Attachment 1 - Budget Performance FY 2021-22 1
TOWN OF LOS GATOS
MID-YEAR BUDGET REPORT
JULY 1 - DECEMBER 31, 2021
February 10, 2022
FINANCIAL OVERVIEW AND EXECUTIVE SUMMARY: STATUS OF FY 2021/22 ADOPTED BUDGET
The purposes of the Mid-Year Report are to provide the Town Council with a status of the Adopted Fiscal
Year (FY) 2021/22 Operating Budget after the first six months and to make any adjustments to ensure
the continuity of municipal services and operations for the remainder of the fiscal year. The Report is
one of several periodic updates to the Town Council on the status of the current year’s revenues and
expenditures and the projected financial condition of all Town funds compared with the Adopted
Operating Budget. The updates typically focus on the Town’s General Fund.
On January 25, 2022, the Town Council determined the Strategic Priorities for 2022-2024, providing
guidance to Town staff and Commissions on workload prioritization. The Town Council reaffirmed its
Core Goals, including: Community Character, Good Governance, Fiscal Stability, Quality Public
Infrastructure, Civic Enrichment, and Public Safety. In addition, the Council affirmed its ongoing
commitments to the Strategic Priorities of Safety, Quality of Life, Traffic/Transportation, and Prudent
Financial Management. Even with budgetary challenges associated with the COVID-19 pandemic, many
of Council’s primary goals and priorities will continue to be programed in the FY 2022/23 Operating and
Capital Budgets. Specifically, the Council would like continued progress on wildfire protection safety;
emergency preparedness; semi-permanent parklets; diversity, equity, and inclusion; community
policing; parking study implementation; and the General Plan update (see the following page).
Based on the Town Council’s identified Strategic Priorities, 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 Fee and Fine Schedule, and other
analyses. Staff is actively engaged in the FY 2022/23 budget process with the primary focus of ensuring
that the available Town resources are allocated to meet the priority service needs of the community.
The Town Council is scheduled to hold a public hearing on the Proposed FY 2022/23 Budget on May 17,
2022.
Current fiscal year-end projections for FY 2021/22 reflect an anticipated $1.4 million deficit of operating
revenues over expenditures compared to the anticipated $1.9 million deficit in the Adopted Budget.
ATTACHMENT 1
2
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As discussed in greater detail later in this Report, the primary drivers of the reduction in the projected
deficit is projected increases in Educational Revenue Augmentation Funds (ERAF) property tax
distributions and Transient Occupancy Tax (TOT). ln addition to the slight improvement in revenue
projections, staff is estimating that there will be year-end operating expenditure savings. Staff
anticipates savings attributable to Departmental vacancies and lower cost structures associated with
retiree replacements. In addition, for FY 2021/22, salaries were again budgeted at actual salary plus a
one step increase, which was a significant budgeting methodology change from previous practice.
On June 1, 2021, the Town Council, under advisement from the Finance Commission, adopted the use of
$1,912,536 in American Recovery Plan Act (ARPA) funding to balance the FY 2021/22 budget. With the
slight reduction in projected deficits into the close of FY 2021/22, staff recommends maintaining one-
time ARPA revenue loss funding in the amount of $1,444,021 for budget balancing.
Providing services to the community in this and future fiscal years will require a strong return to pre-
pandemic performance of the Town’s economically sensitive revenues to offset continued projected
cost increases. The FY 2022/23 budget development process will endeavor to maintain essential public
services while controlling operational costs in light of the five-year fiscal forecast, which predicts
operating revenue shortfalls in subsequent fiscal years.
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CONTENT OVERVIEW
The remainder of this Report focuses on the General Fund and provides analyses of key revenues and
expenditures, including historic data by Town Department/Service Area. The next section contains
descriptions of recommended revenue and expenditure budget adjustments. The Report also includes
financial summaries of other funds as well as a table of General Fund Operating Revenues Versus
Operating Expenditures for the second quarter of FY 2021/22 which includes comparison information
from the prior year.
GENERAL FUND - KEY REVENUE ANALYSIS FY 2021/22
The following information provides a recap of the General Fund budgeted significant revenue sources,
including estimated year end collection as of the second quarter ending December 31, 2021. Staff is
monitoring developments in each major revenue source closely for potential adjustments to budgeted
revenues as recommended in this Report.
Property Tax and Motor Vehicle in Lieu Fee (VLF)
Property tax and VLF are the single largest revenue source for the Town and comprised approximately
43% of total Town General Fund projected revenues for FY 2021/22. Property tax is levied by the Santa
Clara County Assessor’s Office at 1% of a property’s assessed value, of which the Town receives
approximately 9.3 cents per dollar paid on property located within the municipal limits of Los Gatos. In
compliance with Proposition 13, the assessed value of real property is based on the 1975/76 assessment
roll value, adjusted by a 2% inflation factor thereafter. However, when property changes hands or new
construction occurs, property is than reassessed at its current market value.
