08 Staff Report
PREPARED BY: Stephen Conway
Finance Director
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 406-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 02/18/2020
ITEM NO: 8
DATE: February 12, 2020
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Staff recommends that the Town Council:
a. Receive the Fiscal Year (FY) 2019/20 Mid-Year Budget Performance
Report - July 1, 2019 Through December 31, 2019; and
b. Authorize Budget Adjustments as Recommended in the Attached Budget
Performance Report.
RECOMMENDATION:
Staff recommends that the Town Council:
a. Receive the Fiscal Year (FY) 2019/20 Mid-Year Budget Performance Report – July 1, 2019
through December 31, 2019; and
b. Authorize budget adjustments as recommended in the attached Budget Performance
Report.
BACKGROUND:
The purposes of the Mid-Year Report (Attachment 1) are to provide the Town Council with a
status of the adopted FY 2019/20 Operating Budget after the first six months and to describe
the Town’s proposed mid-year adjustments. The Report is one of several periodic updates to
the Town Council on the status of the current year’s revenues and expenditures and the
projected financial condition of all Town funds compared with the Adopted Operating Budget.
The updates typically focus on the Town’s General Fund.
DISCUSSION:
The attached FY 2019/20 Mid-Year Budget Report Performance Report (Attachment 1) covers
the first six months of the fiscal year beginning July 1, 2019 and ending December 31, 2019.
PAGE 2 OF 3
SUBJECT: FY 2019/20 Mid-Year Budget Performance Report
DATE: February 12, 2020
DISCUSSION (continued):
Operating Revenue Trends and Proposed Mid-Year Adjustments
The current forecast expects increases in sales tax, property tax, and motor vehicle in lieu fees
due to the continued strength of the local economy. The combined recommended mid-year
revenue adjustments total a net increase of $1.1 million. Specific revenue adjustments are
shown beginning on page 13 of Attachment 1.
Operating Expenditure Trends and Proposed Mid-Year Adjustments
General Fund expenditure totals are trending in accordance with the Adopted Budget, with total
operational expenditures at the end of the second quarter at or about 46% of the Adopted
Budget. With six months of data now available, staff expects that the next six months of
expenditures will be within the Adopted Budget, although unexpected costs can still occur.
Should any budget adjustments be necessary to balance operating revenue and expenditures,
staff will advise the Council accordingly. Recommended expenditure additions total $0.1 million
and include water utility costs, tree lighting services, and traffic signal updates (see Attachment
1).
General Fund Projected Year-End Excess of Revenues Over Expenditures as of June 30, 2020
Current fiscal year-end projections for FY 2019/20 reflect an anticipated $1.1 million surplus of
operating revenues over expenditures.
FY 2020/21 Budget Development Process
On January 14, 2019, the Town Council confirmed its ongoing priorities and expressed a desire
to continue emphasizing the following if budgetarily feasible:
• Additional Discretionary Payments (ADPs) toward pension obligations
• Wildfire mitigation measures
• Implementation of the parking study
• Renewed sustainability efforts
As mentioned in that report, staff expects next year’s budget to remain “status quo” with the
continuation of the Town’s current service levels in all Departments.
Based on the Town Council’s identified Strategic Priorities and Council budget direction, staff
has started budget development work, including an update of the Five-Year Financial Forecast,
identification of critical Town needs, contractual obligations, unfunded mandates, potential
adjustments to the User Fee Schedule, and other analyses. Staff is actively engaged in the
PAGE 3 OF 3
SUBJECT: FY 2019/20 Mid-Year Budget Performance Report
DATE: February 12, 2020
DISCUSSION (continued):
2020/21 budget process with the primary focus of ensuring that the available Town resources
are allocated to meet the priority service needs of the community. The Proposed FY 2020/21
budget will be presented to Council on May 19, 2020.
CONCLUSION:
The financial results from the prior fiscal year, coupled with the FY 2019/20 first and second
quarter data, confirm that the mid-year financial results are stable. Staff recommends that the
Town Council approve the proposed revenue and expenditure budget adjustments as described
in Attachment 1.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1. Budget Performance Report for the Six Months Ending December 31, 2019
2. Public Comments Received before Publishing the Staff Report