Agenda packet, special meeting — Los Gatos City Council, March 16, 2026

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IMPORTANT NOTICE
This is a hybrid meeting and will be held in-person at the Town Council Chambers at 110 E. Main Street and virtually through Zoom Webinar (log-in information provided below). You may watch the Council meeting without providing public comment on Comcast cable channel 15 or at www.LosGatosCA.gov/TownYouTube. Members of the public may provide public comments for agenda items in-person or virtually by following the instructions listed at the end of the agenda.

To watch and participate via Zoom, please go to:
https://losgatosca-gov.zoom.us/j/85488322698?pwd=7Sq4eCaTO82GZSxVmc2bKaNicYDDOu.1 Enter Passcode: 652669

CALL MEETING TO ORDER

ROLL CALL
VERBAL COMMUNICATIONS (Members of the public are welcome to address the Town Council only on matters listed on the agenda. Town resources may not be used to facilitate audio or visual presentations. Each speaker is limited to no more than three (3) minutes or such time as authorized by the Mayor.)
OTHER BUSINESS (Each speaker is limited to no more than three (3) minutes or such time as authorized by the Mayor.)

1. Discuss and Provide Direction on Potential Revenue Options.

RECOMMENDATION: Provide Direction to Staff on Proceeding with Revenue Options Presented at the Joint Meeting of Town Council and Finance Commission.

ADJOURNMENT (Council policy is to adjourn no later than midnight unless a majority of Council votes for an extension of time.)

SPECIAL MEETING OF THE TOWN COUNCIL AGENDA
MARCH 16, 2026
TOWN COUNCIL CHAMBERS, 110 EAST MAIN STREET,
LOS GATOS, CA 95030
APPROXIMATELY 7:00 PM

FOLLOWING THE JOINT MEETING OF THE

TOWN COUNCIL AND FINANCE COMMISSION
Rob Moore, Mayor
Maria Ristow, Vice Mayor
Mary Badame, Council Member
Matthew Hudes, Council Member
Rob Rennie, Council Member

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ADA NOTICE - In compliance with the Americans with Disabilities Act, if you require special assistance to participate in this meeting, please contact the Clerk’s Office at (408) 354-6834.

Please notify the Clerk’s Office at least two (2) business days prior to the meeting so that reasonable arrangements can be made to ensure accessibility in compliance with 28 CFR §35.102-

35.104 and related provisions.

NOTICE REGARDING SUPPLEMENTAL MATERIALS - Materials related to an item on this agenda submitted to the Town Council after initial distribution of the agenda packets are available for public inspection in the Clerk’s Office at Town Hall, 110 E. Main Street, Los Gatos and on the Town’s website at www.losgatosca.gov. Town Council agendas and related materials can be viewed online at https://losgatos-ca.municodemeetings.com/.

HOW TO PARTICIPATE
The public is welcome to provide oral comments in real-time during the meeting in three ways:
 Zoom Webinar (Online): Join from a PC, Mac, iPad, iPhone or Android device. Please click this URL to join: https://losgatoscagov.zoom.us/j/85488322698?pwd=7Sq4eCaTO82GZSxVmc2bKaNicYDDOu.1 Passcode: 652669. You can also type in 854 8832 2698 in the “Join a Meeting” page on the Zoom website at zoom.us and use passcode 652669. When the Mayor announces the item for which you wish to speak, click the “raise hand” feature in Zoom. If you are participating by phone on the Zoom app, press *9 on your telephone keypad to raise your hand.  Telephone: Please dial 1 (855) 758-1310 for US Toll-free or 1 (408) 961-3927 for US Toll. (Meeting ID: 854 8832 2698). If you are participating by calling in, press *9 on your telephone keypad to raise your hand.
 In-Person: Please complete a “speaker’s card” located on the back of the chamber benches and return it to the Town Clerk before the meeting or when the Mayor announces the item for which you wish to speak.

NOTES: Comments will be limited to three (3) minutes or less at the Mayor’s discretion.

If you are unable to participate in real-time, you may email [email protected] with the subject line “Public Comment Item #__ ” (insert the item number relevant to your comment).

Deadlines to submit written comments are:
-3:00 p.m. the business day before the Council meeting for inclusion in an addendum. -11:00 a.m. on the day of the Council meeting for inclusion in a desk item.

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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 ● (408) 354-6832 www.losgatosca.gov

TOWN OF LOS GATOS

COUNCIL AGENDA REPORT
MEETING DATE: 03/16/2026
ITEM NO: 1
DATE: March 12, 2026
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Discuss and Provide Direction on Potential Revenue Options RECOMMENDATION: Provide Direction to Staff on Proceeding with Revenue Options Presented at the Joint Meeting of Town Council and Finance Commission
FISCAL IMPACT:

There is no direct fiscal impact associated with this item. Potential fiscal impacts would result from future Town Council actions related to revenue measures or associated professional services, as described in the Town Council staff report included as Attachment 1.