5
The County of Santa Clara provides property tax collection updates and projections throughout the year.
The current County estimate indicates a modest deviation from budget of approximately $400,000. The
decrease is attributed to the combination of lower than expected secured property tax estimates and
increases to VLF, property transfer tax, and Educational Revenue Augmentation Fund (ERAF) estimates.
The Town has been monitoring ongoing developments regarding the distribution of excess ERAF funds.
A portion of property tax revenue goes to the ERAF to support local school districts. When the amount
contributed to ERAF is more than the minimum cost of funding local schools, excess funds have
traditionally been returned to the county, cities, and special districts. Five counties, including Santa
Clara, have been using a redistribution allocation formula that has been contested by the State. The
Town received the full amount for FY 2020/21; however, the Santa Clara County Assessor’s Office
recommends budgeting only 70% of the FY 2021/22 projected number. The Adopted FY 2021/22 Budget
included a $1.45 million ERAF estimate, 70% of the current ERAF base revenue estimate is $1.5 million.
Property tax distributions are largely received in the third and fourth quarters. Second quarter receipts
are trending similar to those received during the second quarter of the previous fiscal year and are at
27% of budgeted totals. Based on current County projections, staff recommends a $405,333 decrease in
estimated General Property Tax and Motor Vehicle in Lieu Fee collections.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
2nd Quarter Actual Revenues 4,604,788$ 4,785,479$ 4,785,479$ 5,481,928$ 5,761,081$ Fiscal Year Total Actual Revenues 15,958,406$ 17,321,346$ 18,330,427$ 19,878,834$
Fiscal Year Total Estimated Revenues 19,630,853$ Fiscal Year Budgeted Revenues 20,036,186$
2nd Quarter Percent of Total 29%28%26%28%29%
Recommended Budget Revision 405,333$
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
$22,000,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Property Tax and VLF -Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues
6
Sales Tax
Sales tax is the second largest revenue source for the Town’s General Fund, accounting for 18% of
budgeted General Fund projected revenues for FY 2021/22. The Town currently receives 1.125 cents for
every 9.125 cents of sales tax paid per dollar on retail sales and taxable services transacted within Los
Gatos, including the Town of Los Gatos residents’ approved ballot Measure G enacting a one-eighth cent
(0.125%) district sales tax for 20 years.
Sales tax estimates are based on actual sales tax data and annual sales tax estimates for five years
provided by the Town’s consultant, MuniServices. In addition to brick-and-mortar sales tax generation,
the MuniServices estimates include several online sales tax projections. The 2018 Wayfair Decision
resulted in e-commerce vendors utilizing the Amazon platform to collect sales tax based on destination;
however, items shipped directly from Amazon fulfillment centers are collecting sales tax based on the
point of distribution. Regular sales tax collected through online transactions are distributed through the
Santa Clara County pool for which the Town receives a pro rata share of the sales tax generated in Santa
Clara County for that particular quarter. The Town directly receives the one-eighth district tax portion of
the sales tax generated by the residents of Los Gatos. Current total sales tax estimates include
$7,069,045 ($144,495 decrease) in proceeds from regular sales tax and $1,173,733 ($209,404 increase)
in proceeds from the Measure G one-eighth cent district tax. Actual receipts net of administrative fees
collected by the State will be confirmed at the close of the fiscal year and per prior Council direction, the
Measure G funds are allocated 50 % for capital improvement projects and 50% for operating expenses.
While FY 2021/22 second quarter receipts are trending slightly lower than in the same period last fiscal
year, staff recommends a $64,919 budget increase to reflect the MuniServices current estimates.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
2nd Quarter Actual Revenues 2,662,601$ 2,568,415$ 2,755,208$ 2,813,652$ 2,556,341$
Fiscal Year Total Actual Revenue 7,592,206$ 8,158,152$ 7,531,425$ 7,933,604$
Fiscal Year Total Estimated Revenues 8,242,778$
Fiscal Year Budgeted Revenues 8,177,859$
2nd Quarter Percent of Total 35%31%37%35%31%
Recommended Budget Revision 64,919$
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Sales Tax & Measure G Tax -Quarterly and Annual
Revenues5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues
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Franchise Fees
Franchise fees are collected by the Town for the privilege of operating a utility service within Los Gatos,
and as a fee in lieu of a business license tax. Franchise fees are currently received from Comcast for
cable television, PG&E for gas and electric services, West Valley Collection and Recycling for solid waste
collection services, and AT&T and Comcast for video services. Franchise fees represent 6% of projected
General Fund revenues in FY 2021/22.
