FY 2025-26 Mid-Year Budget
Report and 2026-27 Updated
Forecast
Town Council
February 17, 2026
Agenda and Recommendations
• Receive the FY 2025-26 Mid-Year Budget Report, including the FY 2025-26 Year End Projections;
• Authorize budget adjustments of $3,581,888 in estimated revenues and $1,350,141 in increased expenses as
recommended in the Mid-Year Budget Report; and
• Receive the Town Five Year Financial Projection from FY 2026- 27 to FY 2030-31.
Major Takeaways
• Improved Financial Forecast and conditions
• Driven by increased Sales Tax estimates
• Deficits are still present but have been reduced
Finance Commission
• Questioned, a decrease in the Equipment fund with no
corresponding General Fund Reduction
• Minor corrections
• Miscellaneous Other Category – Measure G proceeds, Pension Trust Fund contributions and the sale of property
• Attachment 5 – Correction to table on page 4 of Attachment 1, to remove a double count of Debt Service.
General Fund Revenue and Expenses
Summary (in millions)
FY25
Actuals
FY25 Q2
Actuals
FY25 %
Actuals
FY26 % of
Budget
FY26 Q2
Actuals
FY26
Budget
FY26
Budget
12.31.25 Proposed
MY Adj
FY26 YE
Estimates
MY Adj
Revenues $61.8 $19.0 31% 34% $21.8 $59.9 $63.4 $3.6 $66.5 Expenses $57.0 $24.9 44% 44% $26.3 $60.4 $62.5 $1.4 $61.6 Rev over
Exp
$5.7 ($5.8) (-102%) (-563%) ($4.5) ($0.5) $0.3 $2.3 $4.3 Financial Overview – All Funds
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
General Fund – Revenue
Adjustment Requests
General Fund Revenue Drivers $3.6M
• Taxes +$1.27M
• Property Tax & VLF: +$96,863
• Updated County Forecast
• Sales Tax & Measure G: +$1.23M
• Updated HDL forecast and new businesses
• Business License: +107,508
• Based on current trends and updated HDL forecast
• Transient Occupancy Tax: ($166,585)
• Based on first 6 month collected
General Fund Revenue Drivers $3.6M
• Franchise Fees: ($34,892)
• Decreases in Cable, offset by increases in PG&E
• Licenses and Permits: +675,000
• Planning Permit $235,000
• Building Permits $220,000
• Tree Removal Permits $180,000
• Title 24 Fee $40,000
• Solid Waste Fee $14,959
General Fund Revenue Drivers $3.6M
• Intergovernmental +38,691
• SCC Unhoused Grant: ($54,696)
• Other Grant Funds: +$23,720
• Prop 172 Public Safety Sales Tax ($7,715)
• Town Services (Charges for Services) +$967,821
• Pass Thru Revenues: +$595,500
• Building Plan Check: +$350,000
• Engineer Review Surcharge ($134,731)
• Grading & Building Inspections ($82,000)
• Other Fees: +$81,240
• Other Town Services: +$157,812
General Fund Revenue Drivers $3.6M
• Other +$692,146
• Pension Trust Contribution: +$300,000
• Interest: +$345,487
• Insurance Claim Reimbursement $26,598
• Other: +$20,061
General Fund –Expenditure
Adjustment Requests
General Fund Expenditure Requests $1.4M
• Town Attorney - $100,000 for increased outside legal costs • Administrative Services - $153,305
• SCC Unhoused Services Grant ($54,307)
• Leadership Los Gatos $4,300
• Road Closures ($11,000)
• Salary and Benefits $194,312
• Business License Processing Fee $20,000
General Fund Expenditure Requests $1.4M
• Community Development - $502,500
• Pass Thru Expenses $615,500
• Contract Employee Services ($75,000)
• Building Inspections ($45,000)
• Other $7,000
• Police - $93,370
• Police Services Study $75,000
• Drug Test and Wellness $18,370
Grant
General Fund Expenditure Requests $1.4M
• Parks and Public Works - $200,775
• Misc Services and Repairs $82,110
• Tree Pruning Services $51,000
• Traffic Signalization $40,000
• Other $27,665
• Townwide – $300,191
• Add’l 115 Pension Trust Payment $300,000
• Retiree Medical $48,606
• Duplicate Agreement ($88,000)
• Other $39,585
Other Funds Request
• Revenue Requests ($96,000)
• Library Trust: +$4,000
• Facilities Maintenance: (S100,000)
• Expenditure Request ($1,255,561)
• GFAR +$122,064
• GFAR Interim Community Center +$437,500
• Equipment Replacement ($1,846,453)
• Facilities Maintenance +$30,000
• Blackweel L&L District +$690
• Kennedy Meadows L&L District +$638
5 Year Forecast Updates
FY27 Final Budget Estimate vs. FY27 Estimate as of 2/6/2026 Major Takeaways
• Improved Financial Forecast and conditions
• Driven by increases Sales Tax
• Deficits are still present but have been reduced
• Updates have been made to out years but focus on FY26-27 changes
Discussion of Five-Year Projections as of
Final Budget
FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 Revenues $59.8 $59.9 $61.6 $63.1 $63.6 $65.7
Expenditures $60.7 $63.5 $65.7 $68.1 $68.4 $69.7
Estimated Fund Balance (Use of) $(0.9) $(3.6) $(4.1) $(5.0) $(4.8) $(4.0) -$10.0
$0.0
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
In millions
5 Year Forecast as of FY26 Final Budget
Discussion of Five-Year Projections as of
2/6/26
FY
2025/26
FY
2026/27
FY
2027/28
FY
2028/29
FY
2029/30
FY
2030/31
Revenues $66.4 $62.0 $63.9 $65.9 $66.7 $68.9
Expenditures $62.1 $65.1 $66.4 $68.6 $69.0 $70.9
Estimated Fund Balance (Use of) $4.3 $(3.1) $(2.5) $(2.7) $(2.3) $(2.0) $(10.0)
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
In millions
5 Year Forecast as of February 6, 2025
Forecast Changes – Revenues (+$2.1M)
• Revenues based on updated estimates
• Sales Tax + Measure G increased by $1.6M
• TOT decreased by $0.1M
• Business License Tax increased by $0.1M
• License and Permits decreased by $0.2M
• Town Services increased by $0.3M
• Interest increased by $0.3M
• Other Sources increased by $0.1M
Forecast Changes –Expenditures (+$1.8M)
• Expenditures based on updated estimates
• CalPERS Benefits decreased $0.1M
• All Other Benefits decreased by $0.4M
• Operating Expenditures increased by $1.7M
• Utilities increased by $0.2M
• Internal Service Charges increase by $0.4M
Questions