STRATEGIC PRIORITY:

This item relates directly to the Town’s adopted 2025–2027 Strategic Priority of ensuring prudent financial management, including structurally balanced multi-year forecasts, sustainable service delivery, and adequately funded capital improvement and deferred maintenance programs.

BACKGROUND:

January 20, 2026, and Council approved preserving revenue options and not committing to a tax. In addition, Council authorized staff to engage with fiscal and legislative consultants and provided a budget adjustment to secure these services. Staff subsequently engaged Townsend Public Affairs to support pursuing legislative authority for additional sales tax bandwidth and Urban Futures Inc (UFI) to complete fiscal analysis on a variety of revenue options as shown in the attached presentation (attachment 1).

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ITEM NO. 1.

PAGE 2 OF 2
SUBJECT: Potential Revenue Options
DATE: March 12, 2026
On March 16, 2026, the Town Council held a joint meeting with the Finance Commission to receive the revenue options presentation from UFI. The Finance Commission provided feedback to the Council.

DISCUSSION:

After receiving the presentation (Attachment 1) and the feedback from the Finance Commission, staff are requesting direction for how to proceed regarding revenue options. In particular, it would be helpful to receive Council direction on the following:
 Which of these options are more appealing to the Council? This will help focus efforts moving forward.
 Would the Council like staff to continue to proceed with preserving revenue options but postponing a decision until fiscal analysis work by NHA Advisors is complete?  Is there any additional analysis or research that the Council would like to see? CONCLUSION:

While the Town is able to pass balanced budgets using reserves in the near-term, current trends, including projected operating deficits, rising personnel costs, and significant unfunded capital and wildfire needs, show that the existing revenue structure will not sustain desired service levels over time. Continuing to proceed with a revenue option or additional research for revenue measures allows the Council to preserve options, rather than waiting until a structural crisis forces abrupt cuts or rushed measures.

ENVIRONMENTAL ASSESSMENT:

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

Attachments:

1. Presentation

2. Draft FY 2026-27 Forecast with Forecast History

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ITEM NO. 1.

TOWN OF LOS GATOS
March 16, 2026

TAX REVENUE ANALYSIS
ATTACHMENT 1

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ITEM NO. 1.

Presentation Outline
Summary of Town Operating & Capital Needs 3
Tax Revenue Options & Analysis 4
Transaction and Use Tax (TUT) 7
Parcel Tax 10
Benefit Assessment 15
Capital Financing Options 16
Lease Revenue Bonds 17
General Obligation (GO) Bonds 19
Next Steps 24
2

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ITEM NO. 1.

Operating Deficit and Unfunded Capital Improvement Projects 3 UNFUNDED NEEDS (in millions)
CATEGORY DESCRIPTION EST COST 2025

DOLLARS

STREETS AND ROADS PAVEMENT AND

INFRASTRUCTURE
$172.7M

PUBLIC SAFETY NEW POLIC OPS

BUILDING AND EOC
$50.4M to $66.0M

TOWN FACILITIES BUILDING

MAINTENANCE,

REPAIRS, CAPITAL
$22.7M

PARKS AND ASSETS PARKS DEFERRED

MAINTENANCE
$29.3M
PARK

REHABILITIATION

SOCCER FILED TURF
REHAB
~$2.5M

WILDFIRE CRITICAL

INFRASTRUCTURE
$6M TO $11M

WILDFIRE

OPERATIONS

COMPREHENSIVE

WILDFIRE PROGRAM
$2.1M TO $3M
TOTAL $285.7M TO $307.2M
$4.3
$(3.1)
$(2.5) $(2.7) $(2.3) $(2.0)
FY
2025/26
FY
2026/27
FY
2027/28
FY
2028/29
FY
2029/30
FY
2030/31
5 Year Forecast as of February 6, 2025
Estimated Fund Balance (Use of)

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ITEM NO. 1.

Tax Revenue Options &
Analysis
4

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ITEM NO. 1.

General Fund Revenue Taxes – 4 Basic Considerations

1. Adequacy & Certainty (volatility)
• Sustainably generates annual needed revenue.
• Not subject to significant variation (low volatility).

2. Equity (who bears tax burden) & Competitiveness
• Fiscal burden appropriately spread.
• Proportionate to surrounding communities.
• Does not highly skew economic incentives.

3. Transparency & Voter Approval
• Easy to find information on the revenue/tax structure and understand how it operates. • Likelihood of voter approval.

4. Simplicity
• Does not require multiple ballot measures (voter confusion and fatigue). • Not highly burdensome, costly or complicated to administer (by Town or payors). 5

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ITEM NO. 1.