Historically, franchise payments are not remitted equally throughout the fiscal year; therefore, second
quarter receipts are not necessarily predictive of future receipts. Total franchise fee revenues are
trending slightly lower than those of the second quarter in FY 2020/21 especially in the cable franchise
fee category. This decrease reflects the current trend of customers using multiple streaming platforms
instead of traditional cable broadcast services. Staff recommends a $83,610 budget decrease to this
revenue source.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
2nd Quarter Actual Revenues 832,583$ 840,555$ 864,849$ 807,833$ 968,181$
Fiscal Year Total Actual Revenues 2,474,814$ 2,475,916$ 2,495,792$ 2,499,463$
Fiscal Year Total Estimated Revenues 2,597,630$
Fiscal Year Budgeted Revenues 2,503,560$
2nd Quarter Revenue Percent of Total 34%34%35%32%37%
Recommended Budget Revision 83,610$
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Franhise Fees -Quarterly and Annual Revenues 5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues
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Business License Tax
The Town requires all businesses located within Los Gatos and/or those that operate within Los Gatos to
obtain a business license. The amount of business license tax paid by each business is based on its
business activity. Fees for activities such as wholesale sales and manufacturing are charged on a sliding
scale based on gross receipts, as is retail, with retail being capped at $975. These gross receipt activities
account for approximately 25% of annual business licenses, while the remaining 75% are flat fee
businesses. Annual renewal payments are due on January 2 of each year. Payments for new flat-fee-
based businesses are prorated by quarter.
Business license tax revenue for the current fiscal year was budgeted anticipating the continued impact
of lower gross retail activities and additional business license closures due to the pandemic. In addition,
Council authorized the omission of late business license penalties for all businesses in 2021. Staff
anticipates collecting the majority of the business license revenue during the third quarter. Staff is
closely monitoring the activities and will return with any recommended adjustments in May, and does
not recommend any changes to this revenue source this time.
FY 17/18 FY 18/19 FY 19/20 FY 20/21
2nd Quarter Actual Revenues 199,045$ 240,293$ 60,500$ 224,388$ 167,942$
Fiscal Year Total Actual Revenues 1,686,251$ 1,526,894$ 1,357,080$ 1,386,943$
Fiscal Year Total Estimated Revenues 1,250,000$
Fiscal Year Budgeted Revenues 1,250,000$
2nd Quarter Revenue Percent of Total 53%53%59%16%13%
Recommended Budget Revision -$
FY 21/22
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Business License Tax -Quarterly and Annual Revenues5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues
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Transient Occupancy Tax
TOT is an important revenue source for the Town and comprises approximately 3% of total Town
adjusted estimated revenues of $1.4 million for FY 2021/22. The Town levies a 12% transient occupancy
tax (TOT) on all hotel and motel rooms within the municipal limits of Los Gatos. The 12% rate has been in
effect since January 1, 2017, after the voters approved a ballot measure to increase in the TOT from 10%
to 12% at the November 8, 2016 election.
The FY 2021/22 Adopted Budget modeled a slight increase to $900,000 in anticipated TOT revenues from
$700,000 the prior year. The slight increase reflected significant uncertainty around the return of
corporate travel and a continuation of slower leisure travel. Due to a significant rebound in leisure
“staycation” travel, current TOT collections are trending higher than anticipated and average occupancy
rates are rebounding as well.
Staff will continue to monitor this revenue source since current estimates do not fully reflect what effect,
if any, the Omicron variant may have had on occupancy in late December and January. However, based
on the current trend and occupancy data analysis staff is recommending a $479,960 budget increase.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
2nd Quarter Actual Revenues 917,019$ 994,581$ 910,806$ 399,620$ 711,861$
Fiscal Year Total Actual Revenues 2,628,927$ 2,692,043$ 1,869,685$ 1,044,820$
Fiscal Year Total Estimated Revenues 1,400,000$
Fiscal Year Budgeted Revenues 920,040$
2nd Quarter Revenue Percent of Total 35%37%49%38%77%
Recommended Budget Revision 479,960$
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
TOT -Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues
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Interest Income
The Town earns interest income by investing monies not immediately required for daily operations in a
number of fixed income and money market instruments. These investments are made within the
parameters stated in the Town Council’s Investment Policy and State regulation. The Town’s investment
goal is to achieve a competitive rate of return while maintaining sufficient liquidity and protecting the
safety of its funds. Interest income revenue is primarily dependent on two factors: the cash balance in
the Town’s investment portfolio and the yield on those funds.
