110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832 www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 05/19/2026
ITEM NO: 16
DESK ITEM
DATE: May 19, 2026
TO: Mayor and Town Council
FROM: Chris Constantin, Town Manager
SUBJECT: Conduct a Public Hearing on the Town of Los Gatos Proposed Operating and Capital Budget for Fiscal Year 2026-27 and on the Proposed Capital Improvement Program for FY 2026-27 – FY 2030-31
REMARKS:
Attachment 5 contains the staff presentation.
Attachments received with the Staff Report:
1. Finance Commission Recommendations and Staff Responses
2. Tier 3 Projects - Facilities Needs
3. Solicitation and Donation Policy
4. Donation Opportunities List 2026-27
Attachments received with this Desk Item:
5. Staff Presentation
Public Hearing
2026-27 Proposed Budget,
Five-Year Forecast and
Capital Improvement Program
Town Council
May 19, 2026
ATTACHMENT 5
1.Budget Process
2.Changes to the Budget
3.Finance Commission
Recommendations
4.Fiscal Year 2026-27 Proposed Budget
5.Proposed Budget Alternative
6.Five-Year General Fund Forecast
7.Staffing Recommendations
8.Issues and Challenges
9.Capital Improvement Program
Budget Process
• April 27th Finance Commission discussion and
May 8th & recommendations to Council
May 11th
• May 19th Proposed Operating and Capital Budget
Public Hearing
Changes to the Budget
Performance Measures Base Budget New 10 Year Charts Annual Average Growth Rate (AAGR)
Budget Themes
Improved Outlook Revenue Driven Proceed with Caution
Finance Commission Recommendations
.
Finance Commission Recommendation Staff Response
1. Use Section 115 Trust for targeted
CalPERS Unfunded Actuarial Liability (UAL
reduction).
1. Pension Section 115 Trust / ADP Strategy:
• Staff agree trust funds can reduce UAL but
recommend waiting for ALM study before
action.
• Retaining funds ensures flexibility for
short-term budget needs.
2. Implement vacancy savings tracking with
monthly labor reporting.
• Staff support improved labor reporting for
vacancy accuracy.
• Vacancy factor removal not feasible until
FY 27–28 or later due to operational
realities.
3. Require Finance Commission review of all
NHA financial reports.
Staff agree Finance Commission should
review final NHA reports before they go to
Council.
Finance Commission Recommendations
. Finance Commission Recommendation Staff Response
4. Adjust Internal Service Fund (ISF) vehicle
and equipment charges by $1.5 million and
conduct full ISF methodology review.
• Staff agree to $1.5M Vehicle & Equipment
ISF charge reduction.
• Support for a full ISF methodology review.
• Recommend savings support facilities
liabilities, not solely the General Fund.
(Alternative Proposed)
5. Enhance CIP with cash-flow estimates and
paving plan alignment
• Staff support cash-flow statements for
major CIP projects.
• Achieving PCI target requires more
resources; Council discussion needed.
• Recommend reserving part of paving
funds for future major reconstruction needs.
FY 2026-27 Proposed Budget (pp. C-16 to C-18)
Fund Type Revenue Expenditures Difference
(Rev-Exp)
General $ 64,815,086 $ 64,974,408 ($549,322)1
Special Revenue 554,802 475,541 79,261
Internal Service 8,952,358 6,272,388 2,679,970
Capital 3,460,439 6,454,919 ($2,994,480)
Successor Agency 3,923,926 3,938,045 ($114,119)
Total $ 81,706,611 $ 82,115,301 ($408,690)
1 Net difference for the General Fund include $390,000 allocation to the restricted pension fund resulting in total difference of $549,322. Net of this expense, the difference is $159,322.