General Fund Tax Revenue Options
6 Based on the need to find new revenue to cover operational gap and fund new capital, several revenue generation and capital financing options were reviewed to determine how best to align them with the Town’s Goals
Recommended
• Consider Transactions and Use Tax (TUT) or Parcel Tax for Operating Deficit • Consider General Obligation Bond for Capital Projects Not recommended at this time or recommended for further study. • Utility User Tax –The voter approval in the state for this type of tax is low and considered regressive. • Transaction and Occupancy Tax – Tax rate is currently at 12%; increasing the rate to generate adequate revenue would place the Town significantly beyond rates in surrounding communities. • Vacancy Tax – Challenging to estimate and implement; more effective for disincentivizing vacancy rather than filling operating deficit.
• Benefit Assessment – Levied on real property to fund specific public improvements or expanded/new public services benefiting the properties assessed but cannot be used for funding current operating costs; consider studying for lighting and landscaping and/or storm drains.

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ITEM NO. 1.

Transaction and Use Tax (TUT)
Basics of a TUT
• Functionally similar to state Sales Tax – tax on sale or use of goods – but based on point of receipt or use
(not point of sale).
• Excludes “Necessities of Life” including most food
products and medicines. Value of these exemptions
in 2024 was equivalent to 56% of total sales tax
collected. For individuals and families, exemption
shifts incident of tax burden more towards
controllable or discretionary goods and items.
• State law requires supermajority approval by city
council (2/3 vote) to place TUT measure on ballot
• 50% + 1 voter approval for general purpose
• 2/3rds voter approval for special purpose
7 Los Gatos 9.875%* Expires
State Sales Tax 6.00% --
Bradley-Burns Local Share 1.25% --
Local/Regional TUT (2.0% total cap)
San Clara County Transit District
(1976) – Measure A 0.50% --
San Clara County VTA (2000) –
Measure A 0.50% 2036
Santa Clara VTA BART Operations &
Maintenance TUT (2008) 0.125% 2042
Santa Clara County Retail TUT (2013) 0.125% --
Silicon Valley Transportation
Solutions Tax (2016) – Measure B 0.50% 2047
Los Gatos TUT (2018) – Measure G 0.125% 2038
Special Legislation
Peninsula Corridor JPA Retail
Transactions and Use Tax (2021) 0.125% 2051
County Temporary Measure*
Santa Clara County Measure A (2025) 0.625%* 2031
*Effective April 2026. Page 11
ITEM NO. 1.

Transaction & Use Tax (TUT)
Los Gatos Current Rate – 9.875%*
Special Considerations
• Under the state 2.0% “cap” on local TUTs, Los Gatos can only add 0.125% to its TUT, state legislature must authorize any additional TUT by special legislation. Town Council has given direction to pursue legislative authorization.
• Senate Bill 63 authorized 0.50% sales tax measure for transit (BART) on the Nov. 2026 ballot (in five Bay Area counties).

Estimated Additional TUT Annual Revenue @ 0.50% tax rate = $5.3 million annually beginning in 4Q FY 2027.
• Total New Rate = 10.375%*
Voter approval rates of new or increased TUTs for general purposes (majority vote) in California
• 80% for 2024 Election (63 of 79)
• 73% for 2022 Election (30 of 41)
• 74% for 2020 Election (65 of 88)
*Rates effective as of April 2026 to include Santa Clara County 2025 Measure A (0.625%).
8 City/Area Current Rate
Santa Clara Countywide 9.75%*
Campbell 10.5%*
Los Gatos 9.875%*
Milpitas 10.0%*
San Jose 10.0%*
Santa Cruz Countywide 8.50%
Capitola 9.25%
Santa Cruz 9.75%
Santa Cruz (unincorporated) 9.50%
Scotts Valley 9.75%
Watsonville 9.75%
San Mateo County 9.375 to 9.875%
San Francisco County 8.625%
Alameda County 10.25 to 10.75%
Contra Costa County 9.25 to 10.25%

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ITEM NO. 1.

Transaction & Use Tax (TUT)
 Pros:
 Voter Approval. TUT measures in last three election cycles (2020, 2022, and 2024) have high approval rates (74%, 73%, and 80% respectively) despite economic volatility due to Covid-19 pandemic and recent high inflation.
 Adequacy & Certainty. Estimated annual revenues with expected growth at or above estimated inflation.  Equity. Tax burden spread across businesses, residents, and visitors.  Cons:
o Certainty (volatility). Sales tax is more volatile (elastic) than UUT or parcel tax because generally correlates with overall economic trends.
o Competitiveness. Additional 0.50% TUT puts Town at 10.375% total sales tax rate, placing it above all other cities on peninsula side of the Bay Area except Campbell. o Special Considerations. For 0.50% TUT, requires state legislature to enact special legislation authorizing an additional 0.375% TUT.
9

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ITEM NO. 1.

Parcel Tax
Basics of Parcel Tax
• Non-ad valorem (non-value based) tax levied on parcels of property.
• Methodology: Either a fixed/flat amount per-parcel or a fixed rate depending on the size, use, or number of
units on the parcel.
• Can establish different amount/rate based on
property use but must be applied uniformly and
roughly proportional to demand for service.
• Can include inflationary index.
• Parcel taxes are considered special taxes requiring 2/3 voter approval (Govt. Code s. 50077).

