,581,888 in estimated revenues and $1,350,141 in increases expenses as
recommended in the Mid-Year Budget Report; and
c. Receive the Town Five Year Financial Projection from FY 2026-27 to FY 2030-31.

FISCAL IMPACT:

As of the mid-year point of the fiscal year staff is recommending budget adjustments to ensure the revenues are reflective of the most current forecasts and expenses end the year within budget authority. Estimated revenues are recommended to increase by $3,581,888 and expenses are recommended to increase by $1,350,141.

STRATEGIC PRIORITY:

This initiative supports the Town’s strategic priority of ensuring prudent financial management to result in structurally balanced five-year forecasts and fully funded five-year Capital Improvement Plans, managing liabilities such as pension costs and leveraging the Town’s assets, efficiencies, partnerships, and revenue streams.

ITEM NO. 14.

PAGE 2 OF 5
SUBJECT: Receive the FY 205-26 Mid-Year Budget Report, including the FY 2025-26 Year End Projections
DATE: February 17, 2026
BACKGROUND:

The purposes of the Mid-Year Report (Attachment 1) are to provide the Town Council with the status of the adopted Fiscal Year (FY) 2025-26 Operating Budget after the first six months and to make adjustments to ensure the continuity of municipal services and operations for the remainder of the fiscal year. The Report is one of several periodic updates to the Town Council on the status of the current year’s revenues and expenditures and the projected financial condition of all Town funds compared with the Adopted Operating Budget. The updates primarily focus on the Town’s General Fund. An update to the Town’s five-year financial projections from FY 2026-27 to FY 2030-31 (Attachment 2) gives context for the FY 2026-27 budget development process and recommended budget approach.

Finance Commission Review
On February 9, 2026, the Finance Commission received the Mid-Year and Forecast Reports. The Commission discussed both items, and the staff answered the commissioners’ questions. The Commission recommended that the Town Council receive the mid-year report, the five-year forecast, and its assumptions. The Commission asked if the Vehicle Replacement Internal Service Fund expenditure reduction of $1.8M in deferred purchases should also result in expenditure reductions in the General or other funds that are charged for these expenses. Staff was able to confirm in the meeting that user departments are not charged the full budget amount as shown in the final budget document. Only about half of the vehicle/equipment fund expenses are charged out with existing fund balance/net position, making up the difference.

Upon further research, staff does not believe an expenditure adjustment is needed. This is due to how the vehicle fund is budgeted. Vehicles and equipment needing replacement are placed on a replacement schedule for out year expenses. Staff then apply charges to user departments by spreading the cost of replacement over several years. This results in a smoothing expense for departments over the useful life of the vehicle/equipment, with some years resulting in excess collections from the department versus actual costs spent. Excess collections result in additional fund balance/net position that is used in the out years to assist with smoothing costs.

The Commission noted a typo on page two of Attachment 1, which showed recommended expenditures at $3,575,371 instead of $3,581,888 that has been corrected.

The Commission asked what revenues made up the “Miscellaneous Other” category that is shown on the table in page 4 of Attachment 1. This category includes various minor miscellaneous revenue, but major revenues include Measure G proceeds, Pension Trust Fund contributions, and the sale of property.

Lastly, staff identified and has made a correction to the table on page 4 of Attachment 1 that had an incorrect adopted budget revenue total due to a double count of the “Debt Service – Entry Eliminated” line of $1,901,850. This revenue had also been included in the Miscellaneous

ITEM NO. 14.

PAGE 3 OF 5
SUBJECT: Receive the FY 205-26 Mid-Year Budget Report, including the FY 2025-26 Year End Projections
DATE: February 17, 2026
Other category; that line has now been reduced to $1,893,651 and includes the corrected table as Attachment 5. Total General Fund revenues now match the adopted budget.

DISCUSSION:

The FY 2025-26 Mid-Year Budget Report focuses on the General Fund and provides analyses of key revenues and expenditures, including historical data by Town Department/Service Area. It contains descriptions of recommended revenue and expenditure budget adjustments and financial summaries of other funds.

For FY 2025–26, the budget was balanced by incorporating a 4.6% vacancy factor, an additional $255,000 in pension benefit savings, potential revenue enhancements, tiered departmental reductions, and the use of $0.9 million in reserve funds. Current year-end projections indicate an anticipated surplus of $4.3 million when combining estimated operating revenues over expenditures. Of this amount, $3.0 million represents estimated proceeds from a one-time property sale.

In addition, departments are requesting $3,581,888 General Fund revenue budget adjustments and $1,350,141 expenditure budget adjustments. As discussed in greater detail later in this Report, the primary drivers of the projected surplus are increased revenue projections for property tax, sales tax, interest, business license tax, and permit revenues offset by increases in retiree health care expenditures, legal services, and various contractually obligated services.

Refer to Attachment 1 for additional details.

Five-Year Forecast:

The forecast provides summaries and analyses of the Town’s major revenues, including property tax, sales tax, business license tax, and transient occupancy tax (TOT). The Town highly depends on these four economically sensitive revenues, comprising about 65% of the General Fund forecasted revenues.

Updated growth assumptions are provided for each revenue source and the resulting projected revenues for the new forecast period. The revenue assumptions provided are informed by the County Tax Assessor, the Town’s sales tax consultant, and direct communication with the Town’s hospitality industry.

Forecasts of future operating expenditures consider two key factors: cost escalation and new operating expenditures. New operating expenditures refer to costs created by new or enhanced service programs approved during the annual budget process. Cost escalation refers to largely unavoidable increases in the cost of doing business. It includes inflation, multi-year contract costs, health care costs, and unfunded State mandates. Cost escalation also includes other unavoidable cost increases to a government organization, such as a rise in wages consistent with collective bargaining agreements and annual pension payments mandated by CalPERS.

ITEM NO. 14.

PAGE 4 OF 5
SUBJECT: Receive the FY 205-26 Mid-Year Budget Report, including the FY 2025-26 Year End Projections
DATE: February 17, 2026
The expenditure assumptions are contained in Attachment 2, pages 17-19. With changes made to assumptions since December 2025, listed on page 10.

The base case Five-Year Forecast (FY2026-27 – 2029-30) (page 2 Attachment 2) identifies reduced deficits for all future years, driven primarily by increased revenues because of updated sales tax projections. Revenue projections, even with the increased sales tax projections, continue to not keep pace with rising costs. Future discussions of revenue capacity to match expenditures and service levels will need to occur to address increasing pressure on Town finances.

Refer to Attachment 2 for additional details.

COORDINATION:

This report has been prepared in coordination with the Town Manager’s Office and the Town Attorney’s Office.

CONCLUSION AND NEXT STEPS:

Staff is continuing to monitor all revenues and expenditures during the preparation of the Proposed Operating and Capital Budgets for FY 2026-27. Should any additional budget adjustments be necessary to balance operating revenue and expenditures prior to the FY 2025- 26 close, Council would be asked to consider appropriate actions.

The preparation of the FY 2026-27 Operating and Capital Budgets is taking into account the Town’s current economic reality and long-term fiscal picture, as well as maintaining the Town’s high level of municipal services. Key budget principles include:
 Develop and recommend a balanced budget that maintains service levels.  Address projected deficits,
 Continue to make progress on Strategic Priorities identified by the Town Council; and  Identify opportunities to maintain or enhance service delivery through new revenue sources and technology.

The Draft FY 2026-27 Operating and Capital Budgets will be available on April 20, 2026, with the Council’s budget hearing tentatively scheduled for May 19, 2026.

Staff recommends that the Town Council approve the proposed revenue and expenditure budget adjustments, as described in Attachment 1.

ENVIRONMENTAL ASSESSMENT:

This is not a project defined under CEQA, and no further action is required.

ITEM NO. 14.

PAGE 5 OF 5
SUBJECT: Receive the FY 205-26 Mid-Year Budget Report, including the FY 2025-26 Year End Projections
DATE: February 17, 2026
Attachments:

1. Town Council FY 2025-26 Mid-Year Budget Report

2. Draft Updated FY 2026-27 Forecast with Forecast History Updated 2-6-2026

3. Revenue Forecast Assumptions

4. Expenditure Forecast Assumptions

5. Correction to General Fund Summary of Revenue and Expenditure Table

ITEM NO. 14.
1 ATTACHMENT 1

TOWN OF LOS GATOS

MID-YEAR BUDGET REPORT
JULY 1 - DECEMBER 31, 2025
February 11, 2026
FINANCIAL OVERVIEW AND EXECUTIVE SUMMARY: STATUS OF FY 2025-26

ADOPTED BUDGET
The purposes of the Mid-Year Report are to provide the Town Council with a status of the Adopted Fiscal Year (FY) 2025-26 Operating Budget after the first six months and to make any adjustments to ensure the continuity of municipal services and operations for the remainder of the fiscal year. The Report is one of several periodic updates to the Town Council on the status of the current year’s revenues and expenditures and the projected financial condition of all Town funds compared with the Adopted Operating Budget. The updates typically focus on the Town’s General Fund.

In February 2025, the Town Council determined the Strategic Priorities for 2025-2027, providing guidance to Town staff and Commissions on workload prioritization. This included prioritizing emergency preparedness, particularly regarding wildfire risks, ensuring prudent financial management, and preserving the community's unique small-town charm. Even with the budgetary challenges of the last several years, many of Council’s primary goals and priorities have been programmed in the FY 2025-26 Operating and Capital Budgets. Town Council will review its strategic priorities at its February 10, 2026, Special Meeting.

Staff has started budget development work for the next fiscal year, including updating the Five-Year Financial Forecast, identifying critical Town needs, contractual obligations, unfunded mandates, potential adjustments to the Fee and Fine Schedule, and other analyses. Staff is actively engaged in the FY 2025-26 budget process with the primary focus of ensuring that the available Town resources are allocated to meet the priority service needs of the community. The Town Council is tentatively scheduled to hold a public hearing on the Proposed FY 2026-27 Budget on May 19, 2026.

During FY 2024-25, the General Fund had an excess of revenues over expenditures of $5.7 million, excluding transfers. Transfers out exceeded transfers in by $1.2 million. The principal purpose of the Town’s interfund transfers was contributions toward capital projects ($1.1 million) and general liability ($0.06 million). Fund Balance in the General Fund increased by $4.7 million to $35.8 million at the close of the prior fiscal year. This increase includes $1.2 million unrealized gains from mark-to-market adjustment and a $0.7 million increase to the Town's restricted Pension Trust. The $1.2 million unrealized gain is an increase in the value of the asset that has not been sold and is not available for spending. In addition, the Council previously allocated $1.0 million for Emergency Management. Out of the $1.0 million, $31,400 were utilized in FY 2024-25; the rest will be spent in FY 2025-26 and future fiscal years.

ITEM NO. 14.
2 ATTACHMENT 1
For FY 2025–26, the budget was balanced by incorporating a 4.6% vacancy factor, an additional $255,000 in pension benefit savings, potential revenue enhancements, tiered departmental reductions, and the use of $0.9 million in reserve funds. Current year-end projections indicate an anticipated surplus of $4.3 million when combining estimated operating revenues over expenditures. Of this amount, $3.0 million represents estimated proceeds from a one-time property sale.

In addition, departments are requesting $3,581,888 General Fund revenue budget adjustments and $1,350,141 expenditure budget adjustments. As discussed in greater detail later in this Report, the primary drivers of the projected surplus are increased revenue projections for property tax, sales tax, interest, business license tax, and permit revenues offset by increases in retiree health care expenditures, legal services, and various contractually obligated services.

As mentioned earlier, the Town Council balanced the budget with a 4.6% vacancy factor. Staff continue to monitor each Department's budget because while overall Townwide General Fund savings are predicted due to vacancies, the individual Departments’ current personnel expenditure budgets may not be sufficient for the remainder of the year. Staff will recommend the necessary expenditure budget adjustments as needed.

Providing services to the community in this and future fiscal years will require strong revenue performance of the Town’s economically sensitive revenues to offset continued projected cost increases. The FY 2026-27 budget development process will endeavor to maintain essential public services while controlling operational costs and considering the five-year fiscal forecast, which predicts operating revenue shortfalls in subsequent fiscal years with certain assumptions.

ITEM NO. 14.
3 ATTACHMENT 1

CONTENT OVERVIEW
The remainder of this Report focuses on the General Fund and provides analyses of key revenues and expenditures, including historical data by Town Department/Service Area. The next section describes recommended revenue and expenditure budget adjustments. The Report also includes financial summaries of other funds, as well as a table of General Fund Operating Revenues Versus Operating Expenditures through the second quarter of FY 2025-26, including comparison information from the prior year.

GENERAL FUND FINANCIAL SUMMARIES AND ESTIMATES
The following table is the Schedule of General Fund Operating Revenues Versus Operating Expenditures for the second quarter of FY 2025-26, which includes comparison information from the prior year.

The FY 2025-26 Adopted Budget represents the original adopted budget.

The FY 2025-26 Adjusted Budget as of 12/31/2025column includes the adopted budget and items that the Council approved during the first two quarters of the fiscal year, such as additional funding for salaries and benefits, janitorial services, road closures related to special events, and miscellaneous carryover grants from the prior fiscal year.

The FY 2025-26 Estimated column contains projections of final balances for the current fiscal year based upon staff analysis, the early trends observed through the second quarter in sales tax and property tax projections, and the proposed mid-year adjustments as listed in this report. The FY 2025-26 Estimated figures also include an analysis of potential salary and other expenditure savings; however, budget adjustments are only recommended as identified in this Report.

Staff continues to fine-tune the detailed analysis of the FY 2025-26 year-end estimated revenue and expenditure numbers, and an update will be provided with the presentation of the Proposed Fiscal Year 2026-27 Operating Budget.

The table on the next page provides details of General Fund Revenues, Reserve Use, total Expenditures, and Reserve Allocations.

ITEM NO. 14.
4 ATTACHMENT 1
FY 2024-25 FY 2024-25
2Q % of
FY 2024-25
2Q % of
FY 2025-26 FY 2025-26 FY 2025-26 FY 2025-26 FY 2025-26
Actuals Q2 Actuals Adjusted
Budget
as of
12/31/2025
Q2 Adopted
Budget
Adjusted
Budget
as of
12/31/2025
Proposed
Mid-Year
Adjustments
Year End
Estimates
Including
Proposed
Mid-Year
Adjustments
Revenues
Property Tax $ 20,157,765 $ 6,687,445 33.2% 32.5% $ 6,981,476 $ 21,450,971 $ 21,450,971 $ 68,164 $ 21,519,135 VLF Backfill Property Tax 5,109,100 - 0.0% 0.0% - 5,377,328 5,377,328 28,672 5,406,000 Sales & Use Tax 6,992,336 2,082,120 29.8% 32.2% 2,138,351 6,639,081 6,639,081 1,207,436 7,840,000 Measure G Sales & Use Tax 1,338,642 428,741 32.0% 33.5% 435,464 1,298,825 1,298,825 30,175 1,329,000 Franchise Fees 1,057,484 113,842 10.8% 9.8% 101,773 1,043,730 1,043,730 (34,892) 1,008,838 Transient Occupancy Tax 2,417,630 941,711 39.0% 31.0% 749,774 2,422,390 2,422,390 (166,585) 2,255,805 Business License Tax 2,975,721 153,569 5.2% 16.0% 399,756 2,493,992 2,493,992 107,508 2,601,500 Licenses & Permits 6,681,607 2,983,426 44.7% 60.1% 3,800,214 6,322,712 6,322,712 689,959 7,014,459 Intergovernmental 1,357,593 796,630 58.7% 72.3% 778,450 838,936 1,076,042 (38,691) 1,307,778 Town Services 5,749,945 3,732,385 64.9% 88.4% 5,285,486 5,736,735 5,980,545 967,821 6,957,561 Fines & Forfeitures 420,127 187,733 44.7% 73.4% 231,288 315,200 315,200 (3,000) 312,775 Interest 1,949,418 374,836 19.2% 39.2% 615,033 1,567,774 1,567,774 345,487 1,913,261 GASB 31 to Market 1,201,824 - 0.0% - - - - -
Use of Property 76,161 - 0.0% - - - - -
Miscellaneous Other 190,104 533,750 280.8% 14.1% 270,499 3,795,501 1,920,471 379,834 1,533,255 Other Taxes - Park Construction Tax 5,004 - - -
Sale of Property - - 3,000,000 - 3,000,000
Total Revenues $ 57,680,461 $ 19,016,188 $ 21,787,564 $ 59,303,175 $ 60,909,061 $ 3,581,888 $ 63,999,367 Debt Service - Entry Eliminated for ACFR 1,902,300 - 0.0% 0.0% - 1,901,850 1,901,850 - 1,901,850 Planning Pass Through
Services - Entry
Eliminated for ACFR 79,400 - - - - - -
Pension Trust Income -
Entry Eliminated for
ACFR 690,000 - - - - - -
Measure G for
Operations - Entry
Eliminated for ACFR 652,396 - - - - - -
Other Financial Sources
Fund Transfer In $ 812,411 $ - 0.0% 0.0% $ - $ 562,411 $ 562,411 $ - $ 562,411 Total Revenues & Transfers In$ 61,816,968 $ 19,016,188 31% 34% $ 21,787,564 $ 61,767,436 $ 63,373,322 $ 3,581,888 $ 66,463,628 Expenditures
Town Council $ 222,954 $ 104,644 46.9% 49.7% $ 110,352 $ 222,115 $ 222,115 $ - $ 233,667 Attorney 1,076,252 398,986 37.1% 50.3% 594,515 830,884 1,180,884 100,000 1,293,243 Administrative Services 6,428,009 3,161,963 49.2% 40.5% 3,367,328 7,338,116 8,308,150 153,305 7,245,642 Non- Departmental 3,157,197 1,641,596 52.0% 24.1% 1,391,498 5,345,295 5,775,829 300,191 5,977,662 Community Development 5,637,743 2,646,092 46.9% 50.1% 3,020,911 6,021,135 6,027,635 502,500 6,368,565 Police 20,827,880 10,269,947 49.3% 46.2% 10,992,545 23,504,430 23,768,356 93,370 23,095,918 Parks & Public Works 10,717,232 4,920,014 45.9% 43.5% 5,068,319 11,404,963 11,653,693 200,775 11,649,244 Library 3,568,498 1,722,056 48.3% 47.8% 1,747,675 3,655,823 3,655,823 - 3,652,651 Capital Outlay 65,000 - - - - - -
Principal 206,380 - - 156,034 - - 156,034
Interest and Fees 41,403 - - - - - -
Total Department Expenditures $ 51,948,548 $ 24,865,298 48% 43% $ 26,293,143 $ 58,478,795 $ 60,592,485 $ 1,350,141 $ 59,672,626 Debt Service - Entry
Eliminated for ACFR $ 1,902,300 $ - 0.0% 0.0% $ - $ 1,901,850 $ 1,901,850 $ - $ 1,901,850 Transfer to Pension
Trust Fund - Entry
Eliminated for ACFR 690,000 - - - - - -
Measure G Transfer -
Entry Eliminated for
ACFR 652,396 - - - - - -
Other Financing Uses
Transfers Out $ 1,843,080 $ - 0.0% $ - $ - $ - $ - $ -
Total Additional Non-Departmental Expenditures $ 5,087,776 $ - 0% 0% $ - $ 1,901,850 $ 1,901,850 $ - $ 1,901,850 Total Operating Expenditures $ 57,036,324 $ 24,865,298 44% 42% $ 26,293,143 $ 60,380,645 $ 62,494,335 $ 1,350,141 $ 61,574,476 Excess (Deficiency) of
Revenues Over
Expenditures $ 5,731,913 $ (5,849,110) $ (4,505,579) $ 824,380 $ 316,576 $ 2,231,747 $ 4,326,741

GENERAL FUND

SUMMARY OF REVENUES AND EXPENDITURES
*FY 2024-25 and FY 2025-26 2Q Net Operating Revenues are negative because some revenues budgeted for the entire fiscal year are received in the third or fourth quarters

ITEM NO. 14.
5 ATTACHMENT 1
GENERAL FUND - KEY REVENUE ANALYSIS FY 2025-26
The following information provides a recap of the General Fund budgeted significant revenue sources, including estimated year end collection as of the second quarter ending December 31, 2025. Staff is monitoring developments in each major revenue source closely for potential adjustments to budgeted revenues as recommended in this Report.

ITEM NO. 14.
6 ATTACHMENT 1
Property Tax and Motor Vehicle in Lieu Fee (VLF)
Property tax and VLF are the single largest revenue sources for the Town and comprise approximately

42.09% of total Town General Fund estimated revenues for FY 2025-26. Property tax is levied by the Santa Clara County Assessor’s Office at 1% of a property’s assessed value, of which the Town receives approximately 9.3 cents per dollar paid on property located within the municipal limits of Los Gatos. In compliance with Proposition 13, the assessed value of real property is based on the 1975/76 assessment roll value, adjusted by a 2% inflation factor annually thereafter. However, when property changes hands or new construction occurs, it is reassessed at its current market value.

The County of Santa Clara provides property tax collection updates and projections throughout the year.

The current County estimate shows a $96,836 increase in estimated collections over the Adopted Budget.

Property tax distributions are largely received in the third and fourth quarters. Second-quarter receipts are trending similarly to those received during the second quarter of the previous fiscal year and are at 27% of budgeted totals. Based on current County projections, staff recommends a $96,836 increase in estimated General Property Tax and Motor Vehicle in Lieu Fee collections.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
2nd Quarter Actual Revenues $ 5,761,081 $ 6,155,317 $ 6,446,869 $ 6,687,445 $ 6,981,476 Fiscal Year Total Actual Revenues $ 21,129,080 $ 22,743,088 $ 24,227,166 $ 25,266,865 Fiscal Year Total Estimated Revenues $ 26,925,135
Fiscal Year Budgeted Revenues $ 20,138,320 $ 22,484,118 $ 23,938,717 $ 25,102,070 $ 26,828,299 2nd Quarter Percent of Total 27% 27% 27% 27% 26%
Recommended Budget Revision $ 96,836
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
$22,000,000
$24,000,000
$26,000,000
$28,000,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Property Tax and VLF - Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues Fiscal Year Budgeted Revenues Fiscal Year Total Estimated Revenues

ITEM NO. 14.
7 ATTACHMENT 1
Sales Tax
Sales tax is the second largest revenue source for the Town’s General Fund, accounting for 14.3% of budgeted General Fund projected revenues for FY 2025-26. The Town currently receives 1.125 cents for every 9.125 cents of sales tax paid per dollar on retail sales and taxable services transacted within Los Gatos, including the Town of Los Gatos residents’ approved ballot Measure G in 2018 enacting a oneeighth cent (0.125%) district sales tax for 20 years.

Sales tax estimates are based on actual sales tax data and annual sales tax estimates for five years provided by the Town’s sales tax consultant, HdL. In addition to brick-and-mortar sales tax generation, the HdL estimates include several online sales tax projections. Regular sales tax collected through online transactions are distributed through the Santa Clara County pool for which the Town receives a pro rata share of the sales tax generated in Santa Clara County for that particular quarter. The Town directly receives the one-eighth district tax portion of the sales tax generated by the residents of Los Gatos.

Current total sales tax estimates are estimated at $7,846.517 (a $1,207,436 increase from the Adopted Budget) in proceeds from regular sales tax and $1,329,000 (a $30,175 increase) in proceeds from the Measure G one-eighth cent district tax. Actual receipts net of administrative fees collected by the State will be confirmed at the close of the fiscal year.