FY 2026-27 Proposed Budget (pp. C-16 & C-18)
General
79.32%
Special
Revenue
0.68%
Internal
Service
10.96%
Capital
4.24%
Successor Agency
4.80%
Revenue by Fund
General
79.13%
Special
Revenue
0.58%
Internal
Service
7.64%
Capital
7.86%
Success
or
Agency
4.80%
Expenditures by Fund
General Fund FY 2026-27
Proposed Budget - Revenues
General Fund Revenues by Category (p. C-31)
Property Tax
43.55%
Sales Tax
15.03%
Franchise Fees
1.68%
Transient
Occupancy Tax
3.52%
Business License Tax
4.13%
Licenses and
Permits
11.65%
Intergovernmental
1.14%
Town Services
8.34%
Fines & Forfeitures
0.49%
Interest
2.97%
Other Sources &
Operating Transfers In
6.64%
Transfers in
0.87%
General Fund Revenue by Category (p. C-31)
Category FY 2025-26
Estimated
FY 2026-27
Proposed
Variance $ % Variance
Property Tax $21,519,135 $22,560,237 $1,041,102 4.8%
VLF Backfill 5,406,000 5,664,604 258,604 4.8%
Sales Tax 9,175,517 9,738,517 563,000 6.1%
Franchise Tax 1,008,838 1,089,210 80,372 8.0%
Transient Occupancy Tax 2,255,805 2,278,360 22,555 1.0% Business License Tax 2,601,500 2,679,550 78,050 3.0%
Licenses & Permits 7,014,459 7,549,926 535,467 7.6%
Intergovernmental 1,307,778 741,477 (566,301) -43.3%
Town Services 6,947,848 5,405,946 (1,541,902) -22.2%
Fines & Forfeitures 312,775 315,200 2,425 0.8%
Interest 1,913,261 1,926,877 13,616 0.7%
Other Sources 6,435,102 4,302,773 (2,138,854) -33.1%
Operating Transfers In 582,029 562,411 (19,618) -3.4%
TOTAL $66,480,047 $64,815,087 (1,664,960) -2.5%
Property Tax (pp. C-32 to C-33)
• Calculated at 1% of assessed
property value
• Max 2% California Consumer
Price Index (CCPI) annually
• Change in ownership or
improvements, and new
construction assessed at full
market value
• Town receives 9.3 cent of each
property tax dollar collected
Property Tax (pp. C-32 to C-33)
Category FY 2025-26
Estimated
FY 2026-27
Proposed
Variance $ Description
Property Tax $ 18,299,135 $ 19,001,237 Based on County Assessor’s Office Update VLF in Lieu 5,406,000 5,664,604
ERAF 3,220,000 3,559,000
TOTAL $26,925,135 $28,224,821 $1,299,706
Sales Tax (p. C-34)
• Excise tax levied on
• retailers for selling tangible
personal property
• Includes out-of-state purchases
• Town receives 1 cent of 9.3 cents
collected in/for the town
• 2018 Measure G additional 0.125
cent in dedicated sales tax
approved as a ballot initiative
Sales Tax (p. C-34)
Category FY 2025-26
Estimate Budget
FY 2026-27
Proposed
Variance $ Variance
Sales and Use Tax $ 7,846,517 8,380,517 $ 534,000 Updated Estimated from HDL, Measure G sales tax consultant 1,329,000 1,358,000 29,000 TOTAL $ 9,175,517 $9,738,517 $ 563,000
Licenses and Permits (p. C-37)
• Licenses and permits include fees for reviewing building plans, building inspections, construction, tenant improvements, and commercial/residential installations for compliance with state and municipal building codes.
FY 2025-26
Estimate Budget
FY 2026-27
Proposed
Variance $ Variance
$7,014,459 $ 7,549,926 $ 535,467 Align with prior
year trends
Town Services (p. C-36)
• The Town attempts to recover the cost of the services, including planning, zoning, and engineering permit processing for new property development. Town Services or Charges for Services account for charges to users of Town services.