As of December 31, 2021, the Town’s weighted portfolio yield was 1.20% which trended approximately
100 basis points above the Local Agency Investment Fund (LAIF) yield of 0.21%. This favorable yield
differential to LAIF was primarily due to the LAIF portfolio’s lower weighted average maturity (WAM) of
338 days versus the Town’s longer WAM of 471 days. The Town’s weighted average rate of return of
1.20% at the close of the Second quarter was 42 basis points lower when compared to the Second
quarter return of 1.62% in 2020.
Staff recommends no change to this revenue source at this time.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
2nd Quarter Actual Revenues 284,009$ 422,729$ 482,517$ 343,813$ 263,702$
Fiscal Year Total Actual Revenues 603,017$ 801,729$ 1,145,538$ 876,640$
Fiscal Year Total Estimated Revenues 551,233$
Fiscal Year Budgeted Revenues 551,233$
2nd Quarter Revenue Percent of Total 47%53%42%39%48%
Recommended Budget Revision
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Interest -Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues
Fiscal Year Budgeted Revenues Fiscal Year Total Estimated Revenues
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Charges for Services
Town Service revenues consist primarily of planning, building, inspections, and engineering fees assessed
on local building and development activity. Development fees and charges are assessed based on cost
recovery formulas, which reflect approximate costs of providing these regulatory services. This category
includes charges for the School Resource Officer and crossing guard services.
Second quarter Town Service revenues, specifically Charges for Services, are trending higher than in the
second quarter compared to the previous fiscal year, with 93% of budgeted revenues already received.
Typically, development fees are collected in advance for projects and recognized as revenue in the fiscal
year the work is performed. Staff recommends a $287,660 budget increase to reflect increased activities
in planning and engineering services.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
2nd Quarter Actual Revenues 2,567,814$ 2,905,238$ 3,258,027$ 3,691,233$ 3,854,415$
Fiscal Year Total Actual Revenues 4,625,136$ 4,580,511$ 4,447,213$ 4,835,962$
Fiscal Year Total Estimated Revenues 4,152,549$
Fiscal Year Budgeted Revenues 3,860,490$
2nd Quarter Revenue Percent of Total 56%63%73%76%93%
Recommended Budget Revision 287,660$
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
$4,500,000
$5,000,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Charges for Services -Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues
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Licenses and Permits
Licenses and Permits consist mainly of planning and building permit fees which are collected by the Town
to offset administrative costs associated with evaluating development proposals to ensure compliance
with codes and policies. Licenses and Permits revenue was budgeted slightly lower than FY 2020/21 in
anticipation of slower development activity; however, actual development activities are higher in the
current fiscal year.
Second quarter License and Permit revenue is trending 83% of budgeted revenue and higher than second
quarter results from the previous fiscal year. Staff recommends a $433,128 increase to this revenue
source.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
2nd Quarter Actual Revenues 1,498,864$ 1,692,252$ 1,584,098$ 1,494,487$ 2,180,000$
Fiscal Year Total Actual Revenues 3,011,309$ 3,067,994$ 2,996,457$ 2,999,711$
Fiscal Year Total Estimated Revenues 3,065,997$
Fiscal Year Budgeted Revenues 2,641,779$
2nd Quarter Revenue Percent of Total 50%55%53%50%83%
Recommended Budget Revision 433,128$
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Licenses & Permits -Quarterly and Annual Revenues
5-Year History
2nd Quarter Actual Revenues Fiscal Year Total Actual Revenues
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GENERAL FUND – EXPENDITURE ANALYSIS
For FY 2021/22, General Fund Operating expenditures (not including debt payment and transfers out)
are programmed at $44.7 million. The delivery of Town services is highly dependent on talent which
comprises 64% of budgeted General Fund expenditures for FY 2021/22. General Fund expenditure
totals are trending in accordance with the Adjusted Budget, with total operational expenditures at the
end of the second quarter at or about 47% of the Adjusted Budget. With six months of data now
available, staff expects that the next six months of expenditures will be within the Adjusted Budget,
although unexpected costs can still occur which may require future Council action.
As with most municipalities, services are provided directly by employees to the Town’s residents,
businesses, and visitors. As a service delivery enterprise, the cost of salaries and benefits are a
significant portion of the budget. As the table below illustrates, at mid-year, actual salaries are trending
at 47% of budgeted salaries, while pension benefits and other benefits are trending at 45% and 44%
respectively to the adjusted budget. The Town submits its entire annual amortization payment of the
Town’s unfunded pension liability upfront in July as a cost savings measure, saving approximately
$145,000 in interest expense. The Town traditionally booked the entire lump sum payment in July to
reflect the unfunded liability payment. Starting in the current fiscal year, staff continued disbursement
of the lump sum payment in July to take advantage of the interest savings; however, the expense will be
booked monthly to accurately reflect staffing costs throughout the year.