While FY 2025-26 second quarter receipts are trending in line with those in the same period last fiscal year, staff recommends a $1,237,611 budget increase to reflect the HdL's current estimates that are driven by new businesses and updated forecast based on most recent collection for 2025 quarter 3 collection which are collections from Jul through September.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
2nd Quarter Actual Revenues $ 2,556,341 $ 2,825,421 $ 2,665,060 $ 2,510,861 $ 2,573,815 Fiscal Year Total Actual Revenues $ 8,483,673 $ 8,806,477 $ 8,071,735 $ 8,330,978 Fiscal Year Total Estimated Revenues $ 9,175,517
Fiscal Year Budgeted Revenues $ 8,671,606 $ 8,959,134 $ 7,881,069 $ 7,841,645 $ 7,937,906 2nd Quarter Percent of Total 30% 32% 33% 32% 32%
Recommended Budget Revision $ 1,237,611
$ 322,804 $ (734,742) $ 259,243 $ 844,539

3.81% -8.34% 3.21% 10.14%
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Sales Tax & Measure G Tax - Quarterly and Annual Revenues 5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues Fiscal Year Budgeted Revenues Fiscal Year Total Estimated Revenues

ITEM NO. 14.
8 ATTACHMENT 1
Franchise Fees
Franchise fees are collected by the Town for the privilege of operating a utility service within Los Gatos, and as a fee in lieu of a business license tax. Franchise fees are currently received from Comcast for cable television, PG&E for gas and electric services, and AT&T and Comcast for video services. Franchise fees represent 1.6% of projected General Fund revenues in FY 2025-26.

Historically, franchise payments are not remitted equally throughout the fiscal year; therefore, second quarter receipts are not necessarily predictive of future receipts. Total franchise fee revenues are trending lower than those of the second quarter in FY 2025-26.

The Town serves on the Board of the West Valley Solid Waste Management Authority (WVSWMA), a Joint Powers Authority that oversees solid waste contracts. Following a recent Franchise Fee Valuation Study, the new agreement reclassified the Franchise Fee Payment as an Encroachment Permit because collection vehicles use Town streets. Starting with FY 2024–25, revenue previously recorded under Franchise Fees is now reported under Licenses and Permits. While collections are expected to remain consistent with prior years, this change affects how revenues are categorized.

Comcast franchise fees are trending below budget due to the growing shift from traditional broadcasting to streaming services, while PG&E franchise fees are trending above budget. To reflect the combined impact of these trends, staff recommends a $34,892 budget decrease in the Franchise Fee category.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
2nd Quarter Actual Revenues $ 968,181 $ 1,044,055 $ 1,079,717 $ 113,842 $ 101,773 Fiscal Year Total Actual Revenues $ 2,822,515 $ 3,074,624 $ 2,547,011 $ 1,057,484 Fiscal Year Total Estimated Revenues $ 1,008,838
Fiscal Year Budgeted Revenues $ 2,514,020 $ 2,716,470 $ 3,308,703 $ 1,013,330 $ 1,043,730 2nd Quarter Revenue Percent of Total 34% 34% 42% 11% 10% Recommended Budget Revision $ (34,892)
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Franchise Fees - Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues Fiscal Year Budgeted Revenues Fiscal Year Total Estimated Revenues

ITEM NO. 14.
9 ATTACHMENT 1
Business License Tax
The Town requires all businesses located within Los Gatos and/or those that operate within Los Gatos to obtain a business license. The amount of business license tax paid by each business is based on its business activity. In November 2022, Los Gatos voters approved Measure J, which modernized the Town’s business license tax program. This was the first update to the program since 1991, strengthening funding for core Town services that benefit Town businesses. Measure J included a 30% increase on flat rate fees, a 40% increase in retailing gross receipts, and a 120% increase in e-commerce, manufacturing, and wholesaling gross receipts. Fees for activities such as wholesale sales and manufacturing are charged on a sliding scale based on gross receipts, as is retail, with retail being capped at $1,365. These gross receipt activities account for approximately 25% of annual business licenses, while the remaining 75% are flat fee businesses. Annual renewal payments are due on January 2 of each year. Payments for new flat-fee-based businesses are prorated by quarter.

The Town is partnering with HdL Companies (HdL) to provide dedicated business license support to Los Gatos businesses. The Town’s business license application and renewal process is now streamlined by offering online business license applications and renewals. FY 2025-26 collection is forecasted at $2.6 million based on current business license activities.

Staff anticipate collecting the majority of the business license revenue during the third quarter. Business license tax revenue projections provided by HdL are trending higher than the adopted budget due to current business license activities. Staff is recommending a $107,508 increase to this revenue source.

FY 21-22 FY 22-23 FY 23-24 FY 24-25
2nd Quarter Actual Revenues $ 167,942 $ 97,974 $ 352,611 $ 153,569 $ 399,756** Fiscal Year Total Actual Revenues $ 1,481,667 $ 2,361,862 $ 1,519,960 $ 2,975,721 Fiscal Year Total Estimated Revenues $ 2,601,500
Fiscal Year Budgeted Revenues $ 1,425,000 $ 2,310,110 $ 2,429,419 $ 2,839,958 $ 2,493,992 2nd Quarter Revenue Percent of Total 11% 4% 23% 5% 15%
Recommended Budget Revision $ 107,508
FY 25-26
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
$2,200,000
$2,400,000
$2,600,000
$2,800,000
$3,000,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Business License Tax - Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues Fiscal Year Budgeted Revenues Fiscal Year Total Estimated Revenues

ITEM NO. 14.
10 ATTACHMENT 1
Transient Occupancy Tax
TOT is an important revenue source for the Town and comprises approximately 3.5% of the total Town's estimated revenues in the amount of $2.3 million for FY 2025-26. The Town levies a 12% transient occupancy tax (TOT) on all hotel and motel rooms within the municipal limits of Los Gatos. The 12% rate has been in effect since January 1, 2017, after the voters approved a ballot measure to increase the TOT from 10% to 12% during the November 8, 2016, election.

During the pandemic, TOT experienced the most significant percentage decline relative to historically adopted budgets. Due to a significant rebound in leisure “staycation” travel and modest improvements in business travel, TOT collections are trending lower than the prior year due to one of the hotel closures.

Staff recommends a $166,585 revenue budget decrease in this category.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
2nd Quarter Actual Revenues $ 711,861 $ 875,715 $ 819,683 $ 941,711 $ 749,774 Fiscal Year Total Actual Revenues $ 1,895,064 $ 2,228,190 $ 2,367,653 $ 2,417,630 Fiscal Year Total Estimated Revenues $ 2,255,805
Fiscal Year Budgeted Revenues $ 1,475,000 $ 2,348,547 $ 2,262,528 $ 2,332,419 $ 2,422,390 2nd Quarter Revenue Percent of Total 38% 39% 35% 40% 31% Recommended Budget Revision $ (166,585)
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
TOT - Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues Fiscal Year Budgeted Revenues Fiscal Year Total Estimated Revenues

ITEM NO. 14.
11 ATTACHMENT 1
Interest Income
The Town earns interest income by investing monies not immediately required for daily operations in a number of fixed income and money market instruments. These investments are made within the parameters stated in the Town Council’s Investment Policy and State regulation. The Town’s investment goal is to protect the safety of its funds, maintain liquidity, and achieve a competitive rate of return.

Interest income revenue is primarily dependent on two factors: the cash balance in the Town’s investment portfolio and the yield on those funds.

As of December 31, 2025, the Town’s weighted portfolio yield for investments under management was

4.24%, which was 21 basis point above the Local Agency Investment Fund (LAIF) yield of 4.03% for the same reporting period. Currently, the LAIF portfolio’s weighted average maturity (WAM) is 244 days versus the Town’s longer WAM of 643 days. The longer WAM for Town assets under management reflects the Town’s strategy to take advantage of higher yields associated with longer maturities balanced with shorter-term yields available on investments held with the State’s LAIF. The Town’s weighted average rate of return on investments under management of 4.24% at the close of December was 3 basis points lower when compared to the prior month’s return of 4.27% reported as of November 30, 2025.

Interest is trending higher than prior year actuals. Staff is recommending $345,487 revenue budget increase in the General Fund interest collection.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
2nd Quarter Actual Revenues $ 227,164 $ 145,003 $ 235,922 $ 374,836 $ 615,033 Fiscal Year Total Actual Revenues $ 610,975 $ 602,592 $ 986,489 $ 1,949,418 Fiscal Year Total Estimated Revenues $ 1,913,261
Fiscal Year Budgeted Revenues $ 441,233 $ 670,021 $ 1,566,384 $ 1,427,333 $ 1,567,774 2nd Quarter Revenue Percent of Total 37% 24% 24% 19% 39% Recommended Budget Revision $ 345,487
* GASB 31 Market Adjustment and GASB 87 Lease Interest are not Included $-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Interest - Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues Fiscal Year Budgeted Revenues Fiscal Year Total Estimated Revenues

ITEM NO. 14.
12 ATTACHMENT 1
Charges for Services
Town Service revenues consist primarily of planning, building, inspections, and engineering fees assessed on local building and development activity. Development fees and charges are assessed based on cost recovery formulas, which reflect the approximate costs of providing these regulatory services. This category includes charges for the Monte Sereno police services, the School Resource Officer and crossing guard services.

Second quarter Town Service revenues, particularly Charges for Services, are trending higher compared to the same period in the previous fiscal year. Development fees are typically collected in advance for projects but recognized as revenue in the fiscal year when the work is performed. Fiscal year estimated revenues include all line items within this category. To reflect increased planning and engineering activities, staff recommends a budget increase of $967,821 in selected items, as detailed in the Budget Adjustment section of this report. Of this amount, $615,500 relates to development pass-through activities, which will have corresponding expenditure budget adjustments, resulting in a net-neutral impact to the General Fund balance.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
2nd Quarter Actual Revenues $ 3,906,577 $ 3,284,766 $ 3,934,979 $ 3,732,385 $ 5,285,486 Fiscal Year Total Actual Revenues $ 5,310,271 $ 4,646,705 $ 5,913,520 $ 5,749,945 Fiscal Year Total Estimated Revenues $ 6,880,420
Fiscal Year Budgeted Revenues $ 4,249,239 $ 5,540,465 $ 4,715,797 $ 5,168,933 $ 5,980,545 2nd Quarter Revenue Percent of Total 74% 71% 67% 72% 77% Recommended Budget Revision $ 967,821
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
$5,500,000
$6,000,000
$6,500,000
$7,000,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Charges for Services - Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues Fiscal Year Total Estimated Revenues Fiscal Year Total Estimated Revenues

ITEM NO. 14.
13 ATTACHMENT 1
Licenses and Permits
Licenses and Permits consist mainly of planning, engineering, and building permit fees which are collected by the Town to offset administrative costs associated with evaluating development proposals to ensure compliance with codes and policies.

Second quarter License and Permit revenue is trending 54% of budgeted revenue. Fiscal Year estimated revenues includes all revenue line items in this category. Staff recommends a $689,959 increase in selected items in this category as explained in the next section of this Report.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
2nd Quarter Actual Revenues $ 3,373,287 $ 1,602,633 $ 1,777,085 $ 2,983,426 $ 3,800,214 Fiscal Year Total Actual Revenues $ 4,814,650 $ 3,268,498 $ 3,993,247 $ 6,681,607 Fiscal Year Total Estimated Revenues $ 5,789,497
Fiscal Year Budgeted Revenues $ 3,052,907 $ 2,830,574 $ 3,255,155 $ 6,247,213 $ 7,014,459 2nd Quarter Revenue Percent of Total 70% 49% 45% 48% 54% Recommended Budget Revision $ 689,959
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
$5,500,000
$6,000,000
$6,500,000
$7,000,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Licenses & Permits - Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues Fiscal Year Total Estimated Revenues Fiscal Year Total Estimated Revenues

ITEM NO. 14.
14 ATTACHMENT 1
GENERAL FUND – EXPENDITURE ANALYSIS
For FY 2025–26, General Fund operating expenditures (excluding debt payments) are programmed at $58.3 million. The delivery of Town services is highly dependent on personnel, which accounts for 68.6% of the budgeted General Fund operating expenditures for the fiscal year. Throughout the year, the Town Council has approved several budget adjustments, which are tracked against the Adopted Budget to form the Adjusted Budget. General Fund expenditure totals are trending in line with the Adjusted Budget, with total operational expenditures at the end of the second quarter at approximately 46% of the Adjusted Budget. With six months of data now available, staff anticipate that some departmental expenditure budgets may not be sufficient for the remainder of the year. If necessary, staff will recommend additional expenditure budget adjustments, which may require future Council action.

Salaries and Benefits
As with most municipalities, services are provided directly by employees to the Town’s residents, businesses, and visitors. As a service delivery enterprise, the cost of salaries and benefits is a significant portion of the budget. As the table below illustrates, at mid-year, actual salaries are trending at 46% of budgeted salaries; overtime is trending at 84% of the Adjusted Budget; and pension benefits and other benefits are trending at 43% and 42% of the Adjusted Budget, respectively.

The FY 2025-26 budget was balanced including 4.6% vacancy factor and $255,000 pension benefit savings, while Council directed that staff continue to hire for all vacant positions. The 4.6% salary and benefit savings represents approximately $2.2 million projected savings. Current year end general Fund salaries and benefits expenditure estimates include about $1.1 million salary savings compared to the adjusted budget that already inlcudes the projected savings. Fully staffed Departments are trending over budget due to the 4.6% vacancy factor that was built in. Staff will continue to monitor the Salaries and Benefits and request adjustment as needed to ensure that all programs remain within its allocated budget before Fiscal Year end.

Vacancy Factor Evaluation
FY 2023-24
FY 2023-24 presented the first year when the budget was balanced with the 4.6% vacancy factor. For FY 2023-24 the final General Fund salaries and benefits budgets of $35,611,692, include a negative $1,670,530 original salary savings and a positive $714,666 budget restoration for Departments that were fully staffed. In addition, the General Fund had $1,041,299 salaries and benefits savings. While individual Departments had various savings, the Townwide General Fund salaries and benefits savings would translate to 5.5% increase if all positions are budgeted without vacancy savings factors.

FY 2024-25
Actuals
FY 2024-25
2Q
2Q % of
FY 2024-25
Actuals
2Q % of
FY 2025-26
Adjusted
Budget
FY 2025-26
2Q
FY2025-26
Estimated
FY 2025-26
Adjusted
Budget
FY 2025-26
Adopted
Budget
Salaries $ 22,368,951 $ 10,910,118 49% 48% $ 11,100,505 $ 23,405,209 $ 23,182,932 $ 23,182,932 Overtime $ 1,333,709 $ 747,234 56% 84% $ 595,047 $ 1,384,604 $ 704,376 $ 657,310 Pension Benefits $ 8,262,903 $ 4,051,720 49% 43% $ 4,299,360 $ 8,790,965 $ 9,907,119 $ 9,907,119 Other Benefits $ 4,948,141 $ 2,413,604 49% 42% $ 2,620,451 $ 5,349,271 $ 6,265,770 $ 6,265,770 Total Salary & Benefit $ 36,913,704 $ 18,122,676 49% 46% $ 18,615,363 $ 38,930,049 $ 40,060,197 $ 40,013,131 General Fund Salaries & Benefits

ITEM NO. 14.
15 ATTACHMENT 1
FY 2024-25
During Fiscal Year 2024–25, the Town’s revised General Fund salaries and benefits budget totaled $38,441,072, including a negative adjustment of $1,798,984 to reflect anticipated vacancy savings based on a 4.6% vacancy saving rate. Actual expenditures for salaries and benefits amounted to $36,913,705.

However, several departments remained fully staffed throughout the fiscal year and did not realize vacancy-related savings. In response, the Town Council authorized budget adjustments for these departments, allowing for a partial restoration of the previously reduced budget—up to the full amount of the anticipated vacancy savings.These budget adjustments totaled $300,304, increasing the final adjusted budget to $38,741,376. With this adjustment, the final budget savings increased to $1,827,671, representing the difference between the adjusted budget and actual expenditures.

Note: If the original 4.6% vacancy savings factor had not been applied, the “full” budget would amount to ($38,441,078 + $1,798,984), the Town would have realized total savings of $3,305,656 equating to an

8.96% vacancy savings rate.

The FY 2024-25 budget included a significant hire ahead budget for the Police Department. Those hire ahead funding were not included in the FY 2025-26 adopted budget, so staff recommends to keep the

4.6% vacancy factor at this time.

The pie chart below represents the Departmental proportion of the Town’s General Fund estimated operating expenditures. The subsequent pages review program expenditures and any anticipated savings are provided for each program. Also provided are historical program costs, year over year (YOY) percentage changes in actual expenditures, and five-year average changes per the Finance Commission’s suggestion. YOY percentage changes are, in many cases, impacted by the timing of one-time expenditures that occur during the fiscal year. Historical analysis has been provided in selected cases to provide explanations for some of the fluctuations between fiscal years. The FY 2025-26 estimated figures also include analysis on potential salary and other expenditure savings; however, budget adjustments are only recommended as identified in this Report.

ITEM NO. 14.
16 ATTACHMENT 1
Town Council
The Town Council is the elected legislative body that represents the residents and provides policy direction for the delivery of services and capital improvements for the Town of Los Gatos. Town Council expenditures are trending higher than the same quarter in the prior year. Total estimated expenditures are also trending higher than budget because this Department is fully staffed. Staff will monitor this program and request a budget adjustment, if necessary, before Fiscal Year end.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Second Quarter Actual Expenditures $ 91,800 $ 92,674 $ 98,255 $ 104,644 $ 110,352 Fiscal Year Total Actual Expenditures $ 189,569 $ 186,337 $ 196,368 $ 222,954 Fiscal Year Total Estimated Expenditure $ 222,115
Fiscal Year Budgeted Expenditures $ 202,891 $ 217,238 $ 197,261 $ 219,814 $ 222,115 Second Quarter Percentage of Total 48% 50% 50% 48% 50%
Recommended Budget Revision $ -
YOY Percentage Changes -7.93% -1.70% 5.38% 13.54% -0.38% 5-year Average Percentage Change 1.78%
$-
$100,000
$200,000
$300,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Town Council - Quarterly and Annual Expenditures
5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure

ITEM NO. 14.
17 ATTACHMENT 1
Town Attorney
The Town Attorney is the legal advisor to the Town Council, Successor Agency to the former Redevelopment Agency, and Town staff. In this capacity, the office of the Town Attorney provides a wide range of legal services to ensure that Town actions and activities are legally sound. Town Attorney program expenditures are trending at 50% at the second quarter. Staff recommends a $100,000 expenditure budget increase to provide additional legal support anticipated for the Department.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Second Quarter Actual Expenditures $ 226,377 $ 332,183 $ 336,063 $ 398,986 $ 594,515 Fiscal Year Total Actual Expenditures $ 629,935 $ 699,143 $ 751,614 $1,076,252 Fiscal Year Total Estimated Expenditure $1,293,243
Fiscal Year Budgeted Expenditures $ 669,733 $ 811,426 $ 947,963 $1,085,157 $1,180,884 Second Quarter Percentage of Total 36% 48% 45% 37% 50%
Recommended Budget Revision $ 100,000
YOY Percentage Changes 11.98% 10.99% 7.51% 43.19% 20.16% 5-year Average Percentage Change 18.77%
$-
$250,000
$500,000
$750,000
$1,000,000
$1,250,000
$1,500,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Town Attorney - Quarterly and Annual Expenditures
5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure Page 338 ITEM NO. 14.
18 ATTACHMENT 1
Administrative Services
The Town Manager provides overall management, administration, and direction for the entire Town organization, reporting to the full Town Council. Administrative Services incorporates five key programs:

Town Manager’s Office, Emergency Management Program, Economic and Community Vitality Program, Clerk Department, Finance Department, Human Resources Department, and Information Technology.

Administrative Services program expenditures are trending at 41% of the adopted budget at mid-year, and staff estimates approximately $1 million in expenditure savings within this program. Most of these savings are attributable to the emergency management spending plan, for which $1,000,000 was previously allocated but, based on current-year expenditures, is expected to yield $900,000 in savings.

The projected savings are earmarked for potential grant match and will be spent in the appropriate fiscal year. Additional savings are expected in staff salaries and benefits, travel and training, and office supplies. Staff requests a $58,933 expenditure budget adjustment to account for Finance Department transition costs, increased business license processing fees, and decreases in special event-related road closure costs. This adjustment also reflects reductions in grant expenditures, as a multi-year grant previously expected to extend into FY 2025–26 concluded in the prior fiscal year.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Second Quarter Actual Expenditures $ 2,583,281 $ 2,435,224 $ 3,144,181 $ 3,161,963 $ 3,367,328 Fiscal Year Total Actual Expenditures $ 5,441,605 $ 5,302,277 $ 5,877,879 $ 6,428,009 Fiscal Year Total Estimated Expenditure $ 7,245,452
Fiscal Year Budgeted Expenditures $ 5,965,801 $ 5,759,393 $ 6,506,131 $ 7,906,038 $ 8,308,150 Second Quarter Percentage of Total 47% 46% 53% 40% 41%
Recommended Budget Revision $ 58,993
YOY Percentage Changes 27.75% -2.56% 10.86% 9.36% 12.72% 5-year Average Percentage Change 11.62%
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Administrative Services - Quarterly and Annual Expenditures 5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure

ITEM NO. 14.
19 ATTACHMENT 1
Community Development Services
The Community Development Department works with elected and appointed officials, other Departments, and the community to guide the physical growth, development, and preservation of the Town.

Community Development program expenditures are trending higher than the same quarter in the prior year due to increased development activities in the Building and Pass-Through programs. The PassThrough program collects developer deposits for various review services, which are provided through consultants and paid from the applicant’s account. At the close of a project, any remaining fees are refunded to the applicant, making these transactions net neutral for the General Fund balance. Staff recommends a $615,500 increase in the development pass-through budget for activities anticipated during the fiscal year. In addition, staff recommends an expenditure budget increase of $7,500 to cover additional special noticing requirements, a $75,000 budget decrease for contract planner services to reflect the reduced need for external support in a fully staffed department, and a $45,000 budget decrease for contract building inspection services to align with current inspection activity. A further $45,000 reduction in the budget for contract building inspection services is recommended to align with current inspection activity. Additional details on all the requested items are provided in the Budget Adjustments section of this report. Staff will continue to monitor this program and request further adjustments, if necessary, before the end of the fiscal year.

Community Development Department expenditures vary year to year based on the development activity and pass-through services.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Second Quarter Actual Expenditures $ 3,460,301 $ 2,394,537 $ 2,559,684 $ 2,646,092 $ 3,020,911 Fiscal Year Total Actual Expenditures $ 6,313,505 $ 5,365,410 $ 5,246,729 $ 5,637,743 Fiscal Year Total Estimated Expenditure $ 6,368,565
Fiscal Year Budgeted Expenditures $ 5,461,716 $ 6,978,617 $ 5,509,853 $ 6,050,448 $ 6,027,635 Second Quarter Percentage of Total 55% 45% 49% 44% 50%
Recommended Budget Revision $ 577,500
YOY Percentage Changes 27.50% -15.02% -2.21% 7.45% 12.96% 5-year Average Percentage Change 6.14%
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Community Development - Quarterly and Annual Expenditures 5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure Page 340 ITEM NO. 14.
20 ATTACHMENT 1
Police Services
The Los Gatos-Monte Sereno Police Department provides Police services to the Town of Los Gatos and contractually to the City of Monte Sereno. The Department is committed to ensuring public safety with integrity, compassion, and professionalism, by providing exceptional law enforcement services, building community partnerships, and engaging the community in problem solving.