FY 2025-26
Estimate Budget
FY 2026-27
Proposed
Variance $ Variance
$ 6,947,848 $ 5,405,946 $ (1,541,902) Update based on
historical collections
General Fund FY 2026-27
Proposed Budget - Expenditures
General Fund Expenditures by Category1 (p. C-47)
Salaries and
Benefits
65.16%
Operating
Expenditures
21.18%
Fixed Assets
0.02%
Grants and
Awards
0.36%
Utilities
3.17%
ISF Charges
10.11%
1 Salaries and Benefits includes Retiree Medical Costs
Expenditures by Category (p. C-47)
Category FY 2025-26
Estimate
FY 2026-27
Proposed
$ Variance %
Variance
Salaries $23,405,209 $24,176,333 $771,124 3.3%
Overtime 1,384,604 1,457,000 $72,396 5.2%
CalPERS Benefits 8,790,965 10,410,788 $1,619,823 18.4%
All Other Benefits 5,349,271 6,294,481 $945,210 17.7%
OPEB Pay as you go 2,173,606 2,193,606 $20,000 0.9%
Total Salaries and Benefits $41,103,655 $44,532,208 $3,428,553 8.3% Operating Expenditures 11,569,730 10,273,206 ($1,296,524) -11.2% Grants & Awards 339,820 321,950 ($17,870) -5.3%
Utilities 723,546 817,018 $93,472 12.9%
Internal Service Charges 4,741,938 6,567,141 $1,825,203 38.5% Debt Service 2,057,884 2,057,884 $0 0.0%
Pension Pre-Funding 690,000 390,000 ($300,000) -43.5%
Fixed Assets/Equip 191,868 15,000 ($176,868) -92.2%
TOTAL EXPENDITURES $61,418,441 $64,974,407 $3,555,967 5.8% Salaries and Benefits (pp. C-48 to C-52)
• Adds one Full-time benefitted position
• Adds .56 part time position hours
• Vacant positions budgeted mid range vs top step
• Assumes negotiated salary and benefit changes
Category FY 2025-26
Estimate
Budget
FY 2026-27
Proposed
Variance $ Variance
Salary and Benefits $ 23,405,209 $ 24,176,3331 $ 771,124 3.3% Overtime $ 1,384,604 $ 1,457,000 $ 72,396 5.2%
CalPERS Benefits $ 8,790,965 $ 10,410,788 $ 1,619,823 18.4% All Other Benefits $ 5,349,271 $ 6,294,481 $ 945,210 17.7% OPEB Pay as you go $ 2,173,606 $ 2,193,606 $ 20,000 0.9% TOTAL $ 41,103,655 $ 44,352,208 $ 3,428,553 8.3%
1 Includes $2,049,100 in salary savings
Pension methodology change (p. C50-C51)
PERS Pension Plan FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 Safety Classic* 69.44% 81.30% 94.98% 109.09% 67.60% 66.50% 68.50% 67.00% 65.50% 65.40% Safety Classic Management 72.44% 84.30% 97.98% 112.09% 67.60% 66.50% 68.50% 67.00% 65.50% 65.40% Safety PEPRA 14.62% 14.50% 15.56% 15.84% 67.60% 66.50% 68.50% 67.00% 65.50% 65.40% Miscellaneous (Classic & PEPRA) 29.92% 29.97% 30.62% 30.02% 29.80% 29.20% 28.90% 28.10% 27.30% 25.30% * Starting in FY 2026–27, the Town began applying blended employer contribution rates for Safety Classic and PEPRA employees. The blended rate incorporates a 3 percent reduction to the Safety Classic employer contribution rate, reflecting the cost sharing agreement negotiated with the Town’s POA in FY 2019–20, under which Safety Classic employees contribute an additional 3 percent toward pension costs.
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
FY 22-23 FY 23-24 FY 24-25 FY 25-26 FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 Safety Classic* Miscellaneous (Classic & PEPRA) Safety PEPRA Safety Classic Management 115 Trust balance to CalPERS (UAL) (p. C-51)
$5.1 $5.4 $5.5 $5.5 $5.6
$4.9 $5.1 $5.0 $4.9 $4.9
($0.2) ($0.3) ($0.5) ($0.6) ($0.7)
($2.0000)
($1.0000)
$0.0000
$1.0000
$2.0000
$3.0000
$4.0000
$5.0000
$6.0000
2027-28 2028-29 2029-30 2030-31 2031-32
Impact of ADP of full 115 Pension Trust Balance 1.1.27
Baseline - Total Employer Cost Projected - Total Employer Cost ($3.8M ADP)
Total Employer Cost
• Based on CalPERS Outlook Tool
• Applies balance of 115 trust ($3.8M) as an Additional Discretionary Payment (ADP) to safety • Assumes payment date of 1.1.27
• Applied to the longest amortization base, with a CalPERS assumed rate of return of 6.8 percent
Recommended Use OPEB Trust
Operating Expenditures (p. C-53)
• This category consists of materials1, supplies, contract costs, and Measure G proceed costs.