Statewide Facts - Parcel Tax
• Since 2010, largest percentage of all
approved parcel taxes (42%) are for
schools (251 of 600 measures).
• Since 2010, 67% of proposed city
parcel taxes were approved (118 of
176 measures).
• Because 2/3 vote required to approve
city parcel tax, almost all restrict tax
revenues to specified purpose; less
than 4% are for general municipal
funding.
• Most common methodology: flat rate
per parcel.
10 Page 14
ITEM NO. 1.

Parcel Tax
11 No Current Parcel Taxes in Los Gatos
Parcel tax measures in Santa Clara & San Mateo
counties (2/3 vote)
• Since 2008, 20 non-school parcel taxes on ballot
with 80% approved (16 of 20).
• All for special purposes: libraries, roads,
police/fire, water, and open space.
• Since 2018, 40 school parcel taxes on ballot with
73% approved (29 of 40).
*Rates as of April 2025.
**Not renewed in 2017.

City/Area Rate/yr.*
San Mateo County
Hillsborough – Public Safety $570/$218 parcel
E. Palo Alto – Office Space $2.50 per sf
Portola Valley – Roads $950 parcel
Highlands CSA – Police & Fire $65 parcel
Atherton – Police $750 parcel**
Santa Clara County
Santa Clara - Libraries $34 parcel
Santa Clara – Open Space $24 parcel
San Jose – Libraries $30 parcel
North County - Libraries $76 parcel
County Library JPA $17 or $34 unit
Santa Clara Water Dist. $0.006 per sf
El Matador - Roads $350-$750 parcel

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ITEM NO. 1.

Parcel Tax
Estimated Annual Revenue – Alternative Structures
12 PARCEL SIZE - CUSTOM TIERED AMOUNTS
Max. Parcel Size
Tier Label (in SF) # of Parcels1Tax Amount Median AV Est. Annual Rev.

Under 1/4 acre 10,890 7,723 $250 $ 1,137,440 $ 1,930,750 1/4 to 1/2 acre 21,780 2,036 $500 1,838,744 1,018,000
1/2 to 1 acre 43,560 686 $750 2,434,129 514,500
1 to 2 acres 87,120 481 $1,500 2,589,437 721,500
Over 2 acres 310 $3,000 3,126,053 930,000
TOTALS 11,236 $ 5,114,750

FIXED/FLAT AMOUNT PER PARCEL
Parcel Type # of Parcels 1 Per Parcel Tax Est. Annual Rev.

Condominiums 2 2,413 $ 445.00 $ 1,073,781
Single-Family Residential (SFR) 7,606 $ 445.00 3,384,656 Other Residential 444 $ 445.00 197,579
Commerical/Industrial/Other 602 $ 445.00 267,889
Vacant & Agricultural 171 $ 445.00 76,095
TOTAL 11,236 $ 5,000,000

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ITEM NO. 1.

Parcel Tax
Estimated Annual Revenue – Alternative Structures (cont.) 13 PARCEL SIZE - FIXED RATE PER SQUARE FOOT (SF) @ $ 0.060 PER SF WITH CAP OF $750 Parcel Type Avg. Parcel Size # of Parcels 1 # Parcels Capped Median Tax Median AV Est. Annual Rev.

Condominiums 2 1,734 2,413 0 $ 105 $ 881,264 $ 248,869
SFR - 5,000 sf & less 3,372 469 0 209 1,570,627 94,900
SFR - 5,000 sf to 1/4-acre 8,191 4,452 0 497 1,339,590 2,187,949 SFR - 1/4 to 1/2-acre 14,837 1,561 0 750 1,915,761 1,148,378 SFR - 1/2 to 1-acre 32,408 556 0 750 2,368,093 417,000
SFR - Over 1-acre 103,782 568 0 750 2,772,363 426,000
Other Residential 15,915 444 0 523 1,127,775 245,944
Commerical/Industrial/Other 34,575 602 0 601 1,513,113 298,780 Agricultural & Vacant - 1/2 acre or less 3 11,446 78 0 25 269,056 1,950 Agricultural & Vacant - 1/2 to 1 acre 3 30,789 20 0 50 308,203 1,000 Agricultural & Vacant - Over 1 acre 3
228,827 73 0 100 470,000 7,300
TOTAL 11,236 0 $ 5,078,071
(1) Excludes parcels owned by public entities, public utilities, exempt entities, vacant parcels under 5,000 sf, private streets, and parcels zoned as "forest and brush lands." (2) Includes condominiums and mobile homes.
(3) For parcels zoned agricultural and vacant parcels over 5,000, flat tax amount of $50 per 1/2-acre with cap of $150.