Staff continues to monitor Police Services program revenues and expenditures. The Police Department has dedicated additional resources to ongoing recruitment efforts for open positions. Whenever feasible, vacancies are temporarily filled with trainees, per diem staff, and temporary employees until permanent hires are made, which has contributed to increased costs. Staff recommends an expenditure budget increase of $75,000 for consultation services on police operations, a $15,000 increase for additional drug testing costs, and a $3,370 grant revenue adjustment to align actual grant spending with receipts across fiscal years. Despite these adjustments, total estimated expenditures are trending lower than budget due to partial vacancies throughout the Department. Staff will continue to monitor this program and may request additional budget adjustments, if necessary, before the end of the fiscal year.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Second Quarter Actual Expenditures $ 8,266,432 $ 8,957,541 $ 9,732,572 $ 10,269,947 $ 10,268,293 Fiscal Year Total Actual Expenditures $ 16,451,189 $ 18,446,040 $ 20,718,871 $ 20,827,880 Fiscal Year Total Estimated Expenditure $ 23,095,918
Fiscal Year Budgeted Expenditures $ 17,390,969 $ 19,331,331 $ 21,107,570 $ 22,832,439 $ 23,768,536 Second Quarter Percentage of Total 50% 49% 47% 45% 43%
Recommended Budget Revision $ 93,370
YOY Percentage Changes 9.13% 12.13% 12.32% 0.53% 10.89% 5-year Average Percentage Change 9.00%
*GASB 96 Subscription-Based Information Technology Arrangement Adjustments, Capital Outlay not included $-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Police - Quarterly and Annual Expenditures
5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure Page 341 ITEM NO. 14.
21 ATTACHMENT 1
Parks and Public Works Services
The Parks and Public Works Department constructs and maintains the Town’s public parks, facilities, roadways, right-of-way, and other infrastructure. Six organizational units work in coordination to achieve the Department’s overarching goal of ensuring the Town’s facilities are safe, functional, and attractive.

Parks and Public Works Services program expenditures are currently trending at 43% of the adopted budget. Staff recommends an expenditure budget increase of $200,755, primarily due to additional contractual obligations related to waste management, traffic signalization, tree pruning, and various miscellaneous and safety repair services. Staff will continue to monitor this program and may request further budget adjustments, if necessary, before the end of the fiscal year.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Second Quarter Actual Expenditures $ 4,010,181 $ 4,215,979 $ 4,589,535 $ 4,920,014 $ 5,068,319 Fiscal Year Total Actual Expenditures $ 8,605,455 $ 8,998,082 $ 9,789,656 $ 10,717,232 Fiscal Year Total Estimated Expenditure $ 11,649,244
Fiscal Year Budgeted Expenditures $ 9,080,662 $ 10,368,194 $ 10,401,796 $ 11,210,621 $ 11,653,693 Second Quarter Percentage of Total 47% 47% 47% 44% 43%
Recommended Budget Revision $ 200,755
YOY Percentage Changes 7.39% 4.56% 8.80% 9.48% 8.70%
5-year Average Percentage Change 7.78%
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Parks and Public Works - Quarterly and Annual Expenditures 5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure

ITEM NO. 14.
22 ATTACHMENT 1
Library Services
The Los Gatos Library fosters curiosity and community connection and strives to be at the heart of an engaged and vibrant community.

Library services program expenditures are trending similarly to prior-year same-quarter expenditures.

Total estimated expenditures are also trending slightly below budget. Staff will monitor this program and request an additional budget adjustment, if necessary, before the fiscal year end.

FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Second Quarter Actual Expenditures $ 1,365,415 $ 1,442,417 $ 1,669,629 $ 1,722,056 $ 1,747,675 Fiscal Year Total Actual Expenditures $ 2,752,401 $ 3,096,485 $ 3,253,389 $ 3,568,498 Fiscal Year Total Estimated Expenditure $ 3,652,651
Fiscal Year Budgeted Expenditures $ 3,062,708 $ 3,247,731 $ 3,285,841 $ 3,591,990 $ 3,655,823 Second Quarter Percentage of Total 50% 47% 51% 48% 48%
Recommended Budget Revision $ -
YOY Percentage Changes 9.40% 12.50% 5.07% 9.69% 2.36%
5-year Average Percentage Change 7.80%
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26
Library - Quarterly and Annual Expenditures
5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure

ITEM NO. 14.
23 ATTACHMENT 1
FY 2025-26 RECOMMENDED BUDGET ADJUSTMENTS
Budget adjustments are recommended for the following revenues and expenditures at the second quarter as described below:

Detailed Budget Adjustments
FY 2025-26 MID-YEAR BUDGET ADJUSTMENT REQUESTS - GENERAL FUND Program Account
1201 411** Property Tax $ 68,164 Based on Santa Clara County Property Tax Estimates February 2026
1201 41141 Motor Vehicle In Lieu Fee (VLF) 28,672 Based on Santa Clara County Property Tax Estimates February 2026
1201 41211 Sales & Use Tax 1,207,436 Based on HdL Sales Tax Estimate January 2026
1221 41214 Measure G - District Sales Tax 30,175 Based on HdL Sales Tax Estimate January 2026
1201 41311 Transient Occupancy Tax (166,585) Based on Past Receipts and Current Trend
1201 41611 Cable Franchise Fee (95,772) Based on Past Receipts and Current Trend
1201 42542 PG&E Franchise Fee 60,880 Based on Past Receipts and Current Trend
1201 42212 Credit Card Convenience Fee 9,410 Based on Past Receipts and Current Trend
2101 43513 SCC Unhoused Services Grant (54,696) Funds Received and Spent in Prior Fiscal Year
2106 44316 Leadership Los Gatos 6,850 Based on Current Enrollment 1232 45964 Pension Trust Contribution 300,000 Funds Anticipated from Available Reserves
2301 4*** Interest 345,487 Funds partially Received
2301 41411 Business License Tax 107,508 Funds Anticipated 2301 42321 Business License Processing Fee 20,000 Funds Anticipated 3201 42413 Planning Permits 235,000 Funds Anticipated
3201 44214 Other Planning Service Fees 20,000 Funds Anticipated General Fund Expenditures Revenues
Town Attorney $ 100,000 $ -
Administrative Services $ 153,305 $ 472,995
Community Development $ 502,500 $ 1,527,500
Police $ 93,370 $ 36,892
Parks and Public Works $ 200,775 $ 143,472
Library $ - $ 6,495
Townwide/Non-Departmental $ 300,191 $ 1,394,534
TOTAL GENERAL FUND $ 1,350,141 $ 3,581,888
All Other Funds Expenditures Revenues
Special Revenue $ 1,328 $ 4,000
Capital Project $ 559,564
Internal Service $ (1,816,453) $ (100,000)
TOTAL ALL OTHER FUNDS $ (1,255,561) $ (96,000)
TOTAL ALL FUNDS $ 94,580 $ 3,485,888

SUMMARY OF BUDGET ADJUSTMENTS BY FUND AND DEPARTMENT

ITEM NO. 14.
24 ATTACHMENT 1
FY 2025-26 MID-YEAR BUDGET ADJUSTMENT REQUESTS - GENERAL FUND Program Account
3202 44414 Plan Check Planning 35,000 Funds Anticipated 3301 42411 Building Permit Fees 220,000 Funds Anticipated 3301 42412 Title 24 Fee 40,000 Funds Anticipated
3301 44415 Address Processing Fee 40,000 Funds Anticipated 3301 44421 Plan Check Building 350,000 Funds Anticipated 3301 44422 Building Inspections (45,000) Funds are not Received, Matching Expenditures
3301 44625 NPDES inspections 20,000 Funds Anticipated
3401 45111 Code Compliance - Admin Citation (3,000) Funds are not Received 3999 48411 Environmental Impact - Pass Through
Services
400,000 Funds Anticipated
3999 48412 Architect Review- Pass Through
Services
30,000 Funds Anticipated
3999 48413 Arborist Review - Pass Through
Services
80,000 Funds Anticipated
3999 48415 Transcription - Pass Through Services 2,000 Funds Anticipated 3999 48418 Water Efficiency Review - Pass
Through Services
50,000 Funds Anticipated
3999 48426 Building Standard - Pass Through
Services
3,500 Funds Anticipated
3999 48428 Video Rendering - Pass Through
Services
30,000 Funds Anticipated
3999 48434 SMIP @ 95% 20,000 Funds Anticipated
4202 43336 Prop 172 - Public Safety Sales Tax (7,715) Based on HdL January 2026 Sales Tax Estimates
4301 44213 Special Event Reimbursement 11,062 Funds Received 4301 48218 Measure G - District Sales Tax 30,175 Funds Anticipated, Matching Tracking Expenditures
4816 45813 BSCC Wellness Grant 3,370 Funds Anticipated, Matching Expenditure
5101 43101 Federal Emergency Management
Grant - 2023 Storms
919 Funds Received
5202 44214 Other Service Fees (33,760) Funds are not Received 5202 44621 Engineering Services 67,000 Funds Anticipated 5202 44623 Engineering Review Surcharge (134,731) Funds are not Received 5202 44624 Grading Inspection (37,000) Funds are not Received 5202 44626 NPDES inspections 32,900 Funds Anticipated
5301 41512 Construction Tax - Capital Parks 10,781 Funds Received 5301 42515 Tree Removal Permit 180,000 Funds Anticipated 5301 43101 Federal Emergency Management
Grant - 2023 Storms
4,100 Funds Received
5301 43531 PLAN JPA Safety and Risk
Management
12,206 Funds Received
5301 45421 Benches (500) Funds are not Received, Matching Expenditures
5302 42522 HHW Solid Waste Fee 14,959 Funds are Anticipates, Matching Tracking Expenditures
5405 45922 Insurance Claim Reimbursement 26,598 Funds are Received 7204 45930 Public Library Fund Grant 6,495 Grant Reimbursement Received TOTAL GENERAL FUND REVENUES $ 3,581,888

ITEM NO. 14.
25 ATTACHMENT 1
FY 2025-26 MID-YEAR BUDGET ADJUSTMENT REQUESTS - GENERAL FUND Program Account General Fund Expenditures
1201 62113 Town Share of Retiree Medical $ 48,606
Funds are Partially
Expended
1201 62119 Additional Payment to IRS Pension Trust 300,000 From Available Reserve 1201 62227 Credit Card Merchant Fee 9,410
Funds are Expended,
Matching Revenue
1201 67102
Los Gatos Chamber Contract is Budgeted in
Economic Vitality Program (88,000) Funds are not Expended 2101 67229 SCC Unhouse Services Grant (54,307)
Funds Received and Spent in
Prior Fiscal Year
2106 62434 Leadership Los Gatos 4,300
Funds are Partially
Expended, Based on Current
Enrollment
2106 62435 Road Closures (11,000) Funds are not Expended 1221 68218 Measure G Sales Tax - Pass Thru 30,175
Funds are Partially
Expended, Matching
Revenue
1301 63215 Legal Services 100,000 Funds are not Expended 2301 5**** Salaries and Benefits 194,312
Funds are Partially
Expended
2301 62335 Business License Processing Fee 20,000
Funds are Partially
Expended, Matching
Revenue
3201 61114 Postage 2,500
Funds are Partially
Expended
3201 62318 Contract Employee Services (75,000) Funds are not Expended 3201 62310 Transcript Services (2,500) Funds are not Expended 3201 62311 Special Noticing 5,000
Funds are Partially
Expended
3301 63381 Building Inspections (45,000) Funds are not Expended 3301 64111 Employee Training 2,000
Funds are Partially
Expended
3999 68411
Environmental Impact - Pass Through
Services 400,000
Funds are Partially
Expended
3999 68412 Architect Review- Pass Through Services 30,000 Funds are Partially
Expended
3999 68413 Arborist Review - Pass Through Services 80,000 Funds are Partially
Expended
3999 68415 Transcription - Pass Through Services 2,000
Funds are Partially
Expended
3999 68419
Water Efficiency Review - Pass Through
Services 50,000
Funds are Partially
Expended
3999 68424 SMIP @ 95% - Pass Through Services 20,000
Funds are Partially
Expended
3999 68426
Building Standard @ 90% - Pass Through
Services 3,500
Funds are Partially
Expended
3999 68428 Video Rendering - Pass Through Services 30,000 Funds are Partially
Expended
4101 64212 Org Development - Police Services Study 75,000 Funds are not Expended 4303 63322 Drug Testing Services 15,000
Funds are Partially
Expended
4816 68513 BSCC Wellness Grant 3,370
Funds are Expended,
Matching Revenue
5301 61234 Playground Safety Parts and Equipment 12,206 Funds are Expended,
Matching Revenue
5301 62378 Miscellaneous Services and Repairs 82,110 Funds are not Expended 5301 63332 Software Annual Support 1,000
Funds are Partially
Expended

ITEM NO. 14.
26 ATTACHMENT 1
FY 2025-26 MID-YEAR BUDGET ADJUSTMENT REQUESTS - GENERAL FUND Program Account General Fund Expenditures
5301 68622 Benches (500)
Funds are not Received,
Matching Tracking
Expenditures
5302 63121 SCC- Household Waste Fee 14,959
Funds are Partially
Expended, Matching
Revenue
5401 62354 Tree Pruning Services 51,000 Funds are not Expended 5401 63364 Traffic Signalization 40,000 Funds are not Expended TOTAL GENERAL FUND EXPENDITURES $ 1,350,141
FY 2025-26 MID-YEAR BUDGET ADJUSTMENT REQUESTS - OTHER FUNDS Fund
Program Account Other Fund Revenues
261
7301 Library Trust
45411 Donation $ 4,000 Additional Donation Received
$ 4,000
633
5423 Facilities Maintenance
45313 Los Gatos Saratoga Recreation District $ (100,000) Funds are not Received - Rent
Abatement
$ (100,000)
TOTAL OTHER FUNDS REVENUES $ (96,000)
FY 2025-26 MID-YEAR BUDGET ADJUSTMENT REQUESTS - OTHER FUNDS Fund
Program Account Other Fund Expenditures
411 GFAR
4118104 82405 Use of Excess VRF Reserves including Interest $ 70,462 Funds are not
Expended
4118414 82405 Sport Court Resurfacing 50,000
Funds are not
Expended
4118741 82405 Auto Gate Replacements 1,602
Funds are not
Expended
$ 122,064
412 GFAR - Interim Community Center
4128736 82405 Interim Community Center 437,500
$ 437,500
631
5404 Equipment Replacement
8**** Equipment Replacement $ (1,846,453)
Funds are not
Expended
$ (1,846,453)
633 Facilities Maintenance

ITEM NO. 14.
27 ATTACHMENT 1
5404 62371 Staffroom Supplies 5,000
Funds are not
Expended
5404 62631 Telephone 25,000
Funds are
Partially Expended
$ 30,000
Library Trust Fund
7301 62420 Additional Donation Received
Funds are not
Expended
7301 62424 Additional Donation Received
Funds are not
Expended
231
5501 Blackwell L&L District
62613 Utilities - Water $ 690
Funds are
Partially Expended
$ 690
232
5502 Kennedy Meadows L&L District
62613 Utilities - Water $ 638
Funds are
Partially Expended
$ 638
TOTAL OTHER FUNDS EXPENDITURES $ (1,255,561)

SUMMARY OF RECOMMENDED BUDGET ADJUSTMENTS
 General Property Tax and Motor Vehicle in Lieu Fee: Staff recommends a increase in projected revenues of approximately $68,164 in General Property Tax and an increase of $28,672 Motor Vehicle in Lieu fee which are in line with the estimates and forecasts provided to the Town from Santa Clara County.
 Sales and Use Tax: Staff recommends a $1,200,919 revenue budget increase to reflect current sales tax trends and new businesses based on HdL’ current projections.  Measure G – District Sales Tax: Staff recommends a $30,175 revenue budget increase to reflect the current trends of the one-eight cent sales tax based on HdL’ projections and the matching $30,175 pass through revenue and expenditure budget adjustments to track the Measure G allocation.
 Transient Occupancy Tax (TOT): Staff recommends a decrease in projected revenues by $166,585 in TOT fee based on current collection trend.
 Cable Franchise Fee: Staff recommends a decrease in projected revenues of $95,722 in cable franchise fee based on current collection trend.
 PG&E Franchise Fee: Staff recommends an increase in projected revenues by $60,880 in PG&E franchise fee based on current collection trend.

ITEM NO. 14.
28 ATTACHMENT 1
 Credit Card Convenience Fee: Staff recommends a $9,410 revenue and expenditure budget increase based on the current convenience fees collected by the Town, with matching expenditures for third-party credit card processing services.  Unhoused Service Grant: Staff recommends a decrease in projected revenues and expenditures in the amount of $54,696, as a multi-year grant previously expected to extend into FY 2025–26 concluded in the prior fiscal year.
 Leadership Los Gatos: Staff recommends a $6,850 revenue budget increase and a $4,300 expenditure budget increase for the Leadership Los Gatos Program to reflect current participation levels and additional associated program expenses.  IRS Pension Trust: Staff recommends a revenue and expenditure budget increase of $300,000 to make an additional payment to the IRS Pension Trust from the available Pension/OPEB Reserve.  Interest: Staff recommends a $345,487 revenue budget increase based on anticipated interest collection during this fiscal year.
 Business License Tax: Staff recommends a $107,508 revenue budget increase based on current trend and HdL’s, the Town business license consultant’s projection.  Planning Permits, Plan Check and Other Planning Services Fees: Staff recommends a $390,000 revenue budget increase to reflect increased planning application activities based on current and anticipated receipts.
 Building Permits and Related Activities: Staff recommends a $625,000 revenue budget increase based on the current and anticipated receipts collections.  Development Application – Pass Through Services: Staff recommends $615,000 revenue expenditure budget increase based on the current development activity.  Prop 172 – Public Safety Sales Tax: Staff recommends a $7,715 revenue budget decrease to reflect the current trends of the tax based on Hdl’s current projections.  Special Event Reimbursement: Staff recommends a $11,062 revenue budget increase based on the current receipts collected for Police Services at special events.  Police Operating Grant: Staff recommend $3,370 revenue and expenditure budget increases based on the use of deferred grant receipts.
 FEMA Reimbursement: Staff recommends a $5,019 revenue budget increase to recognize current year reimbursement proceeds for the 2023 storm.
 Engineering Permits and Related Activities Staff recommends a $105,591 revenue budget decrease to reflect decreased engineering application activities based on current and anticipated receipts.

ITEM NO. 14.
29 ATTACHMENT 1
 Park Construction Tax: Staff recommends a $10,781 revenue budget increase based on the current receipts collected.
 Tree Removal Permit: Staff recommends a $180,000 revenue budget increase based on the current receipts collected.
 Plan JPA – Safety Risk Management: Staff recommends a $12,206 revenue and expenditure budget increase to reflect the current PlanJPA grant receipt and associated spending for playground safety upgrades.
 HHW Solid Waste Fee: Staff recommends a $14,959 revenue and expenditure budget adjustment to reflect the current costs paid to Santa Clara County. These fees are reimbursed through the Solid Waste Joint Powers Authority (JPA).
 Benches: Staff recommends a $500 revenue and expenditure budget decrease due to the decision not to launch the Memorial Bench Program before the end of this fiscal year.  Insurance Claim Reimbursement: Staff recommends a $16,818 revenue budget increase to recognize the reimbursement received for property damage.  Library Operating Grants: Staff recommends a $6,495 revenue budget increase to recognize reimbursement collected in the current year for prior-year grant expenditures.  Retire Medical: Staff recommends a $48,606 expenditure budget increase based on current estimates.
 Los Gatos Chamber of Commerce Contract: Staff recommends an $88,000 expenditure budget decrease because management of the contract has been transferred to the newly established Economic Community Vitality Program. The expenditures were erroneously included in both the legacy program and the new program, resulting in duplication.  Legal Services Support: Staff recommends a $100,000 expenditure budget increase to provide additional legal support for the Town Attorney.
 Salaries and Benefits: Staff recommends a $194,312 expenditure budget increase related to the Director transition in the Finance Department. A portion of this increased cost will be offset by a reversal in the Town’s Compensated Absences Reserve.
 Special Noticing and Postage: Staff recommends a $7,500 expenditure budget increase for a increased cost related the change in the special noticing requirement.  Transcription Services: Staff recommends a $2,500 expenditure budget decrease for transcription services based on the current trend.
 Contract Employee Services: Staff recommends a $75,000 expenditure budget decrease for contract planning employee services, since the full budgeted amount will not be utilized in the current fiscal year.

ITEM NO. 14.
30 ATTACHMENT 1
 Building Inspection Services: Staff recommends a $45,000 expenditure budget decrease for contract building inspection services, since the full budgeted amount will not be utilized in the current fiscal year.
 Building Program Training: Staff recommends a $2,000 expenditure budget increase for staff training.
 Police Service Study: Staff recommends a $75,000 expenditure budget increase to consult with Meliora on Police operations and services.
 Drug Testing Services: Staff recommends a $15,000 expenditure budget increase due to rising costs in Drug Testing Services. The expenditures associated with the Police Department’s Blood Draw Service, and its frequency, have increased during FY 2025–26. In response to these overages, the Police Department has reallocated funds from other areas within its budget on two separate occasions.
 Miscellaneous Services and Repairs: Staff recommends an increase in projected expenditures for miscellaneous park services and repairs of $82,110 to address playground inspection outcomes ($30,000), Blossom Hill Park lighting improvements ($20,000), and Town Plaza holiday tree and park lighting improvements ($32,110).
 Software Annual Support: Staff recommends an increase in projected expenditures for Park Services reservation software of $1,000 to implement a reservation system for tennis and pickleball reservations.
 Tree Pruning Services: Staff recommends an increase in projected expenditures of $51,000 for emergency tree services.
 Traffic Signalization: Staff recommends a $40,000 expenditure budget increase for increased cost for traffic signalization.

Other Fund Revenues and Expenditures
 Library Trust Fund: Staff recommends a $4,000 revenue budget increase to recognize an increase in donations.
 Facilities Maintenance Fund - Revenue: Staff recommends a decrease in projected revenues of $100,000 for the Facilities Maintenance Program based on the current agreement terms with the Los Gatos Saratoga Recreation Center.
 GFAR Project Costs: Staff recommends a $70,642 expenditure budget increase to use available excess Vehicle Registration Fund reserves and a $1,602 expenditure budget increase to the Auto Gate Replacement Project.
 Sport Park Court Resurfacing: Staff recommends an increase in projected expenditure of $50,000 for sound mitigation at La Rinconada Park based on the service quotes from vendors. Upon

ITEM NO. 14.
31 ATTACHMENT 1
further assessment of court conditions, additional sound netting is recommended than was originally proposed. The additional funds will support this additional material cost and associated installation. Project bidding is scheduled for February 6, 2026, with work planned for April 2026.
 Interim Community Center: Staff recommends moving the Adult Recreation Center Interim Community Center Project from Tier 2 to Tier 1 status and an associated increased expenditure projection of $437,500 for various improvements, including mold abatement, replacement of select windows, and roof replacement. This work will address aging building infrastructure.  Equipment Replacement: Staff recommends a $1,846,453 expenditure budget decrease for the Equipment Replacement Fund. In May 2025, one of the Council’s directions to staff was to review the equipment replacement list. Staff have begun this analysis and identified items that can be deferred from replacement in the current fiscal year. As a result, the staff recommends reducing the current equipment replacement budget. During the development of the FY 2026–27 budget, staff will continue to reevaluate all items on the list and either remove them from the replacement schedule or move them to their planned replacement year.  Facilities Maintenance: Staff recommends a $30,000 expenditure budget increase for increased telephone services ($25,000) and increased cost of staffroom supplies ($5,000).  Blackwell L&L District: Staff recommends a $690 expenditure budget increase for increased water utility costs.
 Kennedy Medows L&L District: Staff recommends a $638 expenditure budget increase for increased water utility costs.