FY 2025-26 Estimate
Budget
FY 2026-27
Proposed
Variance $ Variance
$ 11,569,730 $ 10,273,206 $(1,296,524) Aligned with prior year actuals 1This category also may contain the Town’s share of Retiree Medical depending on the table. This view does not. Note that the retiree medical costs are also shown in salary and benefits to provide a more holistic view of all salaries and benefits offered by the Town.
Internal Services Charges (p.C-56)
• Internal Service Charges represent the service program costs charged back to the operational programs for Workers
Compensation, General Liability Insurance, Information
Technology, Vehicle Replacement, and Building Maintenance services.
FY 2025-26
Estimate Budget
FY 2026-27
Proposed
Variance $ Variance
$ 4,741,938 $ 6,567,141 $ 1,825,203 These costs increased to reflect higher IT fees as prior year IT costs
had been subsidized with retained
earnings in the IT Internal Service
Fund
FY 2026-27 Proposed Budget
Alternative
Alternative for Council Consideration (pp. C63-C64)
Recommended Alternative General Fund Vehicle
Replacement
Fund (ISF)
Facilities
(ISF)
FY 2026-27 Estimated Change to Year End Fund Balance
(Use of)
$ (549,322) $ 1,842,644 $ 34,969
Reduce Vehicle and Equipment ISF Charges in the
General Fund
1,501,527 (1,501,527) -
Transfer out from General Fund to Facilities ISF (811,334) - 811,334 Additional Budget for Facilities Projects - - (335,083) Total Impact of ISF Charges Changes $ 140,872 $ 341,117 $ 511,220 Additional Budget for 4 PPW Contracts $ (134,368) $ - $ - Alternative
FY 2026-27 Estimate Change to Year End Fund Balance
(Use of)
$6,503 $ 341,117 $ 511,220
A ( ) or use of fund balance means that these funds are estimated to use reserves to balance. A positive denotes adding to fund balance. Any additional revenues are shown as positive and additional expenses ( ) negatives.
Facilities Projects (Attachment 3)
Location/Building Project/System Type Project Name FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 TOTALS Civic Center Mechanical Systems Replace police dispatch AHU $ 60,000 $ 60,000 Civic Center Mechanical Systems Replace Building controls $ 225,000 $ 225,000 Civic Center Mechanical Systems Replace unit 2 in Council Chamber IT room $ 15,000 $ 15,000 Civic Center Mechanical Systems Insulate boiler room piping $ 7,500 $ 7,500 Civic Center Accessibility Issues DAC Accessibility Compliance $ 109,871 $ 109,871 $ 109,871 $ 109,871 $ 109,871 $ 549,355 Library Electrical Systems Test and Certify Main Electric Panel $ 50,000 $ 50,000 Library Electrical Systems Replace PV Inverters $ 40,000 $ 40,000 Library Interiors Replace floor coverings (carpet) $ 60,000 $ 80,000 $ 140,000 Library Accessibility Issues DAC Accessibility Compliance $ 19,059 $ 19,059 $ 19,059 $ 19,059 $ 19,059 $ 95,295 Annual Total 2022 Dollars2 $ 286,430 $ 428,930 $ 128,930 $ 128,930 $ 208,930 $ 1,182,151 Annual Total Escalated to Fiscal Year Dollars at 4% $ 335,083 $ 521,859 $ 163,138 $ 169,663 $ 285,935 $ 1,475,678 Notes:
2. Annual totals are on 2022 dollars. 2024 escalation provided for discussion. Future development of this projection will escalate all costs to year of projected expense.