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ITEM NO. 1.

Parcel Tax
14  Pros:
 Certainty. Parcel tax revenue not impacted by overall economic trends (non-ad valorem) and inflationary index (if included) can help revenues keep pace with rising expenses.  Equity. Parcel tax provides some flexibility in designing tax structure (such as square foot rate) to help mitigate inequity/regressive nature of a flat amount. But given the Town’s diversity of land uses and wide range of parcel sizes, important to consider incorporating a cap, targeted exemptions, and flat rates for some uses/parcel types.  Voter Approval. Voter approval for non-school parcel taxes has been strong (80%).

Almost all have been designated for special purposes (public safety, roads, libraries, etc.).  Cons:
o Voter Approval. State law requires 2/3 approval by electorate. o Competitiveness. Parcel tax set at 6 cents per sf with a cap of $750 would be towards the upper end of parcel tax amounts in surrounding communities.

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ITEM NO. 1.

Benefit Assessment
15 What is a Benefit Assessment?
• Definition. A charge levied on real property to fund specific public improvements or expanded/new public services benefiting the properties assessed. Not for funding current operating costs.
• Methodology. Town develops a total assessment amount based on the cost of the improvements or expanded/new services. An Engineer’s Report is required to determine the benefitted properties and allocate the total assessment based on each property’s proportionate share of the “special benefit.”
• Voter Approval. A special assessment is approved through the Proposition 218 process. - Ballots mailed to each assessed parcel owner.
- Weighted protest vote.

Examples of Benefit Assessments:
• New fire prevention or mitigation services (e.g., brush removal). • New open space acquisition or restoration.
• Storm water system construction or expansion.

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ITEM NO. 1.

Capital Financing
Options
16 Page 20
ITEM NO. 1.

Overview of General Infrastructure Funding Alternatives 17 Page 21
ITEM NO. 1.

General Fund Revenues  Lease Revenue Bonds
18 • Overview
• Issuer covenants to appropriate annual lease payments from the general fund • If lease payments are not made, trustee has right/obligation to enter and re-let designated asset • Advantages
• Not subject to the constitutional debt limits per lease exception • No voter approval required for the issuance of bonds; Town Council majority vote • Can be completed quickly in as little as 60 days
• Disadvantages
• Requires unencumbered leasable asset(s) valued as least as much as the bond issue • Lease payments (debt service) competes with other general fund expenditures –i.e., police, fire, services, etc. • Leverage
• All general fund revenues are pledged, although sizing is often based on amount available from a particular revenue source • When Used?
• Typically for general infrastructure projects benefitting the Town Based on today’s market, assuming an AA category rating and 30-year Lease Revenue Bonds, and assuming the Town earmarks approximately $6.1 million annually for debt service payments, the Town could generate approximately $100* million in proceeds
*Preliminary, subject to change based on rating, market conditions, and other factors

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ITEM NO. 1.

Property Tax Override  General Obligation Bonds
19 • Overview
• Annual tax levied on property tax roll in proportion to property’s assessed valuation • Requires approval by 2/3rd of town voters voting in an election • Voters approve bond authorization and use of proceeds, not tax rate or annual payment • Advantages
• Broad-based tax support for public improvements
• Lowest bond interest cost due to ad valorem security and unlimited tax pledge • Shifts burden to higher valued properties, including non-residential • Disadvantages
• Revenues can only be used to repay debt; cannot be used to operate/maintain facilities • No ability to differentiate among types of property or target different parts of the town • Must establish max bond authorization; no flexibility to increase if project costs rise • Leverage
• GO Bonds
• When Used?
• Typically for projects with broad political support – varies by community

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ITEM NO. 1.

General Obligation (GO) Bonds Election Results
20 0
1 2
3 4
5 6
7 8
9 10
Nov-24 Mar-24 Nov-22 Jun-22 Nov-20 Mar-20 Nov-18 Jun-18 California
Non-School General Obligation Bonds Election
Results
Pass Fail
0 1
2 3
4 5
6 7
8 9
10 Nov-24 Mar-24 Nov-22 Jun-22 Nov-20 Mar-20 Nov-18 Jun-18 Bay Area
Non-School General Obligation Bonds Election
Results
Pass Fail
Pass Pass Rate Fail Total
2024 5 63% 3 8
2022 2 50% 2 4
2020 5 71% 2 7
2018 6 67% 3 9
Totals 18 64% 10 28
Non-School GO Bonds in Bay Area
Election Results (2018-2024)

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ITEM NO. 1.

Town Assessed Value History
Town of Los Gatos Historical Assessed Value
Fiscal Year Ending Total Value % Change
2017 $10,634,839,902 8.56%
2018 $11,544,997,211 6.53%
2019 $12,299,405,758 6.95%
2020 $13,154,189,846 5.23%
2021 $13,842,193,548 7.70%
2022 $14,908,440,364 4.37%
2023 $15,560,344,483 7.72%
2024 $16,762,300,891 7.72%
2025 $18,056,023,227 4.15%
2026 $19,905,458,672 5.85%
Average 6.48%
Source: County Assessor, Urban Analytics, LLC
• Town’s 2025-26 assessed value is approximately $19.9 billion; ten-year average assessed value growth rate is 6.48%
21 Page 25
ITEM NO. 1.