ITEM NO. 14.
32 ATTACHMENT 1

FINANCIAL SUMMARIES OF OTHER FUNDS
The group of financial summaries on the following pages present data by governmental, proprietary, and fiduciary fund types. For each, the fund information starts with a beginning fund balance, adds current year revenues, and subtracts current year expenditures, resulting in an ending fund balance. Adopted budget amounts are provided as a basis for comparison of actuals to date.

Special Revenue Funds (Governmental Fund Type)
Special Revenue Funds are used to account for revenues that are legally restricted or designated for specific purposes. The Town’s Special Revenue Funds include the Community Development Block Grant Fund, Housing Conservation Program Fund, Urban Runoff Source Fund (Non-Point Source), several Landscaping and Lighting District (LLD) Funds, the Theatre Fund, and Library Trust Funds. Staff recommends increasing the revenue budget by $4,000 to reflect additional donations to the Library Trust Fund. Additionally, an increase of $1,328 in the expenditure budget is recommended to cover higher water utility costs for the Kennedy Meadows and Blackwell Landscaping and Lighting Districts.

CDBG Non-Point LIBRARY
Grants Source LLD's THEATRE TRUSTS
Beginning Fund Balance $ 166,653 $ 664,168 $ 193,606 $ 381,122 $ 559,744 Budgeted Revenues - 163,690 39,230 121,100 79,400
Total Actual Revenues - 2nd Qtr $ - $ 68,204 $ - $ 90,420 $ 70,230 Budgeted Expenditures - 221,318 40,400 55,814 82,000
Total Actual Expenditures - 2nd Qtr - 70,277 12,588 28,747 22,778 2nd Quarter Ending Fund Balance $ 166,653 $ 662,095 $ 181,018 $ 442,795 $ 607,196 Special Revenue Funds
Budget to Actuals Comparisons

ITEM NO. 14.
33 ATTACHMENT 1
Capital Projects Funds (Governmental Fund Type)
Capital Projects Funds account for resources used for the acquisition and construction of capital facilities by the Town. These funds include the General Fund Appropriated Reserve (GFAR) Fund, Community Center Fund, Traffic Mitigation Fund, Grant-Funded CIP Projects Fund, Utility Underground Fund, Gas Tax Fund, and three Storm Drain Funds. Staff recommends reopening the Tier 2 Interim Community Center Project with a budget of $437,500, increasing the Sport Court Resurfacing Project budget by $50,000, and making expenditure budget adjustments of $70,462 to utilize excess Vehicle Registration Fee reserves for additional street work. Additionally, staff recommends a $1,602 expenditure adjustment for the Auto Gate Replacement Project. The Grant-Funded CIP Fund currently reflects a deficit balance because grant-funded projects require the Town to expend its own dollars first and then submit documentation to the State of California or other granting agencies for reimbursement. These reimbursements ultimately result in the fund breaking even with a zero balance.

Community
GFAR* Center Traffic * Grant Funds* Storm Utility Gas
Fund Development Mitigation CIP Drains Undergd Tax
Beginning Fund Balance $ 16,974,945 $ 819,604 $ 676,481 $ (1,577,430) $ 2,825,234 $ 3,763,913 $ 2,130,548 Budgeted Revenues 4,367,396 - - 10,053,709 153,242 45,870 1,822,989 Total Actual Revenues - 2nd Qtr 2,507,708 - - 1,401,539 162,657 8,848 718,471 Budgeted Expenditures 16,844,699 - 10,000 6,198,983 1,880,615 - 3,463,170 Total Actual Expenditures - 2nd Qtr 1,515,679 - - 542,700 135,675 - 930,650 2nd Quarter Ending Fund Balance $ 17,966,974 $ 819,604 $ 676,481 $ (718,591) $ 2,852,216 $ 3,772,761 $ 1,918,369 Capital Project Funds
Budget to Actuals Comparisons
* GFAR, Community Center Development, Traffic Mitigation, and Grant Funds balances are combined in the FY 2025 ACFR. The combined balance of $16,893,600 is presented as an Appropriated Reserve.

ITEM NO. 14.
34 ATTACHMENT 1
Internal Service Funds (Proprietary Fund Type)
Internal Service Funds are used to finance and account for specialized activities and services provided by designated Town departments to other Town departments on a cost-reimbursement basis. These funds include the Equipment Replacement Fund, Workers’ Compensation Fund, Liability Self-Insurance Fund, Information Technology Fund, and Facilities Maintenance Fund.

The Self-Insurance Fund currently reflects a deficit balance because insurance premiums are paid at the beginning of the fiscal year, while departmental reimbursements are recorded on a bi-monthly basis.

Additionally, higher premium rates and increased claim activity required the Town to raise its Liability Internal Service charges in the FY 2025–26 budget. Staff continues to monitor insurance costs and are implementing a change to the Town’s liability insurance policy effective July 1, 2026, which is expected to generate potential savings. Furthermore, staff recommends reducing the revenue budget for the Facility Maintenance Program by $100,000 to account for the rent abatement provided to the Recreation Center, and increasing the expenditure budgets for telephone line services needed for resiliency by $25,000 and for staff room supplies by $5,000. In May 2025, one of the Council’s directions to staff was to review the equipment replacement list. Staff have begun this analysis and identified items that can be deferred from replacement in the current fiscal year. As a result, the staff recommends reducing the current equipment replacement budget by $1,846,453. During the development of the FY 2026–27 budget, staff will continue to reevaluate all items on the list and either remove them from the replacement schedule or move them to their planned replacement year.

Equipment Workers Self Information Facility
Replacemt Compensation Insurance Technology Maint.

Beginning Fund Balance $ 3,890,429 $ 1,259,972 $ 208,747 $ 2,585,104 $ 820,099 Budgeted Revenues 1,187,544 1,901,696 1,825,348 954,554 1,519,570 Total Actual Revenues - 2nd Qtr 583,772 999,555 840,773 395,714 690,616 Budgeted Expenditures 2,280,123 1,846,050 1,758,736 1,593,457 1,419,567 Total Actual Expenditures - 2nd Qtr 163,833 896,072 1,567,792 627,572 682,757 2nd Quarter Ending Fund Balance $ 4,310,368 $ 1,363,455 $ (518,272) $ 2,353,246 $ 827,958 7% 49% 89% 39% 48%
Internal Service Funds
Budget to Actuals Comparisons

ITEM NO. 14.
35 ATTACHMENT 1
Trust and Agency Funds (Fiduciary Fund Type)
AB1x26 is the “Dissolution Bill” that eliminated the Town’s Redevelopment Agency effective February 1, 2012. AB 1484 is the “clean-up” bill that revised and attempted to clarify AB1x26. In accordance with the law, the Successor Agency continues to wind down the affairs and operations of the former Redevelopment Agency by implementing programs and activities in accordance with the State-approved Recognized Obligation payment Schedule (ROPS). The Successor Agency monies are now accounted for in a Private Purpose Trust fund and no longer part of the Town’s Financial Statements. The fund balance reported is the actual fund balance that incorporates the full accrual of long-term debt related to the outstanding bonds payable to the 2002 and 2010 Certificates of Participation. The approved ROPS schedule includes full funding for this debt obligation.

Conclusion
Overall, the Town is well positioned to end the fiscal year in a positive. The recommended adjustments included in the Mid-Year Financial Report to increase estimated revenues across all funds by $3.6M and to decrease budgeted appropriations by $.09M.

SA
Trust
Beginning Fund Balance $ (3,037,145)
Budgeted Revenues 3,923,926
Total Actual Revenues - 2nd Qtr -
Budgeted Expenditures 3,817,112
Total Actual Expenditures - 2nd Qtr 1,743,541
2nd Quarter Ending Fund Balance $ (4,780,686)
Trust & Agency Fund
Budget to Actuals Comparisons

ITEM NO. 14.
1 ATTACHMENT 2

TABLE OF CONTENTS
Contents
FY 2026-27 DRAFT FORECAST UPDATED ON 2-6-2026 ............................................................................... 3 FY 2026-27 UPDATED DRAFT FORECAST COMPARISON AS IT PUBLISHED WITH THE FY 2025-26 ADOPTED BUDGET COMPARED TO AS IT WAS PREPARED ON 2-6-2026 ................................................. 4 FY 2026-27 DRAFT FORECAST UPDATED ON 12-29-2025............................................................................ 7 FY 2026-27 UPDATED DRAFT FORECAST COMPARISON AS IT PUBLISHED WITH THE FY 2025-26 ADOPTED BUDGET COMPARED TO AS IT WAS PREPARED ON 12-29-2025.............................................. 8 FY 2026-27 DRAFT FORECAST UPDATED ON 10-21-2025......................................................................................... 11 FY 2026-27 UPDATED DRAFT FORECAST COMPARISON AS IT PUBLISHED WITH THE FY 2025-26 ADOPTED BUDGET COMPARED TO AS IT WAS PREPARED ON 10-21-2025 ............................................................................................ 12 REVENUE BASELINE AND PROJECTION FACTORS (ADOPTED FY 2025-26 BUDGET).................................................. 15 EXPENDITURE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2025-26 BUDGET - PUBLISHED 4/21/2025)....... 17 FY 2026-27 FORECAST IN THE FY 2025-26 ADOPTED BUDGET.................................................................................. 20 FY 2025-26 BUDGET/FORECAST COMPARISON AS IT PUBLISHED ON 4/22/2024 COMPARED TO AS IT PUBLISHED ON 4/21/2025......................................................................................................................................................... 21 FY 2025-26 FORECAST- PUBLISHED 4-21-2025 (HISTORICAL DETAIL ADDED ON 4/25/2025 TO PUBLICATION)............... 24 REVENUE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2025-25 BUDGET - PUBLISHED 4/21/2025) ............. 26 EXPENDITURE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2025-26 BUDGET - PUBLISHED 4/21/2025)....... 28 FY 2024-25 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/7/2025.................................................................... 30 REVENUE BASELINE AND PROJECTION FACTORS (FY 2024-25 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/7/2025)...................................................................................................................................................... 31 EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2024-25 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/7/2025)...................................................................................................................................................... 33 FY 2024-25 FORECAST- PUBLISHED 4-22-2024 FY 2024-25 PROPOSED BUDGET......................................................... 35 REVENUE BASELINE AND PROJECTION FACTORS (FY 2024-25 PROPOSED BUDGET – PUBLISHED 4/22/2024)............. 37 EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2024-25 PROPOSED BUDGET – PUBLISHED 4/22/2024) ...... 39 FY 2023-24 MID-YEAR-REPORT AND FORECAST – PUBLISHED 2/10/2024.................................................................. 44 REVENUE BASELINE AND PROJECTION FACTORS (FY 2023-24 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2024) .................................................................................................................................................... 45 EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2023-24 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2024) .................................................................................................................................................... 47 FY 2023-24 PROPOSED BUDGET FORECAST- PUBLISHED 4/17/2023 ......................................................................... 49 REVENUE BASELINE AND PROJECTION FACTORS (FY 2023-24 PROPOSED BUDGET - PUBLISHED 4/17/2023) ............. 50 EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2023-24 PROPOSED BUDGET - PUBLISHED 4/17/2023)....... 52 FY 2022-23 MID-YEAR REPORT AND FORECAST- PUBLISHED 2/10/2023.................................................................... 53

ITEM NO. 14.
2 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2022-23 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2023) .................................................................................................................................................... 54 EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2022-23 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2023) .................................................................................................................................................... 56 FY 2022-23 PROPOSED BUDGET FORECAST- PUBLISHED 4/18/2022 ......................................................................... 59 REVENUE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2022-23 BUDGET – PUBLISHED 4/17/2022)............. 60 EXPENDITURE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2022-23 BUDGET – PUBLISHED 4/17/2022) ...... 62 FY 2021-22 MID-YEAR REPORT AND FORECAST- PUBLISHED 2/11/2022.................................................................... 64 REVENUE BASELINE AND PROJECTION FACTORS (FY 2021-22 MID-YEAR AND FORECAST - PUBLISHED 2/11/2022) .... 65 EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2021-22 MID YEAR AND FORECAST - PUBLISHED 2/11/2022) .................................................................................................................................................................... 67 FY 2021-22 PROPOSED BUDGET - PUBLISHED 4/19/2021........................................................................................ 69 REVENUE BASELINE AND PROJECTION FACTORS (FY 2011-22 PROPOSED BUDGET - PUBLISHED 4/19/2021) ............. 70 EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2011-22 PROPOSED BUDGET - PUBLISHED 4/19/2021)....... 72 FY 2020-21 MID-YEAR REPORT AND FORECAST - PUBLISHED 2/12/2021................................................................... 74 REVENUE BASELINE AND PROJECTION FACTORS (FY 2020-21 MID-YEAR AND FORECAST - PUBLISHED 2/12/2021) .... 75 EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2020-21 MID-YEAR AND FORECAST - PUBLISHED 2/12/2021) .................................................................................................................................................................... 77 FY 2020-21 PROPOSED BUDGET - PUBLISHED 4/19/2021........................................................................................ 79 REVENUE BASELINE AND PROJECTION FACTORS (FY 2020-21 PROPOSED BUDGET - PUBLISHED 4/19/2021) ............. 80 EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2020-21 PROPOSED BUDGET - PUBLISHED 4/19/2021)....... 82

ITEM NO. 14.
3 ATTACHMENT 2
FY 2026-27 DRAFT FORECAST UPDATED ON 2-6-2026
Revenue Category
FY 2021-22
Actuals
FY 2022-23
Actuals
FY 2023-24
Actuals
FY 2024-25
Adjusted
Budget
FY 2024-25
Actuals
FY 2025-26
Adjusted
Budget
FY 2025-26
Estimates
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Property Tax $ 16.9 $ 18.2 $ 19.3 $ 20.0 $ 20.2 $ 21.5 $ 21.5 $ 22.2 $ 23.1 $ 24.1 $ 25.0 $ 26.1 VLF Backfill Property Tax 4.2 4.6 4.9 5.1 5.1 5.4 5.4 5.7 6.0 6.3 6.6 6.9 Sales & Use Tax 7.2 7.5 6.8 6.5 7.0 6.6 7.9 8.4 8.6 8.9 9.2 9.4 Measure G District Sales Tax 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.4 1.4 1.4 1.5 Franchise Fees 2.8 3.1 2.5 1.0 1.1 1.0 1.0 1.1 1.1 1.2 1.2 1.2 Transient Occupancy Tax 1.9 2.2 2.4 2.3 2.4 2.4 2.3 2.3 2.3 2.3 2.3 2.4 Business License Tax 1.5 2.4 1.5 2.8 3.0 2.5 2.6 2.7 2.8 2.8 2.9 3.0 Licenses & Permits 4.8 3.3 4.0 6.2 6.7 6.3 7.0 6.1 6.2 6.3 6.4 6.5 Intergovernmental 1.3 1.6 1.2 1.2 1.3 1.1 1.3 0.8 0.8 0.8 0.8 0.8 Town Services 5.3 4.6 5.9 5.2 5.7 6.0 7.0 5.3 5.5 5.6 5.8 6.0 Fines & Forfeitures 0.3 0.4 0.5 0.3 0.4 0.3 0.3 0.3 0.1 0.1 0.1 0.1 Interest (1.4) 0.6 2.7 1.4 3.1 1.6 1.9 1.4 1.5 1.5 1.6 1.7 Other Sources 7.7 8.1 4.9 4.2 3.6 6.8 6.3 3.8 3.9 4.0 2.8 2.7 Fund Transfers In 0.6 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 $ 54.4 $ 58.4 $ 58.5 $ 58.1 $ 61.5 $ 63.4 $ 66.4 $ 62.0 $ 63.9 $ 65.9 $ 66.7 $ 68.9 Use of Capital/Special Projects 0.6 $ 2.4 $ 1.6 $ 3.7 $ 1.1 $ - $ - $ - $ - $ - $ - Use of Measure G Sales Tax - - - 0.6 - - - - - -
Use of Pension/OPEB Reserve 0.3 0.3 0.3 - 0.3 - - - - - - Use of Council Priorites - Economic - - 1.5 - - - - - - - - $ 57.6 $ 61.1 $ 61.9 $ 62.4 $ 62.9 $ 63.4 $ 66.4 $ 62.0 $ 63.9 $ 65.9 $ 66.7 $ 68.9 Expenditure Category FY 2021-22
Actuals
FY 2022-23
Actuals
FY 2023-24
Actuals
FY 2024-25
Adjusted
Budget
FY 2024-25
Actuals
FY 2025-26
Adjusted
Budget
FY 2025-26
Estimates
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Salary $ 18.9 $ 20.5 $ 21.5 $ 25.2 $ 22.4 $ 25.4 $ 23.4 $ 26.8 $ 27.6 $ 28.2 $ 28.8 $ 29.4 Overtime 1.1 1.3 1.3 0.6 1.3 0.7 1.4 0.7 0.7 0.7 0.7 0.7 CalPERS Benefits 6.5 7.1 7.4 8.8 8.3 9.9 8.8 10.3 11.0 11.8 12.0 12.3 All Other Benefits 3.7 3.8 4.3 5.6 4.9 6.3 5.3 5.9 6.2 6.4 6.6 6.9

4.6% Salary and Benefits Savings - - - (1.5) - (2.2) - (2.0) (2.1) (2.2) (2.2) (2.3) OPEB Pay as You Go 1.4 1.5 1.6 2.0 1.9 2.1 2.2 2.2 2.2 2.3 2.3 2.4 Operating Expenditures 10.4 11.7 9.8 10.6 8.1 11.6 11.7 11.6 10.8 11.1 11.4 11.8 Grants & Awards 1.8 0.6 0.7 0.7 0.7 0.5 0.3 0.3 0.3 0.3 0.3 0.3 Utilities 0.6 0.6 0.7 0.7 0.8 0.7 0.7 0.9 0.9 0.9 0.9 1.0 Internal Service Charges 2.6 2.6 3.2 4.4 4.2 4.9 4.7 5.6 6.0 6.2 6.5 6.7 Debt Service 2.1 2.0 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 0.8 0.8 Additional Discretionary Payment - $ 49.0 $ 51.8 $ 52.9 $ 59.2 $ 54.6 $ 61.9 60.6 $ 64.3 $ 65.6 $ 67.8 $ 68.2 $ 70.1 Pension 0.7 0.7 0.7 0.4 0.7 0.4 0.7 0.4 0.4 0.4 0.4 0.4 $ 49.8 $ 52.5 $ 53.5 $ 59.6 $ 55.3 $ 62.3 $ 61.3 $ 64.7 $ 66.0 $ 68.2 $ 68.6 $ 70.5 Capital Transfers Out to GFAR 1.2 $ 2.4 $ 1.6 $ 1.1 $ 1.1 $ - $ - $ - $ - $ - $ - $ - Transfer to General Liability - 0.4 - 0.1 - - - - - - - GASB 65 0.6 - - - - - - - - -
Fixed Assets/ Equipment 0.1 0.4 - - 0.2 - - - - -
1/2 of Measure G Proceeds to Capital 0.6 0.6 0.7 0.6 0.6 - - - - - - - Allocate to ERAF Risk Reserve - 0.7 0.7 - - - - - - - - - Allocate to GASB 31 Reserve 1.2 - -
Allocate to Pension Trust - 0.7 0.7 0.7 0.7 0.4 0.6 0.4 0.4 0.4 0.4 0.4 $ 52.1 $ 56.2 $ 57.6 $ 62.1 $ 59.0 $ 62.7 62.1 $ 65.1 $ 66.4 $ 68.6 $ 69.0 $ 70.9 $ 5.5 $ 4.9 $ 4.3 $ 0.3 $ 3.9 $ 0.7 $ 4.3 $ (3.1) $ (2.5) $ (2.7) $ (2.3) $ (2.0) * Due to rounding of individual categories total revenues, expenditures, and reserve allocations may include $0.1 million.

NET REVENUES , TRANSFERS IN, USE

OF RESERVES LESS EXPENDITURES,

TRANSFERS IN, AND RESERVE

ALLOCATIONS

TOTAL REVENUES, TRANSFERS, AND
USE OF RESERVES*

TOTAL EXPENDITURES & RESERVE

TOTAL OPERATING REVENUES &

TOTAL OPERATING EXPENDITURES

TOTAL OPERATING &

DISCRETIONARY EXPENDITURES
General Fund 5-Year Forecast
Updated 2-5-2026
(in $ million)

ITEM NO. 14.
4 ATTACHMENT 2
FY 2026-27 UPDATED DRAFT FORECAST COMPARISON AS IT PUBLISHED WITH THE FY 2025-26 ADOPTED BUDGET COMPARED TO AS IT WAS PREPARED ON 2- 6-2026

ITEM NO. 14.
5 ATTACHMENT 2
Below is the list of variances/or no changes in the Revenue and Expenditure estimates (2-6-2026).

Revenues:

Row 1 and Row 2 Column A – Property Tax and VLF Property Tax Backfill - Projected Variance – No Projected Variance
No change based on SCCAO February 2026 and HdL Coren and Cane January 2026 Property Tax Update.

Row 3 and Row 4
Column A – Sales Tax and Measure G District Sales Tax - Projected Variance $1.6 million increase In January 2026 HdL, the Town’s Sales Tax consultant, provided an updated Sales Tax revenue projection indicating an increase of approximately $1.6 million. This revised estimate reflects stronger-than-anticipated local economic activity.

Row 5 - Column A – Franchise Fees – No Projected Variance No Projected Change.

Row 6 - Column A – Transient Occupancy Tax (TOT) – Projected Variance ($0.1) million decrease Current TOT trend estimates based on the number of hotels in Town.

Row 7 - Column A – Business License Tax – Projected Variance $0.1 million increase Based on the most recent estimates, the FY 2026-27 Business License Tax is anticipated to increase by $0.1 million.

Row 8 - Column A – Licenses and Permits – Projected Variance ($0.2) million decrease Based on the most recent estimates, the FY 2026-27 License and Permits is anticipated to decrease by $0.2 million.

Row 9 - Column A – Intergovernmental - No Projected Variance Row 10 - Column A – Town Services - Projected Variance - $0.3 million increase Based on Development activities, pass-through revenues are expected to increase by $0.3 million. The corresponding pass-through expenditures are expected to grow by the same amount.

Row 11 - Column A – Fines and Forfeitures - No Projected Variance Row 12 - Column A – Interest - $0.3 million increase
Based on updated interest rate estimates as of January 2026, staff have conducted a comprehensive evaluation of the current interest rate environment in relation to the Town’s existing investment portfolio. The interest rate assumptions have been updated accordingly to reflect current market conditions. As the market environment continues to evolve, projected interest rates will fluctuate. Staff are actively monitoring the investment rate environment and will continue to update interest rate assumptions on a periodic basis

ITEM NO. 14.
6 ATTACHMENT 2
Row 13 - Column A – Other Sources - $0.1 million increase Based on FY 2024-25 Actuals revenue collections, such as credit card merchant fees, and updated Measure G sales Tax tracking Revenue.

Row 14 - Column A – Fund Transfers In - No Projected Variance Expenditures:

Row 17 - Column A – Salaries - No Projected Variance
Row 18 - Column A – Overtime - No Projected Variance
Row 19 - Column A – CalPERS Benefits - Projected Variance ($0.1) million decreases Row 20 - Column A – All Other Benefits - Projected Variance ($0.4) million decreases Row 21 - Column A – 4.6 % Salaries and Benefit Savings - No Projected Variance Based on the 12/31/2025 Actual Salary Steps, Pension Benefits, and Medical Insurance selection, the projected Salaries and Benefits are $0.5 million less. Staff will update pension rates and actual salaries and benefits with the Proposed FY 2026-27 Budget.