1. Projections are based on information developed by Facility Engineering Associates in Fiscal Year 2021/22, informtation developed by Disability Access Consultants in 2022 and staff recommendations
General Fund 5-Year
Forecast
Revenues, Expenditures and Fund Balance (p. C-26)
FY 2026-27
Proposed
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
FY 2031-32
Forecast
Revenues $64.8 $66.6 $67.7 $68.7 $70.9 $73.0
Expenditures $65.3 $66.5 $68.6 $68.7 $70.0 $71.2
Changes to Fund Balance $(0.5) $0.1 $(0.9) $- $0.9 $1.8 $(10.0)
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
General Fund 5-Year Forecast (in millions)
Revenues Expenditures Changes to Fund Balance
Forecast Comparisons
FY 2026-27
Proposed
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
FY 2031-32
Forecast
FY 2025-26 Mid-Year Forecast ($3.1) ($2.5) ($2.7) ($2.3) ($2.0) Proposed Budget (No balancing strategies) ($2.6) ($2.2) ($3.0) ($2.1) ($1.2) ($0.3) Proposed Budget ($0.5) $0.1 ($0.9) $0.0 $0.9 $1.8
Raftelis Forecast ($0.5) ($1.3) ($1.9) ($1.4) ($2.0) ($2.6) ($4.0)
($3.0)
($2.0)
($1.0)
$0.0
$1.0
$2.0
$3.0
FY 2025-26 Mid-Year Forecast Proposed Budget (No balancing strategies) Proposed Budget Raftelis Forecast Reducing the FY 2026-27 Deficit (pp. A-2 and C-28)
-$3.2
$0.4
$1.4 $0.1
$0.5
-$0.1
$0.5
$0.7
-$1.4 -$0.1
$1.0
-$0.5
-$3.5
-$3.0
-$2.5
-$2.0
-$1.5
-$1.0
-$0.5
$0.0
$0.5
Reducing the Projected General Fund Deficit
Revenue Expenditures
Revenue Category
FY 2024-25
Adjusted
Budget
FY 2024-25
Actuals
FY 2025-26
Adjusted
Budget
FY 2025-26
Estimates
FY 2026-27
Proposed
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
FY 2031-32
Forecast
Property Tax $ 20.0 $ 20.2 $ 21.5 $ 21.5 $ 22.6 $ 23.5 $ 24.4 $ 25.4 $ 26.4 $ 27.3 VLF Backfill Property Tax 5.1 5.1 5.4 5.4 5.7 6.0 6.3 6.6 6.9 7.2 Sales & Use Tax 6.5 7.0 7.9 7.9 8.4 8.6 8.9 9.2 9.4 9.7 Measure G District Sales Tax 1.3 1.3 1.3 1.3 1.3 1.4 1.4 1.4 1.5 1.5 Franchise Fees 1.0 1.1 1.0 1.0 1.1 1.1 1.1 1.1 1.2 1.2
Transient Occupancy Tax 2.3 2.4 2.3 2.3 2.3 2.3 2.3 2.3 2.4 2.4 Business License Tax 2.8 3.0 2.6 2.6 2.7 2.8 2.8 2.9 3.0 3.1 Licenses & Permits 6.2 6.7 7.0 7.0 7.5 7.1 7.2 7.4 7.5 7.6 Intergovernmental 1.2 1.3 1.5 1.3 0.7 0.8 0.8 0.8 0.8 0.9 Town Services 5.2 5.7 6.9 6.9 5.4 5.5 5.6 5.8 5.9 6.1
Fines & Forfeitures 0.3 0.4 0.3 0.3 0.3 0.3 0.3 0.3 0.4 0.4 Interest 1.4 3.1 1.9 1.9 1.9 2.0 2.0 2.1 2.2 2.3
Other Sources 4.2 3.6 7.2 7.0 4.3 4.6 4.0 2.8 2.7 2.7
Fund Transfers In 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 0.6 $ 58.1 $ 61.5 $ 67.4 $ 67.0 $ 64.8 $ 66.6 $ 67.7 $ 68.7 $ 70.9 $ 73.0 Use of Capital/Special Projects Reserve $ 3.7 $ 1.1 $ - $ - $ - $ - $ - $ - $ - Use of Measure G Sales Tax - Operating 0.6 - - - - - - - Use of Pension/OPEB Reserve - 0.3 - - - - - - -
Recovery - - - - - - - - -