General Obligation (GO) Bonds
22 Town of Los Gatos Bond Proceeds at Varying Tax Rates* Tax Rate per Series A Series B Series C Total Bond
$100,000 AV 2027 2029 2031 Proceeds
$18.00 $33,705,000 $31,440,000 $34,910,000 $100,055,000 $27.00 $50,555,000 $47,160,000 $52,365,000 $150,080,000 $36.00 $67,410,000 $62,880,000 $69,820,000 $200,110,000 $45.00 $84,260,000 $78,600,000 $87,275,000 $250,135,000 $54.00 $101,115,000 $94,320,000 $104,730,000 $300,165,000 * Assumes assessed value growth of 3% and 30-year bond terms; Preliminary and subject to change Source: UFI
• With projected annual assessed value growth of 3.0%, the Town of Los Gatos can generate up to $300 million for capital projects
• Depending on tax rate selected and assessed value assumptions, the Town can generate significant proceeds

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ITEM NO. 1.

General Obligation (GO) Bonds
23 Calculation Estimated
FY26 Tax Levy
$18 per $100,000 AV $1,569,904 / $100,000 x $18 = $ 282.58 $27 per $100,000 AV $1,569,904 / $100,000 x $27 = $ 423.87 $36 per $100,000 AV $1,569,904 / $100,000 x $36 = $ 565.17 $45 per $100,000 AV $1,569,904 / $100,000 x $45 = $ 706.46 $54 per $100,000 AV $1,569,904 / $100,000 x $54 = $ 847.75 *Median Assessed Value based on FY 25-26 Assessed Valuations for Los Gatos Median Assessed Value (AV) for
Single-Family Residence in Los Gatos:
$1,569,904*

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ITEM NO. 1.

Next Steps
24 Page 28
ITEM NO. 1.

November 2026 Ballot Measure – Potential Timeline
Dates Task
April to June 2026 Staff develops options for revenue measure based on community input and opinion research, Council input, and other relevant considerations.

June 2026 Council decision on appropriate revenue measure and direction for staff to prepare ballot measure language and required resolutions.

July 7, 2026 Last regularly scheduled meeting of Council for Introduction/First Reading of revenue measure ordinance.

July 21, 2026
Last regularly scheduled meeting of Council for Second Reading/Adoption of revenue measure ordinance and approval of resolution for consolidated election.

August 7, 2026 Deadline for Town submission of ballot measure to Registrar of Voters.

August 18, 2026 Deadline for Town’s submittal of impartial analysis of ballot measure to Registrar of Voters.

November 3, 2026 Election Day.
25

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ITEM NO. 1.

Appendix
26 Page 30
ITEM NO. 1.

Utility User Tax (UUT)
Basics of UUT
• Percentage tax based on the consumption of utility
services: electricity, gas, water, sewer, refuse,
telecommunications, and cable television.
• Most cities apply UUT to electricity, gas, and
telecommunications; only half include water.
• Can establish different rate for residential and
commercial. Tax would be collected by utility and
transmitted to the Town.
• Most of the cities with UUTs adopted the taxes prior to 1986 by vote of the city council.
• Since 2002, only 32% approval (28 of 87) for new or
increased UUT rates (statewide). Including advisory
measure may increase voter approval rate by 20%
(limited data).

Statewide Facts on UUTs*
• 157 cities in CA have a UUT
• Rates range from 1% to 11%
• Statewide mean rate = 5.5%
• Statewide median = 5% (+- 2.07%)
• Total UUT revenue statewide is
approximately $1.8 billion*
• On average, UUT provides 15% of
General Fund revenue**
• All UUTs in California (except two) are
currently levied for general purposes
(majority vote)
*Data as of April 2025 – CaliforniaCityFinance.com.
**Data as of April 2021 – CaliforniaCityFinance.com.
27 Page 31
ITEM NO. 1.
28 Regulatory Disclosure
Conflicts of Interest and Other Matters Requiring Disclosures. Pursuant to Municipal Securities Rulemaking Board (“MSRB”) Rule G-42, on Duties of Non-Solicitor Municipal Advisors, Municipal Advisors are required to make certain written disclosures to clients which include, amongst other things, Conflicts of Interest and any Legal or Disciplinary events of Urban Futures, Inc. (UFI) and its associated persons.