Row 22 - Column A – OPEB Pay as You Go - No Projected Variance No Projected Change.

Row 23 - Column A – Operating Expenditure - Projected Variance $1.7 million increase Operating expenditures for FY 2026-27 are projected to increase by approximately $1.7 million. This increase is primarily driven by town-wide growth in contractually obligated expenditures, a shift to a subscription-based model for various public safety equipment, and an increase in the Town’s share of retiree medical reimbursements. In addition, $0.9 million of funding originally allocated to Emergency Management in FY 2024-25 is expected to be used in FY 2026-27.

Row 24 - Column A – Grants and Awards - No Projected Variance No Projected Change.

Row 25 - Column A – Utilities - Projected Variance $0.2 million increase Operating expenditure expected to increase by $0.2 million based on FY 2024-25 actual utilities expenditures.

Row 26 - Column A – Internal Service Charges - $0.4 million increase Expenditure expected to increase by $0.4 million based on FY 2024-25 actual expenditures.

Row 27 - Column A – Debt Services - No Projected Variance

ITEM NO. 14.
7 ATTACHMENT 2
FY 2026-27 DRAFT FORECAST UPDATED ON 12-29-2025
Revenue Category
FY 2021-22
Actuals
FY 2022-23
Actuals
FY 2023-24
Actuals
FY 2024-25
Adjusted
Budget
FY 2024-25
Actuals
FY 2025-26
Adjusted
Budget
FY 2025-26
Estimates
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Property Tax $ 16.9 $ 18.2 $ 19.3 $ 20.0 $ 20.2 $ 21.5 $ 21.4 $ 21.4 $ 22.3 $ 23.2 $ 24.1 $ 25.1 VLF Backfill Property Tax 4.2 4.6 4.9 5.1 5.1 5.4 5.4 5.6 5.9 6.2 6.5 6.8 Sales & Use Tax 7.2 7.5 6.8 6.5 7.0 6.6 6.9 7.1 7.3 7.4 7.5 7.6 Measure G District Sales Tax 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.4 1.4 1.5 Franchise Fees 2.8 3.1 2.5 1.0 1.1 1.0 1.0 1.1 1.1 1.2 1.2 1.2 Transient Occupancy Tax 1.9 2.2 2.4 2.3 2.4 2.4 2.4 2.0 2.0 2.0 2.0 2.0 Business License Tax 1.5 2.4 1.5 2.8 3.0 2.5 2.8 2.7 2.8 2.9 3.0 3.1 Licenses & Permits 4.8 3.3 4.0 6.2 6.7 6.3 6.3 6.1 6.2 6.3 6.4 6.5 Intergovernmental 1.3 1.6 1.2 1.2 1.3 0.8 0.8 0.8 0.8 0.9 0.9 0.9 Town Services 5.3 4.6 5.9 5.2 5.7 5.7 5.7 5.3 5.4 5.5 5.6 5.8 Fines & Forfeitures 0.3 0.4 0.5 0.3 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Interest (1.4) 0.6 2.7 1.4 3.1 1.6 1.6 1.2 1.1 1.1 1.1 1.2 Other Sources 7.7 8.1 4.9 4.2 3.6 3.8 3.9 3.7 3.9 3.9 2.7 2.7 Fund Transfers In 0.6 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 $ 54.4 $ 58.4 $ 58.5 $ 58.1 $ 61.5 $ 59.8 $ 60.4 $ 59.2 $ 61.0 $ 62.9 $ 63.3 $ 65.3 Use of Capital/Special Projects Reserve 0.6 $ 2.4 $ 1.6 $ 3.7 $ 1.1 $ - $ - $ - $ - $ - $ - Use of Measure G Sales Tax - Operating - - 0.6 - - - - - - Use of Pension/OPEB Reserve Use of Council Priorites - Economic 0.3 0.3 0.3 - 0.3 - - - - - - Recovery - - 1.5 - - - - - - - -
Use of Unassigned Fund Balance - - - - - -
$ 57.6 $ 61.1 $ 61.9 $ 62.4 $ 62.9 $ 59.8 $ 60.4 $ 59.2 $ 61.0 $ 62.9 $ 63.3 $ 65.3 Expenditure Category FY 2021-22
Actuals
FY 2022-23
Actuals
FY 2023-24
Actuals
FY 2024-25
Adjusted
Budget
FY 2024-25
Actuals
FY 2025-26
Adjusted
Budget
FY 2025-26
Estimates
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Salary $ 18.9 $ 20.5 $ 21.5 $ 25.2 $ 22.4 $ 25.4 $ 25.4 $ 26.8 $ 27.6 $ 28.2 $ 28.8 $ 29.4 Overtime 1.1 1.3 1.3 0.6 1.3 0.7 0.7 0.7 0.7 0.7 0.7 0.7 CalPERS Benefits 6.5 7.1 7.4 8.8 8.3 9.7 9.7 10.3 11.0 11.8 12.0 12.3 All Other Benefits 3.7 3.8 4.3 5.6 4.9 6.3 6.3 5.9 6.2 6.4 6.6 6.9

4.6% Salary and Benefits Savings - - - (1.5) - (1.9) (1.9) (2.0) (2.1) (2.2) (2.2) (2.3) OPEB Pay as You Go 1.4 1.5 1.6 2.0 1.9 2.1 2.1 2.2 2.3 2.4 2.5 2.6 Operating Expenditures 10.4 11.7 9.8 10.6 8.2 9.9 9.9 10.2 10.3 10.6 10.8 11.2 Grants & Awards 1.8 0.6 0.7 0.7 0.7 0.4 0.4 0.3 0.3 0.3 0.3 0.3 Utilities 0.6 0.6 0.7 0.7 0.8 0.7 0.7 0.9 0.9 0.9 0.9 1.0 Internal Service Charges 2.6 2.6 3.2 4.4 4.2 4.9 4.9 5.3 5.6 5.8 6.1 6.3 Debt Service 2.1 2.0 2.1 2.1 2.1 2.1 2.1 2.1 2.1 2.1 0.8 0.8 Additional Discretionary Payment - $ 49.0 $ 51.8 $ 52.9 $ 59.2 $ 54.7 $ 60.1 $ 60.1 62.5 $ 64.8 $ 67.0 $ 67.5 $ 69.3 Pension 0.7 0.7 0.7 0.4 0.7 0.4 0.4 0.4 0.4 0.4 0.4 0.4 $ 49.8 $ 52.5 $ 53.5 $ 59.6 $ 55.4 $ 60.5 $ 60.5 $ 62.9 $ 65.2 $ 67.4 $ 67.9 $ 69.7 Capital Transfers Out to GFAR 1.2 $ 2.4 $ 1.6 $ 1.1 $ 1.1 $ - $ - $ - $ - $ - $ - $ - Transfer to General Liability - 0.4 - 0.1 - - - - - - - GASB 65 0.6 - - - - - - - - -
Fixed Assets/ Equipment 0.1 0.4 - - - - - - - -
1/2 of Measure G Proceeds to Capital 0.6 0.6 0.7 0.6 0.6 - - - - - - - Allocate to ERAF Risk Reserve - 0.7 0.7 - - - - - - - - - Allocate to GASB 31 Reserve 1.2 - -
Allocate to Pension Trust - 0.7 0.7 0.7 0.7 0.4 0.4 0.4 0.4 0.4 0.4 0.4 $ 52.1 $ 56.2 $ 57.6 $ 62.1 $ 59.1 $ 60.9 $ 60.9 63.3 $ 65.6 $ 67.8 $ 68.3 $ 70.1 $ 5.5 $ 4.9 $ 4.3 $ 0.3 $ 3.8 $ (1.1) $ (0.5) (4.1) $ (4.6) $ (4.9) $ (5.0) $ (4.8) * Due to rounding of individual categories total revenues, expenditures, and reserve allocations may include $0.1 million.

NET REVENUES , TRANSFERS IN, USE OF

RESERVES LESS EXPENDITURES,

TRANSFERS IN, AND RESERVE

ALLOCATIONS

TOTAL REVENUES, TRANSFERS, AND USE
OF RESERVES*

TOTAL EXPENDITURES & RESERVE

TOTAL OPERATING REVENUES &

TOTAL OPERATING EXPENDITURES

TOTAL OPERATING & DISCRETIONARY

EXPENDITURES
General Fund 5-Year Forecast
Updated 12-29-2025
(in $ million)

ITEM NO. 14.
8 ATTACHMENT 2
FY 2026-27 UPDATED DRAFT FORECAST COMPARISON AS IT PUBLISHED WITH THE FY 2025-26 ADOPTED BUDGET COMPARED TO AS IT WAS PREPARED ON 12-29-2025

A B C D
Revenue Category
FY 2026-27 Forecast
Updated 12-29-2025
FY 2026-27 Forecast
Published with the
Adopted Budget

VARIANCE
1 Property Tax $ 21.4 $ 22.2 $ (0.8)
2 VLF Backfill Property Tax 5.6 5.7 (0.1)
3 Sales & Use Tax 7.1 6.8 0.3
4 Measure G District Sales Tax 1.3 1.3 (0.0)
5 Franchise Fees 1.1 1.1 -
6 Transient Occupancy Tax 2.0 2.4 (0.4)
7 Business License Tax 2.7 2.6 0.1
8 Licenses & Permits 6.1 6.3 (0.2)
9 Intergovernmental 0.8 0.8 -
10 Town Services 5.3 5.0 0.3
11 Fines & Forfeitures 0.3 0.3 -
12 Interest 1.2 1.1 0.1
13 Other Sources 3.7 3.7 0.0
14 Fund Transfers In 0.6 0.6 -
15 $ 59.2 $ 59.9 $ (0.7)
Use of Capital/Special Projects Reserve $ - $ -
Use of Measure G Sales Tax - Operating - -
Use of Pension/OPEB Reserve Use of Council Priorites - Economic - - Recovery - -
Use of Unassigned Fund Balance - -
16 $ 59.2 $ 59.9
Expenditure Category FY 2026-27 Forecast
Updated 12-29-2025
FY 2026-27 Forecast
Published with the
Adopted Budget
Variance
17 Salaries $ 26.8 $ 26.8 $ (0.0)
18 Overtime 0.7 0.7 (0.0)
19 CalPERS Benefits 10.3 10.4 (0.1)
20 All Other Benefits 5.9 6.3 (0.4)
21 4.6% Salaries and Benefits Savings (2.0) (2.0) (0.0) 22 OPEB Pay as You Go 2.2 2.2 0.0
23 Operating Expenditures 10.2 9.9 0.3
24 Grants & Awards 0.3 0.3 (0.0)
25 Utilities 0.9 0.7 0.2
26 Internal Service Charges 5.3 5.3 0.0
27 Debt Service 2.1 2.1 (0.0)
28 $ 62.5 $ 62.7 $ (0.2)
30 Additional Discretionary Payment -
Pension 0.4 0.4
31 $ 62.9 $ 63.1
32 Allocate to Pension Trust 0.4 0.4
$ 63.3 $ 63.5
$ (4.1) $ (3.6)

TOTAL EXPENDITURES & RESERVE

NET REVENUES , TRANSFERS IN, USE OF

RESERVES LESS EXPENDITURES,

TRANSFERS IN, AND RESERVE

ALLOCATIONS

TOTAL OPERATING REVENUES &

TOTAL REVENUES, TRANSFERS, AND USE
OF RESERVES*

TOTAL OPERATING EXPENDITURES

TOTAL OPERATING & DISCRETIONARY

EXPENDITURES

ITEM NO. 14.
9 ATTACHMENT 2
Below is the list of variances/or no changes in the Revenue and Expenditure estimates (12-29-2025).

Revenues:

Row 1 and Row 2 Column A – Property Tax and VLF Property Tax Backfill - Projected Variance - ($0.9) million decrease
Based on SCCAO November 12, 2025 and HdL Coren and Cane 12-19-2025 Preliminary Property Tax Update the 2026-27 Property Tax estimates are projected lower. This is a preliminary estimate, staff will further discuss and fine tune the property tax estimates with HdL Coren and Cane before the mid-year analysis. Row 3 and Row 4 Column A – Sales Tax and Measure G District Sales Tax - Projected Variance $0.3 million increase As of October 10, 2025, Muniservices, the Town’s Sales Tax consultant, provided an updated Sales Tax revenue projection indicating an increase of approximately $300,000. This revised estimate reflects stronger-thananticipated local economic activity.

The Town is in the process of signing a Sales Tax Forecasting agreement with HdL. HdL will provide an updated look for the Sales Tax forecast.

Row 5 - Column A – Franchise Fees – No Projected Variance No Projected Change.

Row 6 - Column A – Transient Occupancy Tax (TOT) – Projected Variance ($0.4) million decrease The Finance Department has received the closing notification from one of the hotels. Staff is recommending decreasing the TOT base by $0.4 million.

Row 7 - Column A – Business License Tax – Projected Variance $0.1 million increase Based on the most recent estimates, the FY 2026-27 Business License Tax is anticipated to increase by $0.1 million.

Row 8 - Column A – Licenses and Permits – Projected Variance ($0.2) million decrease Based on the most recent estimates, the FY 2026-27 License and Permits is anticipated to decrease by $0.2 million.

Row 9 - Column A – Intergovernmental - No Projected Variance Row 10 - Column A – Town Services - Projected Variance - $0.3 million increase Based on Development activities, it is anticipated that the pass-through revenues will increase by $0.3 million.

The corresponding pass-through expenditures are expected to grow by the same amount.

Row 11 - Column A – Fines and Forfeitures - No Projected Variance Row 12 - Column A – Interest - $0.1 million increase

ITEM NO. 14.
10 ATTACHMENT 2
Based on updated interest rate estimates as of October 21, 2025, staff have conducted a comprehensive evaluation of the current interest rate environment in relation to the Town’s existing investment portfolio. The interest rate assumptions have been updated accordingly to reflect current market conditions. As the market environment continues to evolve, projected interest rates will fluctuate. Staff are actively monitoring the investment rate environment and will continue to update interest rate assumptions on a periodic basis Row 13 - Column A – Other Sources - No Projected Variance Row 14 - Column A – Fund Transfers In - No Projected Variance Expenditures:

Row 17 - Column A – Salaries - No Projected Variance
Row 18 - Column A – Overtime - No Projected Variance
Row 19 - Column A – CalPERS Benefits - Projected Variance ($0.1) million decreases Row 20 - Column A – All Other Benefits - Projected Variance ($0.4) million decreases Row 21 - Column A – 4.6 % Salaries and Benefit Savings - No Projected Variance Based on the 10/7/2025 Actual Salary Steps, Pension Benefits, and Medical Insurance selection, the projected Salaries and Benefits are $0.5 million less.

Row 22 - Column A – OPEB Pay as You Go - No Projected Variance No Projected Change.

Row 23 - Column A – Operating Expenditure - Projected Variance $0.3 million increase Operating expenditure expected to increase by $0.3 million based on estimated pass-through activities.

Row 24 - Column A – Grants and Awards - No Projected Variance No Projected Change.

Row 25 - Column A – Utilities - Projected Variance $0.2 million increase Operating expenditure expected to increase by $0.2 million based on FY 2024-25 actual utilities expenditures.

Row 26 - Column A – Internal Service Charges - No Projected Variance Row 27 - Column A – Debt Services - No Projected Variance

ITEM NO. 14.
11 ATTACHMENT 2
FY 2026-27 DRAFT FORECAST UPDATED ON 10-21-2025
General Fund 5-Year Forecast
Updated 10-17-2025
(in $ million)
Revenue Category
2021/22
Actuals
FY 2022/23
Actuals
FY 2023-24
Actuals
FY 2024-25
Adjusted
Budget
FY 2025-26
Adjusted
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Property Tax $ 16.9 $ 18.2 $ 19.3 $ 20.0 $ 21.5 $ 22.2 $ 23.1 $ 24.0 $ 24.9 $ 25.9 VLF Backfill Property Tax 4.2 4.6 4.9 5.1 5.4 5.7 5.9 6.2 6.5 6.9 Sales & Use Tax 7.2 7.5 6.8 6.5 6.6 7.1 7.3 7.4 7.5 7.6 Measure G District Sales Tax 1.3 1.3 1.3 1.3 1.3 1.3 1.3 1.4 1.4 1.5 Franchise Fees 2.8 3.1 2.5 1.0 1.0 1.1 1.1 1.2 1.2 1.2
Transient Occupancy Tax 1.9 2.2 2.4 2.3 2.4 2.0 2.0 2.0 2.0 2.0 Business License Tax 1.5 2.4 1.5 2.8 2.5 2.7 2.8 2.9 3.0 3.1 Licenses & Permits 4.8 3.3 4.0 6.2 6.3 6.1 6.2 6.3 6.4 6.5 Intergovernmental 1.3 1.6 1.2 1.2 0.8 0.8 0.8 0.9 0.9 0.9 Town Services 5.3 4.6 5.9 5.2 5.7 5.3 5.4 5.5 5.6 5.8
Fines & Forfeitures 0.3 0.4 0.5 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Interest (1.4) 0.6 2.6 1.4 1.6 1.2 1.1 1.1 1.1 1.2
Other Sources 7.7 8.1 5.0 4.2 3.8 3.7 3.9 3.9 2.7 2.7
Fund Transfers In 0.6 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 $ 54.4 $ 58.4 $ 58.5 $ 58.1 $ 59.8 $ 60.1 $ 61.8 $ 63.7 $ 64.1 $ 66.2 Use of Capital/Special Projects 0.6 $ 2.4 $ 1.6 $ 3.7 $ - $ - $ - $ - $ - $ - Use of Measure G Sales Tax - - - 0.6 - - - - - -
Use of Pension/OPEB Reserve 0.3 0.3 0.3 - - - - - - -
Use of Council Priorites - Economic - - 1.5 - - - - - - - Use of Unassigned Fund Balance - - - - - -
$ 57.6 $ 61.1 $ 61.9 $ 62.4 $ 59.8 $ 60.1 $ 61.8 $ 63.7 $ 64.1 $ 66.2 Expenditure Category 2021/22
Actuals
FY 2022/23
Actuals
FY 2023-24
Actuals
FY 2024-25
Adjusted
Budget
FY 2025-26
Adjusted
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Salary $ 18.9 $ 20.5 $ 21.5 $ 25.2 $ 25.4 $ 26.8 $ 27.6 $ 28.2 $ 28.8 $ 29.4 Overtime 1.1 1.3 1.3 0.6 0.7 0.7 0.7 0.7 0.7 0.7
CalPERS Benefits 6.5 7.1 7.4 8.8 9.7 10.3 11.0 11.8 12.0 12.3 All Other Benefits 3.7 3.8 4.3 5.6 6.3 5.9 6.2 6.4 6.6 6.9

4.6% Salary and Benefits Savings - - - (1.5) (1.9) (2.0) (2.1) (2.2) (2.2) (2.3) OPEB Pay as You Go 1.4 1.5 1.6 2.0 2.1 2.2 2.3 2.4 2.5 2.6 Operating Expenditures 10.4 11.7 9.8 10.6 9.9 10.2 10.3 10.6 10.8 11.2 Grants & Awards 1.8 0.6 0.7 0.7 0.4 0.3 0.3 0.3 0.3 0.3 Utilities 0.6 0.6 0.7 0.7 0.7 0.9 0.9 0.9 0.9 1.0
Internal Service Charges 2.6 2.6 3.2 4.4 4.9 5.3 5.6 5.8 6.1 6.3 Debt Service 2.1 2.0 2.1 2.1 2.1 2.1 2.1 2.1 0.8 0.8
Additional Discretionary Payment - $ 49.0 $ 51.8 $ 52.9 $ 59.2 $ 60.1 62.5 $ 64.8 $ 67.0 $ 67.5 $ 69.3 Pension 0.7 0.7 0.7 0.4 0.4 0.4 0.4 0.4 0.4 0.4
$ 49.8 $ 52.5 $ 53.5 $ 59.6 $ 60.5 $ 62.9 $ 65.2 $ 67.4 $ 67.9 $ 69.7 Capital Transfers Out to GFAR 1.2 $ 2.4 $ 1.6 $ 1.1 $ - $ - $ - $ - $ - $ - Transfer to General Liability - 0.4 - - - - - - -
GASB 65 0.6 - - - - - - -
Fixed Assets/ Equipment 0.1 0.4 - - - - - -
1/2 of Measure G Proceeds to Capital 0.6 0.6 0.7 0.6 - - - - - - Allocate to ERAF Risk Reserve - 0.7 0.7 - - - - - - -
Allocate to GASB 31 Reserve -
Allocate to Pension Trust - 0.7 0.7 0.7 0.4 0.4 0.4 0.4 0.4 0.4 $ 52.1 $ 56.2 $ 57.6 $ 62.1 $ 60.9 63.3 $ 65.6 $ 67.8 $ 68.3 $ 70.1 $ 5.5 $ 4.9 $ 4.3 $ 0.3 $ (1.1) (3.2) $ (3.8) $ (4.1) $ (4.2) $ (3.9) * Due to rounding of individual categories total revenues, expenditures, and reserve allocations may include $0.1 million.

NET REVENUES , TRANSFERS IN, USE

OF RESERVES LESS EXPENDITURES,

TRANSFERS IN, AND RESERVE

ALLOCATIONS

TOTAL REVENUES, TRANSFERS, AND
USE OF RESERVES*

TOTAL EXPENDITURES & RESERVE

TOTAL OPERATING REVENUES &

TOTAL OPERATING EXPENDITURES

TOTAL OPERATING &

DISCRETIONARY EXPENDITURES

ITEM NO. 14.
12 ATTACHMENT 2
FY 2026-27 UPDATED DRAFT FORECAST COMPARISON AS IT PUBLISHED WITH THE FY 2025-26 ADOPTED BUDGET COMPARED TO AS IT WAS PREPARED ON 10-21-2025

A B C D
Revenue Category
FY 2026-27 Forecast
Updated 10-21-2025
FY 2026-27 Forecast
Published with the
Adopted Budget

VARIANCE
1 Property Tax $ 22.2 $ 22.2 $ -
2 VLF Backfill Property Tax 5.7 5.7 -
3 Sales & Use Tax 7.1 6.8 0.3
4 Measure G District Sales Tax 1.3 1.3 -
5 Franchise Fees 1.1 1.1 -
6 Transient Occupancy Tax 2.0 2.4 (0.4)
7 Business License Tax 2.7 2.6 0.1
8 Licenses & Permits 6.1 6.3 (0.2)
9 Intergovernmental 0.8 0.8 -
10 Town Services 5.3 5.0 0.3
11 Fines & Forfeitures 0.3 0.3 -
12 Interest 1.2 1.1 0.1
13 Other Sources 3.7 3.7 -
14 Fund Transfers In 0.6 0.6 -
$ 60.1 $ 59.9 $ 0.2
15 Use of Capital/Special Projects $ - $ -
16 Use of Unassigned Fund Balance - -
$ 60.1 $ 59.9
Expenditure Category FY 2026-27 Forecast
Updated 10-21-2025
FY 2026-27 Forecast
Published with the
Adopted Budget
Variance
17 Salaries $ 26.8 $ 26.8 $ (0.1)
18 Overtime 0.7 0.7 -
19 CalPERS Benefits 10.3 10.4 (0.2)
20 All Other Benefits 5.9 6.3 (0.4)
21 4.6% Salaries and Benefits Savings (2.0) (2.0) -
22 OPEB Pay as You Go 2.2 2.2 -
23 Operating Expenditures 10.2 9.9 0.2
24 Grants & Awards 0.3 0.3 -
25 Utilities 0.9 0.7 0.2
26 Internal Service Charges 5.3 5.3 -
27 Debt Service 2.1 2.1 -
28 $ 62.5 $ 62.7 $ (0.2)
30 Additional Discretionary Payment -
Pension 0.4 0.4
31 $ 62.9 $ 63.1
32 Capital Transfers Out to GFAR $ - $ -
33 Allocate to GASB 31 Mark to Market - -
34 Allocate to Pension Trust 0.4 0.4
$ 63.3 $ 63.5
$ (3.2) $ (3.6)

TOTAL EXPENDITURES & RESERVE

NET REVENUES , TRANSFERS IN, USE

OF RESERVES LESS EXPENDITURES,

TRANSFERS IN, AND RESERVE

ALLOCATIONS

TOTAL OPERATING REVENUES &

TOTAL REVENUES, TRANSFERS, AND
USE OF RESERVES*

TOTAL OPERATING EXPENDITURES

TOTAL OPERATING &

DISCRETIONARY EXPENDITURES

ITEM NO. 14.
13 ATTACHMENT 2
Below is the list of variances/or no changes in the Revenue and Expenditure estimates.