$ 62.4 $ 62.9 $ 67.4 $ 67.0 $ 64.8 $ 66.6 $ 67.7 $ 68.7 $ 70.9 $ 73.0
TOTAL REVENUES, TRANSFERS, AND
USE OF RESERVES*
TOTAL OPERATING REVENUES &
Revenue Forecast (p. C-26)
Expenditure Forecast (p. C-26)
Expenditure Category
FY 2024-25
Adjusted
Budget
FY 2024-25
Actuals
FY 2025-26
Adjusted
Budget
FY 2025-26
Estimates
FY 2026-27
Proposed
FY 2027-28
Forecast
FY 2028-29
Forecast
FY 2029-30
Forecast
FY 2030-31
Forecast
FY 2031-32
Forecast
Salary $ 25.2 $ 22.4 $ 25.6 $ 23.4 $ 26.2 $ 27.2 $ 27.9 $ 28.6 $ 29.2 $ 29.8 Overtime 0.6 1.3 0.7 1.4 1.5 1.5 1.5 1.5 1.6 1.6
CalPERS Benefits 8.8 8.3 9.9 8.8 10.4 10.4 10.7 10.7 10.7 10.5 All Other Benefits 5.6 4.9 6.3 5.3 6.3 6.3 6.5 6.7 6.9 7.1
4.6% Salary and Benefits Savings (1.5) - (2.2) - (2.0) (2.1) (2.1) (2.2) (2.2) (2.3) OPEB Pay as You Go 2.0 1.9 2.2 2.2 2.2 2.3 2.5 2.5 2.6 2.6 Operating Expenditures 8.6 6.2 10.8 9.5 10.2 10.2 10.6 10.8 11.1 11.3 Grants & Awards 0.7 0.7 0.3 0.3 0.3 0.3 0.3 0.3 0.3 0.3 Utilities 0.7 0.8 0.7 0.7 0.8 0.8 0.9 0.9 0.9 0.9
Internal Service Charges 4.4 4.2 4.9 4.7 6.6 6.8 7.0 7.2 7.4 7.6 Debt Service 2.1 2.1 2.1 2.1 2.1 2.1 2.1 0.8 0.8 0.8
y y $ 57.2 $ 52.7 $ 61.3 58.5 $ 64.5 $ 65.7 $ 67.8 $ 67.9 $ 69.2 $ 70.4 Pension 0.4 0.7 0.7 0.7 0.4 0.4 0.4 0.4 0.4 0.4
$ 57.6 $ 53.4 $ 62.0 $ 59.2 $ 64.9 $ 66.1 $ 68.2 $ 68.3 $ 69.6 $ 70.8 Capital Transfers Out to GFAR $ 1.1 $ 1.1 $ 0.3 $ - $ - $ - $ - $ - $ - $ - Transfer to General Liability - 0.1 - - - - - - - -
GASB 65 - - - - - - - - - -
Fixed Assets/ Equipment 0.4 - - 0.2 - - - - - -
1/2 of Measure G Proceeds to Capital 0.6 0.6 - - - - - - - - Allocate to ERAF Risk Reserve - - - - - - - - - -
Allocate to GASB 31 Reserve 1.2 - -
Allocate to Pension Trust 0.7 0.7 0.4 0.6 0.4 0.4 0.4 0.4 0.4 0.4 $ 60.1 $ 57.1 $ 62.7 60.0 $ 65.3 $ 66.5 $ 68.6 $ 68.7 $ 70.0 $ 71.2 $ 2.3 $ 5.8 $ 4.7 $ 7.0 $ (0.5) $ 0.1 $ (0.9) $ - $ 0.9 $ 1.8 * 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 EXPENDITURES & RESERVE
TOTAL OPERATING EXPENDITURES
TOTAL OPERATING & DISCRETIONARY
EXPENDITURES
FY 2025-26 Proposed
Capital Improvement
Program (CIP)
Projects to Close 6/30/26
• VMT Mitigation Program - Completed
• Measure B Education and Encouragement - Moved to operating funds • Shannon Road Bicycle and Pedestrian Improvement - Completed • Public Art Gateway Project - Completed
• Civic Center HR Offices - Completed
• Building Replacement at Corp Yard - Completed
• POB Space Study - Completed
• EOC Communications Upgrade - Completed
• IT Disaster Recovery Improvements - Completed
• Auto Gate Replacements - PPW and POB - Completed
FY2026-27 – CIP Summary
Category Funding Request # of Projects Estimated
Carryforward
FY 2026-27
Proposed Budget
Total FY 2026-
27 Street
Improvements
New 5 - 725,000 725,000
Carryforward + New 9 9,433,425 3,957,430 13,390,855
Carryforward 7 7,049,581 - 7,049,581