Salaries and benefits savings are anticipated due to vacancies and reduced cost structure due to
retirements. In addition, vacant positions are often filled with temporary unbenefitted positions, which
translate into additional benefit savings. Actual vacancies during the course of the first half of fiscal
year are illustrated in the table below.
FY 2020/21
Actuals
FY 2020/21
2Q
Q2% of
FY 2020/21
Actuals
Q2% of
FY 2021/22
Adjusted
Budget
FY 2021/22
2Q
FY 2021/22
Estimated
FY 2021/22
Adjusted
Budget
Salaries 20,213,047$ 9,977,252$ 49%47%9,805,293$ 20,599,803$ 20,812,013$
Pension Benefits 6,374,120$ 5,127,995$ 80%45%3,259,216$ 6,630,301$ 7,316,731$
Other Benefits 3,710,337$ 1,853,907$ 50%44%1,868,661$ 3,760,575$ 4,228,303$
Total Salary & Benefit 30,297,504$ 16,959,154$ 56%46%14,933,170$ 30,990,679$ 32,357,047$
FY 2020/21 Upfront Annual Payment to CalPERS in July 2020 $3,954,819 (not including ADP) - Booked in July 2020
FY 2021/22 Upfront Annual Payment to CalPERS in July 2021 $4,231,602 (not including ADP) - Booked Monthly
General Fund Salaries & Benefits
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The pie chart below represents the Departmental proportion of Town General Fund estimated operating
expenditures. The subsequent pages review program expenditures and any anticipated savings are
provided for each program. Also provided are historical program costs, year over year (YOY) percentage
changes in actual expenditures, and five-year average changes per the Finance Commission’s suggestion.
YOY percentage changes are, in many cases, impacted by the timing of one-time expenditures that occur
during the fiscal year. Historical analysis has been provided in selected cases to provide explanations for
some of the fluctuations between fiscal years. The FY 2021/22 Estimated figures also include analysis on
potential salary and other expenditure savings; however, budget adjustments are only recommended as
identified in this Report.
Department Position
Town Attorney Legal Administrative Asisstant Filled with Temp
Administrative Services Emergency Manager
Administrative Services Administrative Technician Filled - Permanent Filled
Community Development Planning Manager Filled Interim Filled - Permanent
Community Development Assistant Planner Filled - Permanent Filled with Temp Filled
Community Development Senior Planner Filled - Permanent Filled
Community Development Associate Planner Filled - Permanent VacantPolicePolice Dispatcher
Police Police DispatcherPolicePolice Dispatcher Filled
Police Police Dispatcher Filled - Permanent
Police Police Officer
Police Police Officer Filled
Police Police Officer Filled - Permanent Filled
Police Police Officer Filled - Permanent Vacant
Police Police Officer Filled - Permanent Vacant
Police Police Officer Filled - Permanent Vacant
Police Police Chief Filled - Permanent Vacant
Police Police Records & Communication Manager Filled - Permanent
Police Police Record Specialist Filled - Permanent Vacant
Parks & Public Works Streets Maintenance Worker Filled with Temp Filled with Trainee
Parks & Public Works Administrative Assistant Filled - Permanent Vacant
Library Library Specialist Filled - Permanent
Library Librarian Filled - Permanent
Library Senior Library Page Filled - Permanent Vacant - Filled with Temp
Jul-21
Vacant
Vacant
Vacant
Dec-21
Vacant
Vacant
Vacant
Vacant
Vacant
Aug-21 Sep-21 Oct-21 Nov-21
Vacant
Vacant
Vacant
Vacant
Vacant
Vacant
Vacant
Vacant
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Town Council
The Town Council is the elected legislative body that represents the residents and provides policy
direction for the delivery of services and capital improvements for the Town of Los Gatos. Town Council
expenditures are trending lower than the same quarter in prior year. Staff anticipates less than $10,000
in expenditures savings in this program. Savings are anticipated in office supplies and medical benefits.
Staff does not recommend any expenditure budget adjustment in this program.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Second Quarter Actual Expenditures 94,520$ 100,209$ 112,711$ 99,787$ 91,800$
Fiscal Year Total Actual Expenditures 193,183$ 205,903$ 206,163$ 192,280$
Fiscal Year Total Estimated Expenditure 193,559$
Fiscal Year Budgeted Expenditures 202,891$
Second Quarter Percentage of Total 49%49%55%52%45%
Recommended Budget Revision
YOY Percentage Changes -0.21%6.58%0.13%-6.73%0.67%
5-year Average Percentage Change 0.09%
$-
$500,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Town Council -Quarterly and Annual Expenditures
5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures
Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure
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Town Attorney
The Town Attorney is the legal advisor to the Town Council, Successor Agency to the former
Redevelopment Agency, and Town staff. In this capacity, the office of the Town Attorney provides a
wide range of legal services to ensure that Town actions and activities are legally sound. Town Attorney
program expenditures are trending lower than the same quarter in the prior year. This program had a
Deputy Attorney position that was vacated in March 2021 which remained unfilled and was reclassified
to Legal Administrative Assistant which was filled as of 12/31/2021. The Town Attorney position was
vacated as of January 1,, 2022 with an anticipated filling of the position in Spring. Staff estimates
approximately $115,000 expenditures savings in this program. Savings is anticipated in staff salaries and
benefits, travel and training, and office supplies. Staff does not recommend any expenditure budget
adjustment in this program.