Revenues:

Row 1 and Row 2 Column A – Property Tax and VLF Property Tax Backfill - No Projected Variance As of the September 12, 2025 estimate from the Santa Clara County Assessor’s Office (SCCAO), projected revenues are $27,739 lower than the FY 2025–26 Adopted Budget. This is a small variance; the Finance staff does not recommend any adjustment to the FY 2026–27 Property Tax forecast at this time.

The next update from the SCCAO is scheduled for November 12, 2025, and the HdL Coren & Cone Property Tax Update is expected in January 2026.

Row 3 and Row 4 Column A – Sales Tax and Measure G District Sales Tax - Projected Variance $0.3 million increase
As of October 10, 2025, Muniservices, the Town’s Sales Tax consultant, provided an updated Sales Tax revenue projection indicating an increase of approximately $300,000. This revised estimate reflects stronger-thananticipated local economic activity.

The Town is in the process of signing a Sales Tax Forecasting agreement with HdL. HdL will provide an updated look for the Sales Tax forecast.

Row 5 - Column A – Franchise Fees – No Projected Variance No Projected Change.

Row 6 - Column A – Transient Occupancy Tax (TOT) – Projected Variance ($0.4) million decrease The Finance Department has received the closing notification from one of the hotels. Staff is recommending decreasing the TOT base by $0.4 million.

Row 7 - Column A – Business License Tax – Projected Variance $0.1 million increase Based on the most recent estimates, the FY 2026-27 Business License Tax is anticipated to increase by $0.1 million.

Row 8 - Column A – Licenses and Permits – Projected Variance ($0.2) million decrease Based on the most recent estimates, the FY 2026-27 License and Permits is anticipated to decrease by $0.2 million.

Row 9 - Column A – Intergovernmental - No Projected Variance Row 10 - Column A – Town Services - Projected Variance - $0.3 million increase Based on Development activities, it is anticipated that the pass-through revenues will increase by $0.3 million.

The corresponding pass-through expenditures are expected to grow by the same amount.

Row 11 - Column A – Fines and Forfeitures - No Projected Variance

ITEM NO. 14.
14 ATTACHMENT 2
Row 12 - Column A – Interest - $0.1 million increase
Based on updated interest rate estimates as of October 21, 2025, staff have conducted a comprehensive evaluation of the current interest rate environment in relation to the Town’s existing investment portfolio. The interest rate assumptions have been updated accordingly to reflect current market conditions. As the market environment continues to evolve, projected interest rates will fluctuate. Staff are actively monitoring the investment rate environment and will continue to update interest rate assumptions on a periodic basis Row 13 - Column A – Other Sources - No Projected Variance Row 14 - Column A – Fund Transfers In - No Projected Variance Expenditures:

Row 17 - Column A – Salaries - No Projected Variance
Row 18 - Column A – Overtime - No Projected Variance
Row 19 - Column A – CalPERS Benefits - Projected Variance ($0.1) million decreases Row 20 - Column A – All Other Benefits - Projected Variance ($0.4) million decreases Row 21 - Column A – 4.6 % Salaries and Benefit Savings - No Projected Variance Based on the 10/7/2025 Actual Salary Steps, Pension Benefits, and Medical Insurance selection, the projected Salaries and Benefits are $0.5 million less.

Row 22 - Column A – OPEB Pay as You Go - No Projected Variance No Projected Change.

Row 23 - Column A – Operating Expenditure - Projected Variance $0.3 million increase Operating expenditure expected to increase by $0.3 million based on estimated pass-through activities.

Row 24 - Column A – Grants and Awards - No Projected Variance No Projected Change.

Row 25 - Column A – Utilities - Projected Variance $0.2 million increase Operating expenditure expected to increase by $0.2 million based on FY 2024-25 actual utilities expenditures.

Row 26 - Column A – Internal Service Charges - No Projected Variance Row 27 - Column A – Debt Services - No Projected Variance

ITEM NO. 14.
15 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (ADOPTED FY 2025-26 BUDGET) Type of
Revenue Base
Line Estimate
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Property Tax
SCC Assessor
Office
February 2025
Report and
HdL Coren and
Cone April
2025
Forecast

5.29%
Net Taxable
Value Change
Plus $220,000

5.42%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change
VLF Backfill
HdL Coren and
Cone April
2025
Forecast

5.25%
Net Taxable
Value Change

5.41%
Net Taxable
Value Change

4.90%
Net Taxable
Value Change

4.90%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change
Other
Property Tax
SCC Assessor
Office
February 2025
Report

3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
ERAF
SCC Assessor
Office March
2025
Notification
$3,220,000
Including
30% to
Reserve
$3,220,000 $3,220,000 $3,220,000 $3,220,000 $3,220,000
Sales Tax
MuniServices
March 2025
Most Likely
Estimates
MuniServices
March 2025
Most Likely
Estimates
MuniServices
March 2025
Most Likely
Estimates
MuniServices
March 2025
Most Likely
Estimates
MuniServices
March 2025
Most Likely
Estimates
MuniServices
March 2025
Most Likely
Estimates
Sales Tax -
Measure G
MuniServices
March 2025
Most Likely
Estimates
MuniServices
March 2025
Most Likely
Estimates
MuniServices
March 2025
Most Likely
Estimates
MuniServices
March 2025
Most Likely
Estimates
MuniServices
March 2025
Most Likely
Estimates
MuniServices
March 2025
Most Likely
Estimates
Franchise Fee
Current
baseline set by
3% 3% 3% 3% 3% 3%

ITEM NO. 14.
16 ATTACHMENT 2
Type of
Revenue Base
Line Estimate
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
FY 2024-25
Year-End
Estimates
Type of Revenue
Base Line
Estimates
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Transient
Occupancy Tax
Current baseline
set by FY 2024-
25 Year-End
Estimates
3%
Plus $20,000
from
anticipated
audit
3% 0% 0% 0% 0%
Business License
Tax
Current baseline
set by FY 2024-
25 Year-End
Estimates
2%
Plus $110,000
from
anticipated
audit
2% 2% 2% 2% 2%
License &
Permits
Current baseline
set by FY 2024-
25 Year-End
Estimates
3% 3% 3% 3% 3% 3%
Town Services
Current baseline
set by FY 2024-
25 Year-End
Estimates
3% 3% 0% 3% 3% 3%
Fine &
Forfeitures
Current baseline
set by FY 2024-
25 Year-End
Estimates
1% Varies Varies Varies Varies Varies

ITEM NO. 14.
17 ATTACHMENT 2
Type of Revenue
Base Line
Estimates
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Interest
Varies, based on
Portfolio
Weighted
Portfolio Yield

3.64%
Weighted
Portfolio Yield

3.56%
Weighted
Portfolio Yield

3.45%
Weighted
Portfolio Yield

3.36%
Weighted
Portfolio Yield

3.30%
Weighted
Portfolio Yield

3.30%
Other Sources
Current baseline
set by FY 2024-
25 Year-End
Estimates
Varies Varies Varies Varies Varies Varies
EXPENDITURE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2025-26 BUDGET - PUBLISHED 4/21/2025) Beginning in FY 2020-21, the Town is budgeting salaries at the actual salary plus a one-step increase. 68% of the workforce is already at top step or one step below top step. In the Five-Year Forecast, positions are forecasted at the actual rate of pay including salaries and benefits as of March 1, 2025 and rate is increasing in the actual anniversary date. The FY 2025- 26 Budget and the FY 2026-27 – FY 30-31 Forecast includes 4.6% vacancy savings.

Type of
Expenditure
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Salaries (TEA,
Conf, Temp)*
3% 3% 2% 2% 2% 2%
Salaries (POA)* 5% 4% 2% 2% 2% 2%
Salaries
(AFSCME)*
4% 4% 2% 2% 2% 2%
Salaries
(Management)*
3% 3% 2% 2% 2% 2%
Benefit -
Medical** 7% 7% 7% 7% 7% 7%
Vacancy Savings 4.6% 4.6% 4.6% 4.6% 4.6% 4.6%
Operating
Expenditures***
Varies 3% 3% 3% 3% 3%
Grants & Awards 0% 0% 0% 0% 0% 0%
Utilities*** Varies 3% 3% 3% 3% 3%

ITEM NO. 14.
18 ATTACHMENT 2
Internal Service
Charges***
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Debt Service Debt Service Schedules
*Salary increases are based on actual step increases and approved Memoranda of Understanding with the bargaining units **Benefit increase estimates are provided by CalPERS/Public Employees’ Medical and Hospital Care Act (PEMHCA). ***Based on historical trends.

The Town’s required employer contribution rate estimates were developed using data provided by each plan’s most recent CalPERS actuarial valuation. The employer contribution rates reflect percentages of covered payroll. Forecasted rates for FY 2055-26 and subsequent years are based on the most recent CalPERS actuarial valuation Reports as adjusted by the impact related to the FY 2022-23 CalPERS 5.8% investment return and forecasted payroll.

Type of
Expenditure
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Safety
POA 109.09% 109.92% 112.95% 121.16% 121.75% 124.52%
Safety
Management
POA
112.09% 112.92% 115.95% 124.16% 124.75% 127.52%
Safety

POA - PEPRA

15.84% 14.96% 20.99% 2.1.74% 22.04% 25.76%
Miscellaneous
TEA/Confidential/
Management

30.02% 30.52% 30.82% 31.78% 31.92% 32.21%
Miscellaneous
TEA/Confidential/
Management
PEPRA
Separate PEPRA
rate for
Miscellaneous has
not been

30.02% 30.52% 30.82% 31.78% 31.92% 32.21%

ITEM NO. 14.
19 ATTACHMENT 2
established yet by
CalPERS.
*Safety Classic Rate reflects 3% decrease in employer's contribution rate to reflect 3% contribution as negotiated with the Town's POA during the collective bargaining process effective FY 2019-20.

ITEM NO. 14.
20 ATTACHMENT 2
FY 2026-27 FORECAST IN THE FY 2025-26 ADOPTED BUDGET

ITEM NO. 14.
21 ATTACHMENT 2
FY 2025-26 BUDGET/FORECAST COMPARISON AS IT PUBLISHED ON 4/22/2024 COMPARED TO AS IT PUBLISHED ON 4/21/2025
This rest of this document includes forecasts for FY 2025-26, starting with the FY 2020-21 Proposed Budget forecast when FY 2025-26 was first forecasted. The forecast is updated periodically as the base, economy, and other factors evolve. The table on page X shows the variance between the FY 2025-26 Forecast (published on 4/22/2024) and the FY 2025-26 Proposed Budget (published on 4/21/2025). The assumptions for the FY 2025- 26 Forecast (published on 4/22/2024) and the FY 2025-26 Proposed (published on 4/21/2025) can be located on pages B and Y of this document, as well as in the Adopted FY 2024-25 and Proposed FY 2025-26 budgets.

Below is the list of significant variances in Revenue and Expenditure estimates:

Row 8 – Column E - Licenses and Permits: $2.4 million variance.

The $2.4 million Waste hauler Encroachment fee was categorized under Town Services in the Column C Forecast. Staff recategorized the estimated proceeds under Licenses and Permits in the Column D Forecast.

Row 10 – Column E – Town Services: ($1.1) million variance.

Considering the recategorization above, the Town Services increased by $1.3 million. The increase includes $647,000 development-related pass-through activities, $255,000 increase for the Monte Sereno Police Services Contract, $318,000 increased engineering services revenue, $46,000 increases for School Resource Officer support from the School Districts.

Row 13 – Column E – Other Sources: $0.7 million variance.

Since all Measure G Revenue is programmed to provide for public safety services, the pass-through tracking revenue is characterized as other revenue. In the Column C Forecast, only half of the Measure G revenue ($0.6 million) was characterized as Other sources, and the entire proceeds are characterized as Other sources in the Column D Forecast.

Row 18 – Column E – Salaries: $1.6 million variance.

Column C Forecast assumes 2% salary increases for TEA, AFSCME, Confidential, Management, and Temporary employees. The actual increase, as estimated in Column D Forecast for TEA, ASCME, Confidential, Management, and Temporary employees, was 5% in FY 2024-25, 3% in FY 2025-26, and 4% in FY 2024-25 and FY 2025-26 for AFSCME. In addition, there were equity adjustments for certain job classes that were not included in the Column C Forecast.

Row 20 – Column E – CalPERS Benefits: $0.8 million variance.

CalPERS rates are based on actual payroll, so increased salaries will cause increased CalPERS contributions. In addition, while the Miscellaneous Group rates remained relatively flat, growing from 29.6% (Column C Forecast) to 30.02% (Column D Forecast), the Classic Safety Group required contribution changed from 98.74% (Column C Forecast) to 109.09% (Column D Forecast), and the Classic Safety Management Group estimated contribution changed 101.74% (Column C Forecast) to 112.09% (Column D Forecast)

ITEM NO. 14.
22 ATTACHMENT 2
Row 24 – Column E – Operating Expenditures: $2.03 million variance.

Operating expenditures experience inflationary factors as well. The prior year assumed a 3% increases; however, certain services and product prices increased by more than 3%. The variance is added up from many different items:
 This item shows half of the Measure G Expenditure under Row 31 – Column C in the Column C Forecast, while it is included in the Operating Expenditures in Column D Forecast. Measure G Fund is a subfund in General Fund, and all proceeds are expended in a given year and part of the operating expenditures.
 The following increases listed as an example in this category that contribute to the difference between the two forecast: $647,000 development related pass through activities, $215,000 in legal services, $190,000 special studies, $150,000 temporary employee services, 127,000 in engineering services; $70,000 miscellaneous services and repairs,$54,000 in street closures,$53,000 street sweeping services,$50,000 in tree trimming services, $37,000 townwide meetings and events, 30,000 in auto parts, $27,000 software licenses,

ITEM NO. 14.
23 ATTACHMENT 2

A B C D E
Account Revenue Category
FY 2025-26
Forecast
Published
4/22/2024
FY 2025-26
Proposed
Budget
Published
4/21/2025
Variance
1 4100 Property Tax $ 21.3 $ 21.2 $ (0.10)
2 4110 VLF Backfill Property Tax 5.3 5.4 0.10
3 4200 Sales & Use Tax 6.7 6.6 (0.16)
4 4200 Measure G District Sales Tax 1.3 1.2 (0.04)
5 4250 Franchise Fees 1.1 1.0 (0.10)
6 4251 Transient Occupancy Tax 2.4 2.4 -
7 4400 Business License Tax 2.5 2.4 (0.10)
8 4400 Licenses & Permits 3.0 5.4 2.40
9 4500 Intergovernmental 0.9 0.8 (0.10)
10 4600 Town Services 6.7 5.6 (1.10)
11 4700 Fines & Forfeitures 0.3 0.3 -
12 4800 Interest 1.4 1.4 -
13 4850 Other Sources 3.1 3.8 0.70
14 4900 Fund Transfers In 0.6 0.6 -
15 $ 56.6 $ 58.1 $ 1.50
16 Use of Capital/Special Projects Reserve $ 1.1 $ -
Use of Measure G Sales Tax - Operating - -
Use of Pension/OPEB Reserve - -
Use of OPEB Trust - -
Use of Property Surplus Reserve - -
Use of Measure G Reserve - -
ARPA Replacement Revenue - -
Use of Council Priorites - Economic Recovery - -
17 $ 57.7 $ 58.1
Account Expenditure Category FY 2025/26
Forecast
FY 2025-26
Proposed
Budget
Variance
18 5110 Salary $ 23.8 $ 25.4 $ 1.63
19 Overtime 0.7 0.7 0.01
20 5120 CalPERS Benefits 9.1 9.9 0.81
21 5200 All Other Benefits 6.1 6.3 0.13
22 4.6% Salary and Benefits Savings (1.8) (1.9) (0.12)
23 6211 OPEB Pay as You Go 1.9 2.1 0.24
24 6000 Operating Expenditures 8.3 10.3 2.03
25 7200 Grants & Awards 0.2 0.4 0.19
26 7400 Utilities 0.7 0.7 (0.01)
27 8060 Internal Service Charges 5.2 5.0 (0.19)
28 8900 Debt Service 2.1 2.1 -
$ 56.2 $ 61.0 $ 4.72
GASB 45 Retiree Medical Actuarial - -
29 Additional Discretionary Payment - Pension 0.4 0.4
$ 56.6 $ 61.4
30 Capital Transfers Out to GFAR $ 1.1 $ -
31 1/2 of Measure G Proceeds to Capital 0.6 -
32 Allocate to ERAF Risk Reserve 0.8 -
33 Allocate to Pension Trust 0.4 0.4
34 $ 59.5 61.8
35 NET REVENUES , TRANSFERS IN, USE OF RESERVES LESS $ (1.8) (3.7)

TOTAL OPERATING REVENUES & TRANSFERS
TOTAL REVENUES, TRANSFERS, AND USE OF RESERVES*

TOTAL OPERATING EXPENDITURES

TOTAL OPERATING & DISCRETIONARY EXPENDITURES

AMOUNTS AVAILABLE FOR RESERVE ALLOCATIONS
TOTAL EXPENDITURES & RESERVE ALLOCATIONS*

ITEM NO. 14.
24 ATTACHMENT 2
FY 2025-26 FORECAST- PUBLISHED 4-21-2025 (HISTORICAL DETAIL ADDED ON 4/25/2025 TO

PUBLICATION)

ITEM NO. 14.
25 ATTACHMENT 2
Account Revenue Category
FY 2015/16
Actuals
FY 2016/17
Actuals
FY 2017/18
Actuals
FY 2018/19
Actuals
FY 2019/20
Actuals
FY 2020/21
Actuals
FY 2021/22
Actuals
4100 Property Tax $ 10.8 $ 11.5 $ 12.5 $ 13.6 $ 14.5 $ 15.8 $ 16.9 4110 VLF Backfill Property Tax 3.0 3.2 3.4 3.7 3.9 4.1 4.2 4200 Sales & Use Tax 7.5 9.2 7.6 8.0 6.5 6.8 7.2
4200 Measure G District Sales Tax - - - 0.2 1.0 1.1 1.3 4250 Franchise Fees 2.3 2.4 2.5 2.5 2.5 2.5 2.8
4251 Transient Occupancy Tax 1.9 2.3 2.6 2.7 1.9 1.0 1.9 4400 Business License Tax 1.5 1.7 1.7 1.5 1.4 1.4 1.5
4400 Licenses & Permits 3.5 3.0 3.0 3.1 2.7 3.1 4.8
4500 Intergovernmental 1.0 0.9 1.0 0.9 1.0 1.6 1.3
4600 Town Services 4.0 3.3 4.4 4.4 4.4 4.6 5.3
4700 Fines & Forfeitures 0.9 0.9 0.7 0.5 0.3 0.1 0.3
4800 Interest 0.6 0.2 0.2 1.4 2.2 0.1 (1.4)
4850 Other Sources 2.3 4.3 3.2 4.6 2.7 3.7 7.0
4900 Fund Transfers In 2.4 0.3 0.8 1.6 0.6 0.7 0.6
Use of Capital/Special Project Reserve - $ 41.7 $ 43.2 $ 43.6 $ 48.7 $ 45.6 $ 46.6 $ 53.7 Capital - 1.4 3.2 2.8 8.0 3.4 0.6
Use of Pension/OPEB Reserve - - - - - 4.5 0.3
Use of Property Surplus Reserve - - - - - - 1.2
Use of Almond Grove Reserve - 5.9 - - - - -
Use of Measure G Reserve - - - - - - 1.1
$ 41.7 $ 50.5 $ 46.8 $ 51.5 $ 53.6 $ 54.5 $ 56.9
Account Expenditure Category FY 2015/16
Actuals
FY 2016/17
Actuals
FY 2017/18
Actuals
FY 2018/19
Actuals
FY 2019/20
Actuals
FY 2020/21
Actuals
2021/22
Actuals
5110 Salary 14.5 14.8 16.0 17.9 19.3 20.2 20.0
5120 CalPERS Benefits 3.6 3.9 4.3 5.3 6.1 6.4 6.5
5200 All Other Benefits 3.2 3.2 3.3 3.6 3.6 3.7 3.7
6211 OPEB Pay as You Go 0.9 1.0 1.1 1.2 1.2 1.3 1.4
6000 Operating Expenditures 4.7 4.8 5.0 5.6 5.1 5.7 10.4 7200 Grants & Awards 0.7 0.2 0.2 0.3 0.3 0.3 1.8
7400 Utilities 0.4 0.6 0.5 0.5 0.5 0.6 0.6
8060 Internal Service Charges 3.5 3.6 3.9 2.5 2.2 2.3 2.6 8900 Debt Service 1.9 1.9 1.9 1.9 1.9 2.0 2.1
$ 33.6 $ 34.0 $ 36.2 $ 38.8 $ 40.2 $ 42.4 $ 49.0
GASB 45 Retiree Medical Actuarial 1.5 2.6 1.6 1.1 1.1 0.6 0.1 Additional Discretionary Payment - Pension - - - - - 5.6 0.7 $ 35.1 $ 36.6 $ 37.8 $ 39.9 $ 41.3 $ 48.6 $ 49.8
Capital Transfers Out to GFAR 0.5 7.3 2.6 2.3 7.0 3.4 1.2 Operating Tranfer Out 0.1 - 0.6 0.5 1.1 - -
1/2 of Measure G Proceeds to Capital - - - - - - 0.7
Fixed Assets/ Equipment Pension/OPEB Payment to Pension Trust 0.4 - - - 0.1 - - Fund - - 1.2 3.6 0.4 - -
$ 5.6 $ 6.6 $ 4.6 $ 5.2 $ 3.7 $ 2.5 $ 5.9
Allocate to Almond Grove Reserve Allocate to Budget 2.5 - - - - - - Stabilization/Catastrophic - - - - - 0.1 1.1
Allocate to Compensated Absences - - - - - 0.1 (0.2)
Allocate to Market Fluctuations Reserve 0.3 0.3 - - 1.2 - (0.4) Allocate to CalPERS/Pension Reserve - 1.8 - - - 0.3 0.3 Allocate to Measure G Reserve - - - - 1.2 - -
Allocate to VM & Stores Surplus Reserve - - - 1.0 - - - Allocate to Authorized Carryforwards 0.1 - - - - - 0.03 Sales Tax Prior - Year Adjusments - 0.4 - - - - -
Allocate to Property Surplus Reserve - - - 1.9 - 1.2 -
$ 39.0 $ 46.4 $ 42.2 $ 49.2 $ 52.2 $ 53.7 $ 52.2
$ 2.7 $ 4.1 $ 4.6 $ 2.3 $ 1.4 $ 0.8 $ 4.7

TOTAL OPERATING & DISCRETIONARY EXPENDITURES

AMOUNTS AVAILABLE FOR RESERVE ALLOCATIONS

TOTAL EXPENDITURES & RESERVE ALLOCATIONS

NET REVENUES RESERVE TRANSFERS LESS EXPENDITURES &

RESERVE ALLOCATIONS FOR FINAL ALLOCATION AFTER YEAR

END CLOSE
* Due to rounding of individual categories Total Expenditures and Reserve Allocations may include $0.1 million.