Total Street Projects 21 $ 16,483,006 $ 4,682,430 $ 21,165,436 Parks and Trails
Carryforward + New Funding
Requests 1 539,699 120,000 659,699
Carryforward 1 384,208 - 384,208
Total Parks and Trails Projects 2 923,907 120,000 1,043,907 Infrastructure New 4 - 1,075,000 1,075,000
Carryforward + New Funding
Requests 1 67,870 20,000 87,870
Carryforward 6 1,309,913 - 1,309,913
Total Infrastructure Projects 11 1,377,783 1,095,000 3,547,783 TOTAL CIP PROJECTS 34 $18,784,696 $5,897,430 $24,682,126 FY2026-27 – New Projects by Category
Project Name One-time/ Ongoing FY 2026-27 Proposed Budget Street Improvements
Impact Fee Study One-Time 300,000
East Main Street Crosswalk Improvements One-Time 75,000 Green Stormwater Infrastructure Ongoing 100,000
Timber Bridge Inspection 50,000
Roadway Reconstruction Santa Cruz Avenue BHR to Hwy 9 One-Time 200,000 TOTAL NEW STREET IMPROVEMENT PROJECTS 725,000
Infrastructure
Downtown Restroom Design One-Time 100,000
41 Miles Avenue Emergency Management Improvements One-Time 525,000 Library Lighting Controls Renovation One-Time 200,000
Condition Assessment of Civic Center (New) One-Time 250,000 TOTAL NEW INFRASTRUCTURE PROJECTS $1,075,000
TOTAL NEW PROJECTS $1,800,000
FY2026-27 – Carryforward + New Funding
Project Name One-time/
Ongoing
Estimated
Carryforward
FY 2026-27
Proposed Budget Total FY 2026-27
Street Improvements
Street Repair & Resurfacing Ongoing $ 6,357,803 $ 2,865,680 $ 9,223,483 Rehab Crack and Seal Ongoing 180,000 180,000 360,000
Annual Street Restriping Ongoing 30,000 15,000 45,000
Roadside Fire Fuel Reduction Ongoing 1,555,376 136,750 1,692,126 Unanticipated Repairs Ongoing 422,860 100,000 522,860
Curb, Gutter Sidewalk Maintenance Ongoing 378,007 500,000 878,007 Stormwater System – Pollution Prevention
Compliance Ongoing 43,481 30,000 73,481
709 University Avenue Drainage System
Replacement One-Time 275,635 10,000 285,635
Vasona Oaks Drainage Failure Repair One-Time 190,263 120,000 310,263 Total Streets Carryforward + New Funding $ 9,433,425 $ 3,957,430 $ 13,390,855 FY2026-27 – Carryforward + New Funding
Project Name One-time/
Ongoing
Estimated
Carryforward
FY 2026-27
Proposed Budget Total FY 2026-27
Parks and Trails
Parks Playground Fibar Project Ongoing $ 41,564 $ 20,000 $ 61,564 Vegetation Management Town-wide Ongoing 498,135 100,000 598,135 Total Parks and Trails Carryforward + New Funding $ 539,699 $ 120,000 $ 659,699 Infrastructure
Annual ADA Compliance Work Ongoing 67,870 20,000 87,870 Total Infrastructure Carryforward + New Funding $ 67,870 $ 20,000 $ 87,870 TOTAL CIP CARRYFORWARD + NEW FUNDING $ 10,040,994 $ 4,097,430 $ 14,138,424 FY2026-27 – Carryforward
Project Name One-time/
Ongoing
Estimated
Carryforward
FY 2026-27
Proposed Budget Total FY 2026-27
Street Improvements