The following are potential conflicts of interest to be considered. •UFI represents that in connection with the issuance of municipal securities, UFI may receive compensation from an Issuer or Obligated Person for services rendered, which compensation is contingent upon the successful closing of a transaction and/or is based on the size of a transaction. Consistent with the requirements of MSRB Rule G-42, UFI hereby discloses, that such contingent and/or transactional compensation may present a potential conflict of interest regarding UFI's ability to provide unbiased advice to enter into such transaction. The contingent fee arrangement creates an incentive for UFI to recommend unnecessary financings or financings that are disadvantageous to the client, or to advise the client to increase the size of the issue. This potential conflict of interest will not impair UFI's ability to render unbiased and competent advice or to fulfill its fiduciary duty to the client. •UFI fees under this potential agreement may be based on hourly fees of UFI's personnel, with the aggregate amount equaling the number of hours worked by such personnel times an agreed-upon hourly billing rate. This form of compensation presents a potential conflict of interest because it could create an incentive for UFI to recommend alternatives that would result in more hours worked. This conflict of interest will not impair UFI's ability to render unbiased and competent advice or to fulfill its fiduciary duty to its clients. •UFI's fees under this potential agreement, may be a fixed amount established at the outset of the Agreement. The amount is usually based upon an analysis by the client and UFI of, among other things, the expected duration and complexity of the transaction and the Scope of Services to be performed by UFI. This form of compensation presents a potential conflict of interest because, if the transaction requires more work than originally contemplated, UFI may suffer a loss. Thus, UFI may recommend less time-consuming alternatives, or fail to do a thorough analysis of alternatives. This conflict of interest will not impair UFI's ability to render unbiased and competent advice or to fulfill its fiduciary duty to the client. •The fee paid to UFI increases the cost of investment to client. The increased cost occurs from compensating UFI for municipal advisory services provided. •UFI serves a wide variety of other clients that may from time to time have interests that could have a direct or indirect impact on the interests of another UFI client. For example, UFI serves as municipal advisor to other municipal advisory clients and, in such cases, owes a regulatory duty to such other clients. These other clients may, from time to time and depending on the specific circumstances, have competing interests. In acting in the interests of its various clients, UFI could potentially face a conflict of interest arising from these competing client interests. UFI fulfills its regulatory duty and mitigates such conflicts through dealing honestly and with the utmost good faith with its clients. •UFI does not have any affiliate that provides any advice, service, or product to or on behalf of the client that is directly or indirectly related to the municipal advisory activities to be performed by UFI; •UFI has not made any payments directly or indirectly to obtain or retain its clients municipal advisory business; •UFI has not received any payments from third parties to enlist UFI's recommendation to its clients of its services, any municipal securities transaction or any municipal finance product; •UFI has not engaged in any fee-splitting arrangements involving UFI and any provider of investments or services to its clients; •UFI does not have any legal or disciplinary event that is material to its clients evaluation of the municipal advisory or the integrity of its management or advisory personnel. •UFI does not act as principal in any of the transaction(s) related to this Agreement. •Randall Merritt, a Managing Principal, previously worked at Raymond James & Associates, Inc. from December 2015 until December 2023. UFI's relationships with Raymond James and all other investment banks are conducted in an arm's length manner, and any recommendations are independent of any prior employment or other relationships. •Gabrielle Dawson, an Associate previously worked at Morgan Stanley from June 2022 until December 2023. UFI's relationships with Morgan Stanley and all other investment banks are conducted in an arm's length manner, and any recommendations are independent of any prior employment or other relationships.

Legal Events and Disciplinary History. UFI does not have any legal events and disciplinary history on its Form MA and Form MA-I, which includes information about any criminal actions, regulatory actions, investigations, terminations, judgments, liens, civil judicial actions, customer complaints, arbitrations and civil litigation. The Town may electronically access UFI’s the most recent Form MA and each most recent Form MA-I filed with the Commission at the following website: www.sec.gov/edgar/searchedgar/companysearch.html. There have been no material changes to a legal or disciplinary event disclosure on any Form MA or Form MA-I filed with the SEC.

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ITEM NO. 1.
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

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ITEM NO. 1.
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

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ITEM NO. 1.
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)

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ITEM NO. 1.
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

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ITEM NO. 1.
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

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ITEM NO. 1.
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

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ITEM NO. 1.
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)

Page 39 ends

ITEM NO. 1.
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

Page 40 ends

ITEM NO. 1.
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 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

Page 41 ends

ITEM NO. 1.
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

Page 42 ends

ITEM NO. 1.
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

Page 43 ends

ITEM NO. 1.
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

Page 44 ends

ITEM NO. 1.
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.

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

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

Page 45 ends

ITEM NO. 1.
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

Page 46 ends

ITEM NO. 1.
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
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

4.89%
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%

Page 47 ends

ITEM NO. 1.
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

Page 48 ends

ITEM NO. 1.
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.

Page 49 ends

ITEM NO. 1.
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%

Page 50 ends

ITEM NO. 1.
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.