General Fund (111) Historical presentaion does not include Pension Trusts activities.

TOTAL OPERATING EXPENDITURES
TOTAL OPERATING REVENUES & TRANSFERS*

TOTAL REVENUES, TRANSFERS, AND USE OF RESERVES
Town of Los Gatos General Fund Historical Year-End Results (in $ million)

ITEM NO. 14.
26 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2025-25 BUDGET - PUBLISHED 4/21/2025) Type of
Revenue Base
Line Estimate
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Property Tax
SCC Assessor
Office
February 2025
Report and
HdL Coren
and Cone
April 2025
Forecast

5.29%
Net Taxable
Value Change

5.42%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change
VLF Backfill
HdL Coren
and Cone
April 2025
Forecast

5.25%
Net Taxable
Value Change

5.41%
Net Taxable
Value Change

4.90%
Net Taxable
Value Change

4.90%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change

4.89%
Net Taxable
Value Change
Other
Property Tax
SCC Assessor
Office
February 2025
Report

3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
ERAF
SCC Assessor
Office March
2025
Notification
$3,220,000 $3,220,000 $3,220,000 $3,220,000 $3,220,000 $3,220,000 Sales Tax
MuniServices
January 2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
Sales Tax -
Measure G
MuniServices
January 2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
MuniServices
January
2025
Most Likely
Estimates
Franchise Fee
Current
baseline set
by FY 2024-25
Year-End
Estimates
Current
baseline set by
FY 2024-25
Year-End
Estimates
3% 3% 3% 3% 3%

ITEM NO. 14.
27 ATTACHMENT 2
Type of Revenue
Base Line
Estimates
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Transient
Occupancy Tax
Current baseline
set by FY 2024-
25 Year-End
Estimates
3% 3% 0% 0% 0% 0%
Business License
Tax
Current baseline
set by FY 2024-
25 Year-End
Estimates
2% 2% 2% 2% 2% 2%
License &
Permits
Current baseline
set by FY 2024-
25 Year-End
Estimates
3% 3% 3% 3% 3% 3%
Town Services
Current baseline
set by FY 2024-
25 Year-End
Estimates
3% 3% 0% 3% 3% 3%
Fine &
Forfeitures
Current baseline
set by FY 2024-
25 Year-End
Estimates
1% Varies Varies Varies Varies Varies
Interest
Varies, based on
Portfolio
Weighted
Portfolio Yield

3.64%
Weighted
Portfolio Yield

3.56%
Weighted
Portfolio Yield

3.45%
Weighted
Portfolio Yield

3.36%
Weighted
Portfolio Yield

3.30%
Weighted
Portfolio Yield

3.30%
Other Sources
Current baseline
set by FY 2024-
25 Year-End
Estimates
Varies Varies Varies Varies Varies Varies

ITEM NO. 14.
28 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2025-26 BUDGET - PUBLISHED 4/21/2025) Beginning in FY 2020-21, the Town is budgeting salaries at the actual salary plus a one-step increase. 68% of the workforce is already at top step or one step below top step. In the Five-Year Forecast, positions are forecasted at the actual rate of pay including salaries and benefits as of March 1, 2025 and rate is increasing in the actual anniversary date. The FY 2025- 26 Budget and the FY 2026-27 – FY 30-31 Forecast includes 4.6% vacancy savings.

Type of
Expenditure
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Salaries (TEA,
Conf, Temp)*
3% 3% 2% 2% 2% 2%
Salaries (POA)* 5% 4% 2% 2% 2% 2%
Salaries
(AFSCME)*
4% 4% 2% 2% 2% 2%
Salaries
(Management)*
3% 3% 2% 2% 2% 2%
Benefit -
Medical**
7% 7% 7% 7% 7% 7%
Vacancy Savings 4.6% 4.6% 4.6% 4.6% 4.6% 4.6%
Operating
Expenditures***
Varies 3% 3% 3% 3% 3%
Grants & Awards 0% 0% 0% 0% 0% 0%
Utilities*** Varies 3% 3% 3% 3% 3%
Internal Service
Charges***
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Debt Service Debt Service Schedules
*Salary increases are based on actual step increases and approved Memoranda of Understanding with the bargaining units **Benefit increase estimates are provided by CalPERS/Public Employees’ Medical and Hospital Care Act (PEMHCA). ***Based on historical trends.

ITEM NO. 14.
29 ATTACHMENT 2
The Town’s required employer contribution rate estimates were developed using data provided by each plan’s most recent CalPERS actuarial valuation. The employer contribution rates reflect percentages of covered payroll. Forecasted rates for FY 2055-26 and subsequent years are based on the most recent CalPERS actuarial valuation Reports as adjusted by the impact related to the FY 2022-23 CalPERS 5.8% investment return and forecasted payroll.

Type of
Expenditure
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Safety
POA
109.09% 109.92% 112.95% 121.16% 121.75% 124.52%
Safety
Management
POA
112.09% 112.92% 115.95% 124.16% 124.75% 127.52%
Safety

POA - PEPRA

15.84% 14.96% 20.99% 21.74% 22.04% 25.76%
Miscellaneous
TEA/Confidential/
Management

30.02% 30.52% 30.82% 31.78% 31.92% 32.21%
Miscellaneous
TEA/Confidential/
Management
PEPRA
Separate PEPRA
rate for
Miscellaneous has
not been
established yet by
CalPERS.

30.62% 29.65% 31.01% 32.28% 33.81% 34.49%
*Safety Classic Rate reflects 3% decrease in employer's contribution rate to reflect 3% contribution as negotiated with the Town's POA during the collective bargaining process effective FY 2019-20.

ITEM NO. 14.
30 ATTACHMENT 2
FY 2024-25 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/7/2025

ITEM NO. 14.
31 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2024-25 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/7/2025)

ITEM NO. 14.
32 ATTACHMENT 2 Page 388
ITEM NO. 14.
33 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2024-25 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/7/2025)
Beginning in FY 2020-21, the Town started budgeting salaries at the actual salary plus a one-step increase. In the FiveYear Forecast, positions are forecasted at the actual rate of pay including salaries and benefits as of December 31, 2024.

Beginning FY 2023-24 the total salaries and benefits budget includes 4.6% vacancy factor.

ITEM NO. 14.
34 ATTACHMENT 2
The Town’s required employer contribution rate estimates were developed using data provided by each plan’s most recent CalPERS actuarial valuation. The employer contribution rates reflect percentages of covered payroll. Rates shown for FY 2024-25 are actual rates as prescribed by CalPERS. Forecasted rates for FY 2025-26 and subsequent years are based on the most recent CalPERS actuarial valuation Reports as adjusted by the impact related to the FY 2022-23 CalPERS 6.1% investment return and forecasted payroll.

Beginning in FY 2021-22, the estimates of employer contributions were credited with an anticipated reductions associated with the approximate $4.8 million additional discretionary payment (ADP) toward the 2016 unfunded amortization base paid off in October 2019 and the total of approximately $5.8 million in ADPs toward unfunded 2013 and 2015 amortization bases that were paid off in FY 2020-21.

ITEM NO. 14.
35 ATTACHMENT 2
FY 2024-25 FORECAST- PUBLISHED 4-22-2024 FY 2024-25 PROPOSED BUDGET General Fund 5-Year Forecast
(in $ million)
Revenue Category
FY 2022/23
Actuals
FY 2023/24
Adjusted
Budget
FY 2023/24
Estimates
FY 2024/25
Budget
FY 2025/26
Forecast
FY 2026/27
Forecast
FY 2027/28
Forecast
FY 2028/29
Forecast
FY 2029/30
Forecast
Property Tax $ 18.2 $ 19.0 $ 19.0 $ 20.2 $ 21.3 $ 22.5 $ 23.7 $ 25.0 $ 26.5 VLF Backfill Property Tax 4.6 4.9 4.9 5.0 5.3 5.6 5.9 6.3 6.7 Sales & Use Tax 7.5 7.0 6.7 6.6 6.7 6.9 6.9 7.0 7.1
Measure G District Sales Tax 1.3 1.2 1.2 1.3 1.3 1.3 1.4 1.4 1.4 Franchise Fees 3.1 3.3 3.3 1.0 1.1 1.1 1.1 1.2 1.2
Transient Occupancy Tax 2.2 2.3 2.3 2.3 2.4 2.4 2.4 2.4 2.4 Business License Tax 2.4 2.4 2.4 2.4 2.5 2.6 2.6 2.7 2.8 Licenses & Permits 3.3 3.3 3.3 3.0 3.0 3.1 3.2 3.3 3.4
Intergovernmental 1.6 1.3 1.3 1.4 0.9 1.0 0.9 0.9 1.0
Town Services 4.6 4.6 5.0 7.0 6.7 6.8 7.0 7.2 7.4
Fines & Forfeitures 0.4 0.4 0.4 0.3 0.3 0.3 0.3 0.3 0.3 Interest 0.6 1.6 1.6 1.8 1.4 1.3 1.2 1.1 1.1
Other Sources 8.1 4.0 4.1 3.5 3.1 3.2 3.3 3.2 2.0
Fund Transfers In 0.5 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6
$ 58.4 $ 55.9 $ 56.1 $ 56.4 $ 56.6 $ 58.7 $ 60.5 $ 62.6 $ 63.9 Use of Capital/Special Projects Reserve $ 2.4 $ 1.6 $ 2.0 $ 1.1 $ 1.1 $ 1.1 $ 1.1 $ 1.1 $ 1.1 Use of Measure G Sales Tax - Operating - - - 0.6 - - - - - Use of Pension/OPEB Reserve 0.3 0.3 0.3 - - - - - -
Use of Council Priorites - Economic Recovery - 1.5 1.5 - - - - - - $ 61.1 $ 59.3 $ 59.9 $ 58.1 $ 57.7 $ 59.8 $ 61.6 $ 63.7 $ 65.0 Expenditure Category FY 2022/23
Actuals
FY 2023/24
Adjusted
Budget
FY 2023/24
Estimates
FY 2024/25
Budget
FY 2025/26
Forecast
FY 2026/27
Forecast
FY 2027/28
Forecast
FY 2028/29
Forecast
FY 2029/30
Forecast
Salary $ 20.4 $ 21.3 $ 21.9 $ 23.6 $ 23.8 $ 24.5 $ 25.1 $ 25.7 $ 26.2 Overtime 1.4 0.6 1.3 0.6 0.7 0.7 0.7 0.7 0.7
CalPERS Benefits 7.1 8.2 7.2 8.8 9.1 9.7 10.4 11.2 11.8 All Other Benefits 3.8 4.7 4.4 5.6 6.1 6.3 6.5 6.7 6.8

4.6% Salary and Benefits Savings - - - (1.8) (1.8) (1.9) (2.0) (2.0) (2.1) OPEB Pay as You Go 1.5 1.6 1.6 1.7 1.9 2.0 2.0 2.0 2.0
Operating Expenditures 11.7 11.0 10.6 8.8 8.3 8.6 8.7 9.0 9.2 Grants & Awards 0.6 1.0 0.7 0.3 0.2 0.2 0.2 0.2 0.3
Utilities 0.6 0.7 0.7 0.7 0.7 0.8 0.8 0.8 0.8
Internal Service Charges 2.6 3.4 3.4 4.4 5.2 5.4 5.6 5.8 6.1 Debt Service 2.0 2.1 2.1 2.1 2.1 2.1 2.1 2.1 0.8
$ 51.8 $ 54.5 $ 53.9 $ 54.8 $ 56.2 $ 58.4 $ 60.1 $ 62.2 $ 62.7 Additional Discretionary Payment - Pension 0.7 0.7 0.7 0.4 0.4 0.4 0.4 0.4 0.4 $ 52.5 $ 55.2 $ 54.6 $ 55.2 $ 56.6 $ 58.8 $ 60.5 $ 62.6 $ 63.1 Capital Transfers Out to GFAR $ 2.4 $ 1.6 $ 1.6 $ 1.1 $ 1.1 $ 1.1 $ 1.1 $ 1.1 $ 1.1 Transfer to General Liability - - 0.4 - - - - - -
1/2 of Measure G Proceeds to Capital 0.6 0.6 0.7 0.6 0.6 0.7 0.7 0.7 0.7 Allocate to ERAF Risk Reserve 0.7 0.7 0.7 0.8 0.8 0.8 0.8 0.8 0.8 Allocate to Pension Trust 0.7 0.7 0.7 0.4 0.4 0.4 0.4 0.4 0.4 $ 56.2 $ 58.8 $ 58.7 $ 58.1 $ 59.5 $ 61.8 $ 63.5 $ 65.6 $ 66.1 $ 4.9 $ 0.5 $ 1.1 $ - $ (1.8) $ (2.0) $ (1.9) $ (1.9) $ (1.1) * Due to rounding of individual categories total revenues, expenditures, and reserve allocations may include $0.1 million.

NET REVENUES , TRANSFERS IN, USE OF RESERVES

LESS EXPENDITURES, TRANSFERS IN, AND RESERVE

ALLOCATIONS

TOTAL REVENUES, TRANSFERS, AND USE OF
RESERVES*
TOTAL EXPENDITURES & RESERVE ALLOCATIONS*

TOTAL OPERATING REVENUES & TRANSFERS

TOTAL OPERATING EXPENDITURES

TOTAL OPERATING & DISCRETIONARY

EXPENDITURES

ITEM NO. 14.
36 ATTACHMENT 2
Account Revenue Category
FY 2015/16
Actuals
FY 2016/17
Actuals
FY 2017/18
Actuals
FY 2018/19
Actuals
FY 2019/20
Actuals
FY 2020/21
Actuals
FY 2021/22
Actuals
4100 Property Tax $ 10.8 $ 11.5 $ 12.5 $ 13.6 $ 14.5 $ 15.8 $ 16.9 4110 VLF Backfill Property Tax 3.0 3.2 3.4 3.7 3.9 4.1 4.2 4200 Sales & Use Tax 7.5 9.2 7.6 8.0 6.5 6.8 7.2
4200 Measure G District Sales Tax - - - 0.2 1.0 1.1 1.3 4250 Franchise Fees 2.3 2.4 2.5 2.5 2.5 2.5 2.8
4251 Transient Occupancy Tax 1.9 2.3 2.6 2.7 1.9 1.0 1.9 4400 Business License Tax 1.5 1.7 1.7 1.5 1.4 1.4 1.5
4400 Licenses & Permits 3.5 3.0 3.0 3.1 2.7 3.1 4.8
4500 Intergovernmental 1.0 0.9 1.0 0.9 1.0 1.6 1.3
4600 Town Services 4.0 3.3 4.4 4.4 4.4 4.6 5.3
4700 Fines & Forfeitures 0.9 0.9 0.7 0.5 0.3 0.1 0.3
4800 Interest 0.6 0.2 0.2 1.4 2.2 0.1 (1.4)
4850 Other Sources 2.3 4.3 3.2 4.6 2.7 3.7 7.0
4900 Fund Transfers In 2.4 0.3 0.8 1.6 0.6 0.7 0.6
Use of Capital/Special Project Reserve - $ 41.7 $ 43.2 $ 43.6 $ 48.7 $ 45.6 $ 46.6 $ 53.7 Capital - 1.4 3.2 2.8 8.0 3.4 0.6
Use of Pension/OPEB Reserve - - - - - 4.5 0.3
Use of Property Surplus Reserve - - - - - - 1.2
Use of Almond Grove Reserve - 5.9 - - - - -
Use of Measure G Reserve - - - - - - 1.1
$ 41.7 $ 50.5 $ 46.8 $ 51.5 $ 53.6 $ 54.5 $ 56.9
Account Expenditure Category FY 2015/16
Actuals
FY 2016/17
Actuals
FY 2017/18
Actuals
FY 2018/19
Actuals
FY 2019/20
Actuals
FY 2020/21
Actuals
2021/22
Actuals
5110 Salary 14.5 14.8 16.0 17.9 19.3 20.2 20.0
5120 CalPERS Benefits 3.6 3.9 4.3 5.3 6.1 6.4 6.5
5200 All Other Benefits 3.2 3.2 3.3 3.6 3.6 3.7 3.7
6211 OPEB Pay as You Go 0.9 1.0 1.1 1.2 1.2 1.3 1.4
6000 Operating Expenditures 4.7 4.8 5.0 5.6 5.1 5.7 10.4 7200 Grants & Awards 0.7 0.2 0.2 0.3 0.3 0.3 1.8
7400 Utilities 0.4 0.6 0.5 0.5 0.5 0.6 0.6
8060 Internal Service Charges 3.5 3.6 3.9 2.5 2.2 2.3 2.6 8900 Debt Service 1.9 1.9 1.9 1.9 1.9 2.0 2.1
$ 33.6 $ 34.0 $ 36.2 $ 38.8 $ 40.2 $ 42.4 $ 49.0
GASB 45 Retiree Medical Actuarial 1.5 2.6 1.6 1.1 1.1 0.6 0.1 Additional Discretionary Payment - Pension - - - - - 5.6 0.7 $ 35.1 $ 36.6 $ 37.8 $ 39.9 $ 41.3 $ 48.6 $ 49.8
Capital Transfers Out to GFAR 0.5 7.3 2.6 2.3 7.0 3.4 1.2 Operating Tranfer Out 0.1 - 0.6 0.5 1.1 - -
1/2 of Measure G Proceeds to Capital - - - - - - 0.7
Fixed Assets/ Equipment Pension/OPEB Payment to Pension Trust 0.4 - - - 0.1 - - Fund - - 1.2 3.6 0.4 - -
$ 5.6 $ 6.6 $ 4.6 $ 5.2 $ 3.7 $ 2.5 $ 5.9
Allocate to Almond Grove Reserve Allocate to Budget 2.5 - - - - - - Stabilization/Catastrophic - - - - - 0.1 1.1
Allocate to Compensated Absences - - - - - 0.1 (0.2)
Allocate to Market Fluctuations Reserve 0.3 0.3 - - 1.2 - (0.4) Allocate to CalPERS/Pension Reserve - 1.8 - - - 0.3 0.3 Allocate to Measure G Reserve - - - - 1.2 - -
Allocate to VM & Stores Surplus Reserve - - - 1.0 - - - Allocate to Authorized Carryforwards 0.1 - - - - - 0.03 Sales Tax Prior - Year Adjusments - 0.4 - - - - -
Allocate to Property Surplus Reserve - - - 1.9 - 1.2 -
$ 39.0 $ 46.4 $ 42.2 $ 49.2 $ 52.2 $ 53.7 $ 52.2
$ 2.7 $ 4.1 $ 4.6 $ 2.3 $ 1.4 $ 0.8 $ 4.7

TOTAL OPERATING & DISCRETIONARY EXPENDITURES

AMOUNTS AVAILABLE FOR RESERVE ALLOCATIONS

TOTAL EXPENDITURES & RESERVE ALLOCATIONS

NET REVENUES RESERVE TRANSFERS LESS EXPENDITURES &

RESERVE ALLOCATIONS FOR FINAL ALLOCATION AFTER YEAR

END CLOSE
* Due to rounding of individual categories Total Expenditures and Reserve Allocations may include $0.1 million.

General Fund (111) Historical presentaion does not include Pension Trusts activities.

TOTAL OPERATING EXPENDITURES
TOTAL OPERATING REVENUES & TRANSFERS*

TOTAL REVENUES, TRANSFERS, AND USE OF RESERVES
Town of Los Gatos General Fund Historical Year-End Results (in $ million)

ITEM NO. 14.
37 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2024-25 PROPOSED BUDGET – PUBLISHED 4/22/2024)

ITEM NO. 14.
38 ATTACHMENT 2 Page 394
ITEM NO. 14.
39 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2024-25 PROPOSED BUDGET – PUBLISHED 4/22/2024)

ITEM NO. 14.
40 ATTACHMENT 2
SUMMARY OF CHANGES FY 2024-25

FROM PROPOSED TO ADOPTED

ITEM NO. 14.
41 ATTACHMENT 2
Per Measure A, the Finance Commission received the Proposed FY 2023/24 Operating and Capital Budgets 21 business days before May 16, 2023, which was the first meeting at which the Proposed Budgets were considered by the Town Council. The Finance Commission held three public meetings at which Commissioners discussed the Proposed Budgets and provided recommendations to the Town Council per Measures A and G. On May 16, 2023, the Town Council conducted a public hearing to discuss the proposed FY 2023/24 Operating and Capital Summary Budget and Proposed FY 2023/24 – 2027/28 Capital Improvement Program. The Town Council considered public testimony, discussed both documents, considered the Finance Commission recommendations, and directed staff to bring back the documents for final approval incorporating the Council recommendations.

The Town Council adopted a balanced budget on June 6, 2023. The Adopted Budget includes a 4.6% vacancy factor, while Council directed that staff continue to hire for all vacant positions. The 4.6% salary savings represents approximately $1.7 million projected saving that eliminates a need for Other Post Employment Benefits (OPEB) Trust withdrawal. The Adopted Budget fully recognizes the Educational Revenue Augmentation Fund (ERAF) proceeds for FY 2023/24. The Council programmed 70% of the estimated revenue and reserved 30% as the “at risk” amount until the lawsuit between the State and the School Districts is resolved.

The following table represent the changes from the proposed budget to the adopted budget.