Downtown Parking Lots Seal Coat &
Restriping Ongoing 65,161 - 65,161
Highway 17 Bicycle & Pedestrian Bridge -
Design One-Time 3,290,173 - 3,290,173
Annual Storm Drain Improvement Project Ongoing 179,862 - 179,862 Loma Street Drainage One-Time 699,240 - 699,240
Blossom Hill Road – Union to Camden One-Time 800,000 - 800,000 Storm Drainage Mapping Ongoing 266,681 - 266,681
Shannon Road Repair One-Time 1,748,464 - 1,748,464
Total Streets Carryforward $ 7,049,581 $ - $ 7,049,581
FY2026-27 – Carryforward
Project Name One-time/
Ongoing
Estimated
Carryforward
FY 2026-27
Proposed Budget Total FY 2026-27
Parks and Trails
Sport Court Resurfacing One-Time $ 149,803 $ - $ 149,803 Oak Meadow Bandstand Area Improvements One-Time 234,405 - 234,405 Total Parks and Trails Carryforward $ 384,208 $ - $ 384,208 Infrastructure
Battery Power Supply Library Ongoing $ 2,818 $ - $ 2,818 Civic Center Plumbing Repair and HVAC
Repairs Ongoing 50,377 - 50,377
ARC Interim Community Center One-Time 437,500 - 437,500 Fleet Service Outdoor Work Area (Design
Phase) One-Time 45,000 - 45,000
Enterprise Resource Planning (ERP) Upgrade One-Time 376,877 - 376,877 IT Disaster Resiliency Project One-Time 397,341 - 397,341 Total Infrastructure Carryforward + New Funding $ 1,309,913 $ - $ 1,309,913 TOTAL CIP CARRYFORWARD + NEW FUNDING $ 10,040,994 $ - $ 10,040,994 Staffing, Issues and
Challenges and Next Steps
Staffing
Category Position Position
Count
FY 2025-26 Staffing 163.74
Administration and Town
Offices
Deputy Town Attorney 1.0
Administrative Assistant .46
Community Development Senior Planner (.25)
Parks and Public Works Parks Services Aide .46
Maintenance Worker (.11)
TOTAL RECOMMENDED FY 2026-27 STAFFING 165.3
Issues and Challenges
• Current High-Interest Rate Environment is a positive, but… • CalPERS
• Investments
• OPEB
• No Recession in forecast, but could impact:
• Town Services
• Licenses and Permits
• Sales Tax
Issues and Challenges
• Sales Tax
• New expected revenues not fully realized
• Transient Occupancy Tax
• Full impact of hotel closure is still unknown
• Unfunded Capital Needs over $300 million
• No Transfer to GFAR ($1 million)
• Half of Measure G not going to GFAR ($0.6 million)
Next Steps
• June 2nd Final Operating and Capital Budget Adoption to Town Council
• July 2026 Publication of the Adopted Operating and Capital Budgets
Recommendations
1. Conduct a Public Hearing on the Town of Los Gatos
Proposed Operating and Capital Budget for Fiscal Year 2026- 27 and on the Proposed Capital Improvement Program for
FY 2026-27 – FY 2030-31.
2. Provide direction and recommendations on any changes for the final budget.
3. Provide direction on Finance Commission
recommendations.
4. Approve the FY 2026-27 List of Potential Donations
Consistent with the Town’s Donation Policy.
Questions