Page 51 ends

ITEM NO. 1.
20 ATTACHMENT 2
FY 2026-27 FORECAST IN THE FY 2025-26 ADOPTED BUDGET

Page 52 ends

ITEM NO. 1.
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)

Page 53 ends

ITEM NO. 1.
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,

Page 54 ends

ITEM NO. 1.
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*

Page 55 ends

ITEM NO. 1.
24 ATTACHMENT 2
FY 2025-26 FORECAST- PUBLISHED 4-21-2025 (HISTORICAL DETAIL ADDED ON 4/25/2025 TO

PUBLICATION)

Page 56 ends

ITEM NO. 1.
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)

Page 57 ends

ITEM NO. 1.
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
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

4.89%
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%

Page 58 ends

ITEM NO. 1.
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

Page 59 ends

ITEM NO. 1.
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.

Page 60 ends

ITEM NO. 1.
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.

Page 61 ends

ITEM NO. 1.
30 ATTACHMENT 2
FY 2024-25 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/7/2025

Page 62 ends

ITEM NO. 1.
31 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2024-25 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/7/2025)

Page 63 ends

ITEM NO. 1.
32 ATTACHMENT 2 Page 64
ITEM NO. 1.
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.

Page 65 ends

ITEM NO. 1.
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.

Page 66 ends

ITEM NO. 1.
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

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ITEM NO. 1.
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)

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ITEM NO. 1.
37 ATTACHMENT 2
REVENUE BASELINE AND PROJECTION FACTORS (FY 2024-25 PROPOSED BUDGET – PUBLISHED 4/22/2024)

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ITEM NO. 1.
38 ATTACHMENT 2 Page 70
ITEM NO. 1.
39 ATTACHMENT 2
EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2024-25 PROPOSED BUDGET – PUBLISHED 4/22/2024)

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ITEM NO. 1.
40 ATTACHMENT 2
SUMMARY OF CHANGES FY 2024-25

FROM PROPOSED TO ADOPTED

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ITEM NO. 1.
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.

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ITEM NO. 1.
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

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ITEM NO. 1.
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

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44 ATTACHMENT 2
FY 2023-24 MID-YEAR-REPORT AND FORECAST – PUBLISHED 2/10/2024

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REVENUE BASELINE AND PROJECTION FACTORS (FY 2023-24 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2024)

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EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2023-24 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2024)

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49 ATTACHMENT 2
FY 2023-24 PROPOSED BUDGET FORECAST- PUBLISHED 4/17/2023

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REVENUE BASELINE AND PROJECTION FACTORS (FY 2023-24 PROPOSED BUDGET - PUBLISHED 4/17/2023)

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EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2023-24 PROPOSED BUDGET - PUBLISHED 4/17/2023)

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FY 2022-23 MID-YEAR REPORT AND FORECAST- PUBLISHED 2/10/2023

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REVENUE BASELINE AND PROJECTION FACTORS (FY 2022-23 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2023)

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EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2022-23 MID-YEAR REPORT AND FORECAST – PUBLISHED 2/10/2023)

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FY 2022-23 PROPOSED BUDGET FORECAST- PUBLISHED 4/18/2022

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REVENUE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2022-23 BUDGET – PUBLISHED 4/17/2022)

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EXPENDITURE BASELINE AND PROJECTION FACTORS (PROPOSED FY 2022-23 BUDGET – PUBLISHED 4/17/2022)

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FY 2021-22 MID-YEAR REPORT AND FORECAST- PUBLISHED 2/11/2022

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REVENUE BASELINE AND PROJECTION FACTORS (FY 2021-22 MID-YEAR AND FORECAST - PUBLISHED 2/11/2022)

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EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2021-22 MID YEAR AND FORECAST - PUBLISHED 2/11/2022)

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FY 2021-22 PROPOSED BUDGET - PUBLISHED 4/19/2021

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REVENUE BASELINE AND PROJECTION FACTORS (FY 2021-22 PROPOSED BUDGET - PUBLISHED 4/19/2021)

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EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2021-22 PROPOSED BUDGET - PUBLISHED 4/19/2021)

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FY 2020-21 MID-YEAR REPORT AND FORECAST - PUBLISHED 2/12/2021

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REVENUE BASELINE AND PROJECTION FACTORS (FY 2020-21 MID-YEAR AND FORECAST - PUBLISHED 2/12/2021)

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EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2020-21 MID-YEAR AND FORECAST - PUBLISHED 2/12/2021)

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FY 2020-21 PROPOSED BUDGET - PUBLISHED 4/19/2021

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REVENUE BASELINE AND PROJECTION FACTORS (FY 2020-21 PROPOSED BUDGET - PUBLISHED 4/19/2021)

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EXPENDITURE BASELINE AND PROJECTION FACTORS (FY 2020-21 PROPOSED BUDGET - PUBLISHED 4/19/2021)

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ITEM NO. 1.

Los Gatos City CouncilMarch 16, 2026

Los Gatos City Council
March 16, 2026