The decrease from FY 2016/17 to FY 2017/18 is attributable to the Town’s legal expenses related to the
North 40 lawsuit in FY 2016/17. In addition, beginning in FY 2018/19, all personnel costs that were
previously budgeted in Internal Service funds were transferred to the General Fund. While overall
expenditures did not increase, salary and benefit costs that were formerly reported as an Internal
Service Fund expense effective with the change became a General Fund expense.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Second Quarter Actual Expenditures 158,095$ 310,219$ 296,424$ 311,520$ 226,341$
Fiscal Year Total Actual Expenditures 354,205$ 562,542$ 559,010$ 537,296$
Fiscal Year Total Estimated Expenditure 554,137$
Fiscal Year Budgeted Expenditures 669,733$
Second Quarter Percentage of Total 45%55%53%58%34%
Recommended Budget Revision
YOY Percentage Changes -16.96%58.82%-0.63%-3.88%3.13%
5-year Average Percentage Change 8.10%
$-
$500,000
$1,000,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Town Attorney -Quarterly and Annual Expenditures
5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures
Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure
17
Administrative Services
The Town Manager provides overall management, administration, and direction for the entire Town
organization, reporting to the full Town Council. Administrative Services incorporates five key programs:
Town Manager’s Office, Clerk Department, Finance Department, Human Resources Department, and
Information Technology.
Administrative Services program expenditures are trending lower than same quarter expenditures in
prior year. While this program had some vacancies during the course of the first half of the fiscal year
there is only one vacancy (Temporary Emergency Services Coordinator) as of December 31, 2021. That
position is scheduled to be filled in late February. The Finance Director position was vacated as of
January 1, 2022, and staff anticipates filling the position in March/April. Staff estimates approximately
$200,000 expenditures savings in this program. Savings are anticipated in staff salaries and benefits,
travel and training, and office supplies. Staff recommends $28,400 budget adjustments to cover
additional executive recruitment expenses.
Beginning in FY 2018/19, all personnel that were previously budgeted in Internal Service funds were
transferred to the General Fund. While overall expenditures did not increase, salary and benefit costs
that were formerly reported as an Internal Service Fund expense effective with the change became a
General Fund expense. This program budget includes a limited temporary position to assist the Town
with its emergency preparedness and response operations since FY 2019/20.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Second Quarter Actual Expenditures 1,567,002$ 2,069,839$ 2,204,552$ 2,467,813$ 2,584,905$
Fiscal Year Total Actual Expenditures 3,193,995$ 3,931,807$ 4,380,504$ 4,667,995$
Fiscal Year Total Estimated Expenditure 5,501,110$
Fiscal Year Budgeted Expenditures 5,701,385$
Second Quarter Percentage of Total 49%53%50%53%45%
Recommended Budget Revision 28,400$
YOY Percentage Changes 11.55%23.10%11.41%6.56%17.85%
5-year Average Percentage Change 14.09%
$- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 $5,500,000 $6,000,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Administrative Services -Quarterly and Annual Expenditures
5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures
Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure
18
Community Development Services
The Community Development Department works with elected and appointed officials, other
Departments, and the community to guide the physical growth, development, and preservation of the
Town.
Community Development program expenditures are trending higher than the same quarter expenditures
in prior year due to increased development activities in the Department Pass Through program. The Pass
Through program collects the required developer deposits for various review services. The Town
provides those services through consultants and the consultants are paid out of the applicant’s account.
At the close of a project, all remaining fees collected will be refunded to the applicant. This program has
one vacancy (Associate Planner) as of December 31, 2021; however, the Planning Manager, Assistant
Planner, Senior Planner positions were all partially vacant during the first half of the fiscal year. Staff
anticipates approximately $360 000 expenditures savings in this program. Savings are anticipated in staff
salaries and benefits, travel and training, and office supplies. Staff does not recommend any expenditure
budget adjustment in the Community Development Department expenditure budget.