ITEM NO. 14.
42 ATTACHMENT 2
While the Adopted Budget document reflects all of the approved changes, the Town Manager Transmittal Letter dated April 17, 2023 represents the proposed FY 2023/24 Operating and Capital Budgets as it was submitted on April 17, 2023. The five-year forecast on the following page has been updated to reflect the adjustments to revenues and expenditures in the FY 2023/24 Adopted Budget. 2023/24 Estimated 2023/24
Proposed Budget Recommended
Budget Revision Budget

REVENUES
General Fund $54,130,896 $ (914,326) (1) $ 53,216,570
Special Revenue Funds 542,380 - $ 542,380
Internal Service Funds 4,947,389 - $ 4,947,389
Capital Project Funds (does not include carryforwards) 8,547,920 - $ 8,547,920 Successor Agency Funds 3,811,664 - $ 3,811,664
TOTAL REVENUES $71,980,249 $ (914,326) $ 71,065,923

OTHER FUNDING SOURCES
Designated One-Time Use of General Fund Reserves 2,361,000 $ 33,000 2,394,000 (2) TOTAL TOWN REVENUES & OTHER FUNDING SOURCES $74,341,249 $ (881,326) $ 73,459,923

TOTAL TOWN EXPENDITURES, TRANSFERS OUT & CARRYFORWARD APPROPRIATION General Fund $56,101,896 $ (1,586,649) (3) $ 54,515,247 Special Revenue Funds 469,381 (9,794) (4) 459,587
Internal Service Funds 6,132,798 - 6,132,798
Capital Project Funds (does not include carryforwards) 10,658,747 - (5) 10,658,747 Successor Agency Funds 3,801,021 (87) (6) 3,800,934
TOTAL TOWN EXPENDITURE & OTHER FUNDING USES $77,163,843 $ (1,596,530) $ 75,567,313 GENERAL FUND SOURCE(USE) OF FUND BALANCES $ 390,000 $ 660,900 $ 1,095,323 OTHER FUNDS SOURCE(USE) OF FUND BALANCES (3,212,594) (3,202,713) (7) TOTAL SOURCE(USE) OF FUND BALANCES $ (2,822,594) $ 715,204 $ (2,107,390) Numbers may differ between exhibits due to rounding.
(4) Special Revenue Fund Expenditures
$9,794 - Decrease - 4.6% Salary Saving Factor
(1) Additional General Fund Revenues
$1,608,226 Decreases OPEB Trust Reimbursement for Retiree Medical $660,900 Increases Additional ERAF Proceeds to Reserve At Risk $33,000 - Increase ARPA Replacement Pass Through Revenue - Tracking (2) Designated One-Time Use of the General Fund Reserves during FY 2023/24 $1,615,000 - Transfer to Capital Projects (GFAR)
$779,000 - ARPA Revenue Replacement Tracking
(3) General Fund Expenditures
$1,663,649 - Decrease - 4.6% Salary Saving Factor
$11,000- Increase Project Based Boards and Commissions Support $33,000 - Increase Chamber Agreement
$33,000 - Increase ARPA Replacement Pass Through Expenditure - Tracking (5) Capital Project Funds Expenditures
No Change in Total Expenditures, $35,000 transferred from the Lynn Avenue Pedestrian Path Design Project (411-832-4510) to Emergency Preparedness Project (411-821-2012) (7) Other Funds Source (Use) represents planned one-time uses of Internal Service Funds, Special Revenue Funds, Trust Funds, and Capital Project Funds primary for infrastructure and equipment investment.
(6) Successor Agency Funds Expenditures
$87 - Decrease - 4.6% Salary Saving Factor

ITEM NO. 14.
43 ATTACHMENT 2
The following table illustrates the previous projected deficits relative to the updated Forecast.

Original 5 Year Forecast 2024/25
Forecast
($M)
2025/26
Forecast
($M)
2026/27
Forecast
($M)
2027/28
Forecast
($M)
2028/29
Forecast
($M)
Proposed Surplus/Deficit ($3.1) ($2.8) ($3.2) ($3.5) ($4.0) Adopted Surplus/Deficit ($3.0) ($2.8) ($3.1) ($3.3) ($3.8) Account Revenue Category
FY 2022/23
Adjusted
Budget
FY 2022/23
Estimates
FY 2023/24
Adopted
Budget
FY 2024/25
Forecast
FY 2025/26
Forecast
FY 2026/27
Forecast
FY 2027/28
Forecast
FY 2028/29
Forecast
4100 Property Tax $ 17.0 $ 17.2 $ 17.9 $ 17.8 $ 18.5 $ 18.9 $ 19.5 $ 20.1 4110 VLF Backfill Property Tax 4.6 4.6 4.7 4.8 5.0 5.1 5.3 5.4 4200 Sales & Use Tax 7.5 7.7 7.9 8.1 8.5 8.7 9.0 9.3
4200 Measure G District Sales Tax 1.3 1.3 1.3 1.3 1.3 1.4 1.4 1.4 4250 Franchise Fees 2.7 2.7 2.1 1.9 1.9 1.9 2.0 2.0
4251 Transient Occupancy Tax 2.0 2.3 2.4 2.5 2.6 2.6 2.6 2.7 4400 Business License Tax 2.4 2.3 2.4 2.5 2.5 2.6 2.6 2.7 4400 Licenses & Permits 2.9 2.9 2.9 2.9 3.0 3.1 3.2 3.3 4500 Intergovernmental 1.3 1.3 0.9 0.9 0.9 1.0 1.0 1.0
4600 Town Services 4.8 5.1 4.4 4.2 4.2 4.3 4.4 4.6
4700 Fines & Forfeitures 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 4800 Interest 0.4 0.7 1.0 0.9 0.9 0.9 0.9 0.9
4850 Other Sources 3.5 7.1 3.6 2.8 2.8 3.0 2.9 2.9
4900 Fund Transfers In 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5
Use of Capital/Special Project Reserve - $ 51.1 $ 55.9 $ 52.2 $ 51.3 $ 52.8 $ 54.2 $ 55.5 $ 57.0 Capital 2.4 2.4 1.6 0.8 0.8 0.8 0.8 0.8
Use of Pension/OPEB Reserve 0.3 0.3 - - - - - -
Use of OPEB Trust - - - - - -
ARPA Replacement Revenue Use of Council Priorites - Economic 1.6 - - - - - - - Vitalities - 6.1 0.7 - - - - -
$ 55.4 $ 64.7 $ 54.5 $ 52.1 $ 53.6 $ 55.0 $ 56.3 $ 57.8 Account Expenditure Category
FY 2022/23
Adjusted
Budget
FY 2022/23
Estimates
FY 2023/24
Adopted
Budget
FY 2024/25
Forecast
FY 2025/26
Forecast
FY 2026/27
Forecast
FY 2027/28
Forecast
FY 2028/29
Forecast
5110 Salary 23.0 22.5 23.2 23.8 24.4 25.0 25.5 26.0
5120 CalPERS Benefits 7.7 6.8 8.2 8.6 8.9 9.6 10.2 11.1 5200 All Other Benefits 4.6 3.9 4.7 4.8 4.9 5.0 5.1 5.2

4.6% Salary and Benefits Savings - - (1.7) (1.7) (1.8) (1.8) (1.9) (1.9) 6211 OPEB Pay as You Go 1.6 1.6 1.6 1.8 1.9 2.0 2.0 2.0 6000 Operating Expenditures 8.0 11.7 9.0 8.8 8.9 9.2 9.3 9.7 7200 Grants & Awards 0.5 1.2 0.8 0.6 0.6 0.3 0.3 0.3
7400 Utilities 0.6 0.6 0.6 0.6 0.7 0.7 0.7 0.7
8060 Internal Service Charges 2.7 2.6 3.4 3.6 3.7 3.9 4.1 4.2 8900 Debt Service 2.0 2.0 2.1 2.1 2.1 2.1 2.1 2.1
$ 50.8 $ 53.0 $ 51.9 $ 52.9 $ 54.2 $ 55.9 $ 57.4 $ 59.4 GASB 45 Retiree Medical Actuarial - - - - - - - -
Additional Discretionary Payment - Pension 0.7 0.7 0.4 0.4 0.4 0.4 0.4 0.4 $ 51.5 $ 53.7 $ 52.3 $ 53.3 $ 54.6 $ 56.3 $ 57.8 $ 59.8 Capital Transfers Out to GFAR 2.4 2.4 1.6 1.1 1.1 1.1 1.1 1.1 1/2 of Measure G Proceeds to Capital Pension/OPEB Transfer to Pension Trust 0.6 0.6 0.6 0.7 0.7 0.7 0.7 0.7 Fund 0.4 0.7 - - - - - -
Allocate to Council Priorites - Economic
Recovery - 5.7 - - - - - -
$ 54.9 $ 63.1 $ 54.5 $ 55.1 $ 56.4 $ 58.1 $ 59.6 $ 61.6 $ 0.5 $ 1.6 $ - $ (3.0) $ (2.8) $ (3.1) $ (3.3) $ (3.8) * Due to rounding of individual categories FY 2022/23 Estimated Total Expenditures and Reserve Allocations includes $0.1 million.

General Fund (111) Forecast does not include Pension Trust activities.

NET REVENUES RESERVE TRANSFERS LESS EXPENDITURES &

RESERVE ALLOCATIONS FOR FINAL ALLOCATION AFTER YEAR

END CLOSE

TOTAL REVENUES, TRANSFERS, AND USE OF RESERVES

TOTAL EXPENDITURES & RESERVE ALLOCATIONS
TOTAL OPERATING REVENUES & TRANSFERS*

TOTAL OPERATING EXPENDITURES

TOTAL OPERATING & DISCRETIONARY EXPENDITURES

AMOUNTS AVAILABLE FOR RESERVE ALLOCATIONS

ITEM NO. 14.
44 ATTACHMENT 2
FY 2023-24 MID-YEAR-REPORT AND FORECAST – PUBLISHED 2/10/2024

ITEM NO. 14.
45 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2023-24 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2024)

ITEM NO. 14.
46 ATTACHMENT 2 Page 402
ITEM NO. 14.
47 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2023-24 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2024)

ITEM NO. 14.
48 ATTACHMENT 2 Page 404
ITEM NO. 14.
49 ATTACHMENT 2
FY 2023-24 PROPOSED BUDGET FORECAST- PUBLISHED 4/17/2023

ITEM NO. 14.
50 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2023-24 PROPOSED BUDGET - PUBLISHED 4/17/2023)

ITEM NO. 14.
51 ATTACHMENT 2 Page 407
ITEM NO. 14.
52 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2023-24 PROPOSED BUDGET - PUBLISHED 4/17/2023)

ITEM NO. 14.
53 ATTACHMENT 2
FY 2022-23 MID-YEAR REPORT AND FORECAST- PUBLISHED 2/10/2023

ITEM NO. 14.
54 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2022-23 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2023)

ITEM NO. 14.
55 ATTACHMENT 2 Page 411
ITEM NO. 14.
56 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2022-23 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2023)

ITEM NO. 14.
57 ATTACHMENT 2 Page 413
ITEM NO. 14.
58 ATTACHMENT 2 Page 414
ITEM NO. 14.
59 ATTACHMENT 2
FY 2022-23 PROPOSED BUDGET FORECAST- PUBLISHED 4/18/2022

ITEM NO. 14.
60 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2022-23 BUDGET – PUBLISHED 4/17/2022)

ITEM NO. 14.
61 ATTACHMENT 2 Page 417
ITEM NO. 14.
62 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2022-23 BUDGET – PUBLISHED 4/17/2022)

ITEM NO. 14.
63 ATTACHMENT 2 Page 419
ITEM NO. 14.
64 ATTACHMENT 2
FY 2021-22 MID-YEAR REPORT AND FORECAST- PUBLISHED 2/11/2022

ITEM NO. 14.
65 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2021-22 MID-YEAR AND FORECAST - PUBLISHED 2/11/2022)

ITEM NO. 14.
66 ATTACHMENT 2 Page 422
ITEM NO. 14.
67 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2021-22 MID YEAR AND FORECAST - PUBLISHED 2/11/2022)

ITEM NO. 14.
68 ATTACHMENT 2 Page 424
ITEM NO. 14.
69 ATTACHMENT 2
FY 2021-22 PROPOSED BUDGET - PUBLISHED 4/19/2021

ITEM NO. 14.
70 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2021-22 PROPOSED BUDGET - PUBLISHED 4/19/2021)

ITEM NO. 14.
71 ATTACHMENT 2 Page 427
ITEM NO. 14.
72 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2021-22 PROPOSED BUDGET - PUBLISHED 4/19/2021)

ITEM NO. 14.
73 ATTACHMENT 2 Page 429
ITEM NO. 14.
74 ATTACHMENT 2
FY 2020-21 MID-YEAR REPORT AND FORECAST - PUBLISHED 2/12/2021

ITEM NO. 14.
75 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2020-21 MID-YEAR AND FORECAST - PUBLISHED 2/12/2021)

ITEM NO. 14.
76 ATTACHMENT 2 Page 432
ITEM NO. 14.
77 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2020-21 MID-YEAR AND FORECAST - PUBLISHED 2/12/2021)

ITEM NO. 14.
78 ATTACHMENT 2 Page 434
ITEM NO. 14.
79 ATTACHMENT 2
FY 2020-21 PROPOSED BUDGET - PUBLISHED 4/19/2021

ITEM NO. 14.
80 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2020-21 PROPOSED BUDGET - PUBLISHED 4/19/2021)

ITEM NO. 14.
81 ATTACHMENT 2 Page 437
ITEM NO. 14.
82 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2020-21 PROPOSED BUDGET - PUBLISHED 4/19/2021)

ITEM NO. 14.
83 ATTACHMENT 2 Page 439
ITEM NO. 14.

Revenue Baselines and Projection Factors
ATTACHMENT 3
Type of
Revenues
FY 2025-26
Estimates
Baseline
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Property
Tax/VLF
Backfill
Current
baseline set by
SCC Assessor
Office February
2026 report

4.34% 5.09% 5.08% 5.07% 5.06%
Motor
Vehicle
License in
Lieu (VLF)
Current
baseline set by
SCC Assessor
Office,
February 2026
report

4.78% 5.14% 5.13% 5.11% 5.10%
ERAF
Current
baseline set
100% of SCC
Assessor Office
February
2026Update
$3.2 million $3.2 million $3.2 million $3.2 million $3.2 million Sales Tax
HdL
January 2026
Estimates
HdL
January 2026
Estimates
HdL
January 2026
Estimates
HdL
January 2026
Estimates
HdL
January 2026
Estimates
HdL
January 2026
Estimates
Sales Tax -
Measure G
HdL
January 2026
Estimates
HdL
January 2026
Estimates
HdL
January 2026
Estimates
HdL
January 2026
Estimates
HdL
January 2026
Estimates
HdL
January 2026
Estimates
Franchise
Fee
Current
baseline set by
FY 2024-25
Actuals
3% 3% 3% 3% 3%
Transient
Occupancy
Tax
Current
baseline set by
FY 2024-25
Actuals
1% 1% 1% 1% 1%
Business
License Tax
Current
baseline set by
FY 2025-26
Estimates
3% 3% 3% 3% 3%
License &
Permits
Current
baseline set by
FY 2025-26
Estimates
Adjusting to
One-Time
Items
3% 3% 3% 3% 3%

ITEM NO. 14.

Revenue Baselines and Projection Factors
ATTACHMENT 3
Town
Services
Current
baseline set by
FY 2025-26
Estimates
Adjusting to
One-Time
Items
3% 3% 3% 3% 3%
Fine &
Forfeitures
Current
baseline set by
FY 2025-26
Estimates
Varies Varies Varies Varies Varies
Yield to
Maturity
Assumptions
Average
Portfolio Yield

4.26%
Average
Portfolio Yield

4.14%
Average
Portfolio Yield

4.06%
Average
Portfolio Yield

3.97%
Average
Portfolio Yield

3.96%
Average
Portfolio Yield

4.03%
Other
Sources
Current
baseline set by
FY 2025-26
Estimates
Varies Varies Varies Varies Varies

ITEM NO. 14.

ATTACHMENT 4

EXPENDITURE BASELINE AND PROJECTION FACTORS
Beginning in FY 2020-21, the Town started budgeting salaries at the actual salary plus a one-step increase. In the FiveYear Forecast, positions are forecasted at the actual rate of pay including salaries and benefits as of December 31, 2025. Beginning FY 2023-24 the total salaries and benefits budget includes 4.6% vacancy factor. *Salary increases are based on actual step increases and approved Memoranda of Understanding with the bargaining units from FY 2024-25 through FY 2026-27. Beyond FY 2027-28 the assumption is 2% per year cost of living adjustment. ** Benefit increase estimates are provided by CalPERS/Public Employees’ Medical and Hospital Care Act (PEMHCA) *** Based on historical trends.

Type of
Expenditures
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Salaries*(TEA) 3% 3% 3% 2% 2% 2%
Salaries *(POA) 5% 4% 4% 2% 2% 2%
Salaries*(AFSCME) 4% 4% 4% 2% 2% 2%
Salaries *
(Management,
Confidential,
Temp)
3% 3% 3% 2% 2% 2%
Benefit -
Medical** 4% 4% 4% 4% 4% 4%
Operating
Expenditures*** 3% 3% 3% 3% 3% 3%
Grants & Awards 0% 0% 0% 0% 0% 0%
Utilities*** Varies 3% 3% 3% 3% 3%
Workers Comp
Charges
Based on
projected
payroll
3% 3% 3% 3% 3%
General Liability
Charges
Based on
projected
payroll
3% 3% 3% 3% 3%
Other Internal
Service
Charges***
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Based on
operating
cost and
scheduled
replacement
Debt Service Debt Service Schedules

ITEM NO. 14.

ATTACHMENT 4
The Town’s required employer contribution rate estimates were developed using data provided by each plan’s most recent CalPERS actuarial valuation. The employer contribution rates reflect percentages of covered payroll. Forecasted rates for FY 2025-26 and subsequent years are based on the most recent CalPERS actuarial valuation Reports as adjusted by the impact related to the FY 2022-23 CalPERS 5.8% investment return and forecasted payroll. In addition, staff will update the rates based on the February forecasted payroll for the FY 2026-27 Proposed Budget.

Type of
Expenditure
FY 2025-26
Budget
FY 2026-27
Forecast
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
Safety
POA
109.09% 109.92% 112.95% 121.16% 121.75% 124.52%
Safety
Management
POA
112.09% 112.92% 115.95% 124.16% 124.75% 127.52%
Safety

POA - PEPRA

15.84% 14.96% 20.99% 21.74% 22.04% 25.76%
Miscellaneous
TEA/Confidential/
Management

30.02% 30.52% 30.82% 31.78% 31.92% 32.21%
Miscellaneous
TEA/Confidential/
Management
PEPRA
Separate PEPRA
rate for
Miscellaneous has
not been
established yet by
CalPERS.

30.02% 30.52% 30.82% 31.78% 31.92% 32.21%
*Safety Classic Rate reflects 3% decrease in employer's contribution rate to reflect 3% contribution as negotiated with the Town's POA during the collective bargaining process effective FY 2019-20.

ITEM NO. 14.

ATTACHMENT 5
FY 2024-25 FY 2024-25
2Q % of
FY 2024-25
2Q % of
FY 2025-26 FY 2025-26 FY 2025-26 FY 2025-26 FY 2025-26
Actuals Q2 Actuals Adjusted
Budget
as of
12/31/2025
Q2 Adopted
Budget
Adjusted
Budget
as of
12/31/2025
Proposed
Mid-Year
Adjustment
Year End
Estimates
Including
Proposed
Mid-Year
Adjustments
Revenues
Property Tax $ 20,157,765 $ 6,687,445 33.2% 32.5% $ 6,981,476 $ 21,450,971 $ 21,450,971 $ 68,164 $ 21,519,135 VLF Backfill Property Tax 5,109,100 - 0.0% 0.0% - 5,377,328 5,377,328 28,672 5,406,000 Sales & Use Tax 6,992,336 2,082,120 29.8% 32.2% 2,138,351 6,639,081 6,639,081 1,207,436 7,840,000 Measure G Sales & Use Tax 1,338,642 428,741 32.0% 33.5% 435,464 1,298,825 1,298,825 30,175 1,329,000 Franchise Fees 1,057,484 113,842 10.8% 9.8% 101,773 1,043,730 1,043,730 (34,892) 1,008,838 Transient Occupancy Tax 2,417,630 941,711 39.0% 31.0% 749,774 2,422,390 2,422,390 (166,585) 2,255,805 Business License Tax 2,975,721 153,569 5.2% 16.0% 399,756 2,493,992 2,493,992 107,508 2,601,500 Licenses & Permits 6,681,607 2,983,426 44.7% 60.1% 3,800,214 6,322,712 6,322,712 689,959 7,014,459 Intergovernmental 1,357,593 796,630 58.7% 72.3% 778,450 838,936 1,076,042 (38,691) 1,307,778 Town Services 5,749,945 3,732,385 64.9% 88.4% 5,285,486 5,736,735 5,980,545 967,821 6,957,561 Fines & Forfeitures 420,127 187,733 44.7% 73.4% 231,288 315,200 315,200 (3,000) 312,775 Interest 1,949,418 374,836 19.2% 39.2% 615,033 1,567,774 1,567,774 345,487 1,913,261 GASB 31 to Market 1,201,824 - 0.0% - - - - -
Use of Property 76,161 - 0.0% - - - - -
Miscellaneous Other 190,104 533,750 280.8% 14.1% 270,499 1,893,651 1,920,471 379,834 1,533,255 Other Taxes - Park Construction Tax 5,004 - - -
Sale of Property - - 3,000,000 - 3,000,000
Total Revenues $ 57,680,461 $ 19,016,188 $ 21,787,564 $ 57,401,325 $ 60,909,061 $ 3,581,888 $ 63,999,367 Debt Service - Entry Eliminated for ACFR 1,902,300 - 0.0% 0.0% - 1,901,850 1,901,850 - 1,901,850 Planning Pass Through
Services - Entry
Eliminated for ACFR 79,400 - - - - - -
Pension Trust Income -
Entry Eliminated for
ACFR 690,000 - - - - - -
Measure G for
Operations - Entry
Eliminated for ACFR 652,396 - - - - - -
Other Financial Sources
Fund Transfer In $ 812,411 $ - 0.0% 0.0% $ - $ 562,411 $ 562,411 $ - $ 562,411 Total Revenues & Transfers In$ 61,816,968 $ 19,016,188 31% 34% $ 21,787,564 $ 59,865,586 $ 63,373,322 $ 3,581,888 $ 66,463,628 Expenditures
Town Council $ 222,954 $ 104,644 46.9% 49.7% $ 110,352 $ 222,115 $ 222,115 $ - $ 233,667 Attorney 1,076,252 398,986 37.1% 50.3% 594,515 830,884 1,180,884 100,000 1,293,243 Administrative Services 6,428,009 3,161,963 49.2% 40.5% 3,367,328 7,338,116 8,308,150 153,305 7,245,642 Non- Departmental 3,157,197 1,641,596 52.0% 24.1% 1,391,498 5,345,295 5,775,829 300,191 5,977,662 Community Development 5,637,743 2,646,092 46.9% 50.1% 3,020,911 6,021,135 6,027,635 502,500 6,368,565 Police 20,827,880 10,269,947 49.3% 46.2% 10,992,545 23,504,430 23,768,356 93,370 23,095,918 Parks & Public Works 10,717,232 4,920,014 45.9% 43.5% 5,068,319 11,404,963 11,653,693 200,775 11,649,244 Library 3,568,498 1,722,056 48.3% 47.8% 1,747,675 3,655,823 3,655,823 - 3,652,651 Capital Outlay 65,000 - - - - - -
Principal 206,380 - - 156,034 - - 156,034
Interest and Fees 41,403 - - - - - -
Total Department Expenditures $ 51,948,548 $ 24,865,298 48% 43% $ 26,293,143 $ 58,478,795 $ 60,592,485 $ 1,350,141 $ 59,672,626 Debt Service - Entry
Eliminated for ACFR $ 1,902,300 $ - 0.0% 0.0% $ - $ 1,901,850 $ 1,901,850 $ - $ 1,901,850 Transfer to Pension
Trust Fund - Entry
Eliminated for ACFR 690,000 - - - - - -
Measure G Transfer -
Entry Eliminated for
ACFR 652,396 - - - - - -
Other Financing Uses
Transfers Out $ 1,843,080 $ - 0.0% $ - $ - $ - $ - $ -
Total Additional Non-Departmental Expenditures $ 5,087,776 $ - 0% 0% $ - $ 1,901,850 $ 1,901,850 $ - $ 1,901,850 Total Operating Expenditures $ 57,036,324 $ 24,865,298 44% 42% $ 26,293,143 $ 60,380,645 $ 62,494,335 $ 1,350,141 $ 61,574,476 Excess (Deficiency) of
Revenues Over
Expenditures $ 5,731,913 $ (5,849,110) $ (4,505,579) $ (1,077,470) $ 316,576 $ 2,231,747 $ 4,326,741

GENERAL FUND

SUMMARY OF REVENUES AND EXPENDITURES
*FY 2024-25 and FY 2025-26 2Q Net Operating Revenues are negative because some revenues budgeted for the entire fiscal year are received in the third or fourth quarters and fund expended in the first or second quarters.

ITEM NO. 14.