Community Development Department expenditures varies year to year based on the development
activity and pass through services. FY 2020/21 and FY 2021/22 include one-time special project related
services to the General Plan update.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Second Quarter Actual Expenditures 2,012,335$ 2,104,258$ 2,245,767$ 2,589,502$ 3,460,301$
Fiscal Year Total Actual Expenditures 4,192,165$ 4,577,495$ 4,473,790$ 4,994,391$
Fiscal Year Total Estimated Expenditure 5,094,473$
Fiscal Year Budgeted Expenditures 5,461,716$
Second Quarter Percentage of Total 48%46%50%52%63%
Recommended Budget Revision
YOY Percentage Changes 9.50%9.19%-2.27%11.64%2.00%
5-year Average Percentage Change 6.01%
$- $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 $5,500,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Community Development -Quarterly and Annual Expenditures
5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures
Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure
19
Police Services
The Los Gatos-Monte Sereno Police Department provides Police services to the Town of Los Gatos and
contractually to the City of Monte Sereno. The Department is committed to ensuring public safety with
integrity, compassion, and professionalism, by providing exceptional law enforcement services, building
community partnerships, and engaging the community in problem solving.
Staff is continuing to monitor Police service program revenues and expenditures. Staffing levels remain a
challenge for the Police Department with dedicated ongoing recruitment for open positions. Whenever
feasible, open positions are filled with trainees, per diems, and temporary employees until positions are
filled. The Police Department does not anticipate any budgetary concerns at mid-year. Staff
recommends $14,636 expenditure budget increase related to crossing guard services as explained in the
next section of this report.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Second Quarter Actual Expenditures 7,197,220$ 7,832,251$ 8,504,636$ 9,041,998$ 8,266,574$
Fiscal Year Total Actual Expenditures 14,423,554$ 14,948,952$ 15,793,815$ 16,570,836$
Fiscal Year Total Estimated Expenditure 17,289,979$
Fiscal Year Budgeted Expenditures 17,376,333$
Second Quarter Percentage of Total 50%52%54%55%48%
Recommended Budget Revision 14,636$
YOY Percentage Changes 8.13%3.64%5.65%4.92%4.34%
5-year Average Percentage Change 5.34%
$-
$5,000,000
$10,000,000
$15,000,000
$20,000,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Police -Quarterly and Annual Expenditures
5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures
Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure
20
Parks and Public Works Services
The Parks and Public Works Department constructs and maintains the Town’s public parks, facilities,
roadways, right-of-way, and other infrastructure. Six organizational units work in coordination to
achieve the Department’s overarching goal of ensuring the Town’s facilities are safe, functional, and
attractive.
The Parks and Public Works services program expenditures are trending lower than prior year same
quarter expenditures. This program had one vacancy (Maintenance Worker) that was filled with a
temporary replacement in order to deliver services until vacancies were filled permanently. In addition,
an Administrative Assistant position opened up during December due to a staff promotion. Staff is
requesting the addition of an Urban Forest Manager position to manage the Town’s urban forest and fire
safety program. Funding for the current fiscal year of the position is available from the tree replacement
deposit fund while in future years the Department is proposing to reclassify the Town Arborist position as
it becomes vacant.
Staff anticipates approximately $270,000 expenditures savings in this program. Savings are anticipated in
fuel expenditures, travel and training, and office supplies. Staff recommends an expenditure budget
increase of $171,936 attributed to the additional Urban Forest Manager position, increased costs in
underground utility locator services, emergency storm responses, and safety measures as explained in
the next section of this Report.
Beginning in FY 2018/19, all personnel that were previously budgeted in Internal Service funds were
transferred to the General Fund. While overall expenditures did not increase, salary and benefit costs that
were formerly reported as an Internal Service Fund expense effective with the change became a General
Fund expense.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Second Quarter Actual Expenditures 3,422,553$ 3,717,900$ 3,864,874$ 4,185,306$ 4,020,953$
Fiscal Year Total Actual Expenditures 7,099,527$ 7,969,631$ 8,139,106$ 8,175,987$
Fiscal Year Total Estimated Expenditure 8,332,422$
Fiscal Year Budgeted Expenditures 8,605,418$
Second Quarter Percentage of Total 48%47%47%51%47%
Recommended Budget Revision 171,936$
YOY Percentage Changes 7.07%12.26%2.13%0.45%1.91%
5-year Average Percentage Change 4.76%
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Parks and Public Works -Quarterly and Annual Expenditures
5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures
Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure
21
Library Services
The Los Gatos Library fosters curiosity and community connection and strives to be at the heart of an
engaged and vibrant community.
Library services program expenditures are trending lower than prior year same quarter expenditures.
This program has one vacancy (Senior Library Page) as of as of December 31, 2021. Staff anticipates
approximately $160,000 expenditures savings in this program. Savings are anticipated in temporary
employee salaries, travel and training, and office supplies. Staff recommends a $9,000 budget increase to
authorize spending of a State Library Grant received by the Department and no other adjustments at this
time.
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Second Quarter Actual Expenditures 1,289,625$ 1,280,179$ 1,404,285$ 1,445,899$ 1,365,415$
Fiscal Year Total Actual Expenditures 2,529,017$ 2,493,617$ 2,700,802$ 2,828,873$
Fiscal Year Total Estimated Expenditure 2,886,606$
Fiscal Year Budgeted Expenditures 3,053,708$
Second Quarter Percentage of Total 51%51%52%51%45%
Recommended Budget Revision 9,000$
YOY Percentage Changes 0.80%-1.40%8.31%4.74%2.04%
5-year Average Percentage Change 2.90%
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22
Library -Quarterly and Annual Expenditures
5-Year History
Second Quarter Actual Expenditures Fiscal Year Total Actual Expenditures
Fiscal Year Budgeted Expenditures Fiscal Year Total Estimated Expenditure
22
FY 2021/22 RECOMMENDED BUDGET ADJUSTMENTS
Budget adjustments are recommended for the following revenues and expenditures at the second
quarter as described below:
Fund Program Account
111 1201 411XX Property Tax (480,475)$ Based on Santa Clara County Property Tax Estimates 2/6/2022 111 1201 41141 Motor Vehicle In Lieu Fee 75,142 Based on Santa Clara County Property Tax Estimates 2/6/2022
111 1201 41211 Sales & Use Tax (144,495) Based on MuniServices Most Probable Sales Tax Estimates 111 1221 41214 Measure G - District Sales Tax 209,414 Based on MuniServices Most Probable Sales Tax Estimates 111 1201 41311 Transient Occupancy Tax 479,960 Funds Received 111 1201 41612 Cable Franchise Fees (83,610) Funds are not Received 111 3201 42413 Planning Permit 100,000 Funds Anticipated
111 3201 44412 Plan Check 25,000 Funds Anticipated 111 3301 45111 Planning Administration Citation 10,000 Funds Received 111 4202 43336 Prop 172 - Public Safety Sales Tax 65,400 Based on MuniServices Most Probable Sales Tax Estimates 111 4302 44512 Crossing Guards' Services 11,660 Funds Anticipated 111 4815 43525 Tobbacco Grant 7,000 Funds Anticipated
111 5202 42514 Encroachment Permits 300,000 Funds Anticipated 111 5202 45127 Engineering Services 150,000 Funds Anticipated 111 5202 44417 Engineering Review Services 50,000 Funds Anticipated 111 5202 42511 Grading Inspection 35,000 Funds Anticipated 111 5301 42511 OMP- Reservation Fees 53,128 Funds Anticipated
111 5301 42512 OMP- Parking Fee (20,000) Funds are not Received 111 5401 44627 Arborist Reimbursement Fee 16,000 Funds Anticipated 111 5401 From Tree Replacement Deposit 105,000 Funds are Available 111 7801 43343 Public Library Fund Grant 9,000 Matching Expenditure
TOTAL GENERAL FUND REVENUES 973,124$
Fund Program Account111120162113 Town Share of Retiree Medical 220,000$ Funds are not Expended 111 1201 63219 Special Sudies - Business Tax Ordinance Review 20,000 Funds are not Expended 111 1201 63219 Special Sudies - Council Retreat 20,000 Funds are not Expended
111 1201 63219 Special Sudies - NUMU Antique Map 20,000 Funds are not Expended 111 1201 63219 Compensation Study 15,300 Funds are not Expended 111 2201 63213 Additional Executive Recruitment Services 28,400 Funds are not Expended 111 4302 63342 Crossing Guards' Services 14,636 Funds are Partially Expendd 111 5202 63356 Underground Utility Locator 15,000 Funds are not Expended
111 5401 63364 Underground Utility Locator 10,000 Funds are Partially Expendd 111 5301 61224 Playgorund Safety Equipment 3,027 Funds are Expended 111 5301 62379 Civic Center Fountain - Safety Enhancements 25,638 Funds are not Expended 111 5401 62379 Emergency Storm Responses 13,271 Funds are Expended 111 5401 5****Urban Forest Manager 105,000 Funds are not Expended
111 7801 61172 Youth Collections 9,000 Matching Revenue
TOTAL GENERAL FUND EXPENDITURES 519,272$
FY 2021/22MID-YEAR BUDGET ADJUSTMENT REQUESTS - GENERAL FUNDS
General Fund Revenues
General Fund Expenditures
Fund Program Account Other Fund Revenues
711711 7301 45452 Additional Donation Received 15,000 Funds Received 15,000$
TOTAL OTHER FUNDS REVENUES 15,000$
411
411 411-xxx-xxxx 82405 Recreation Center HVAC Update 160,000 From Available GFAR balance
411 411-812-0130 82405 224 West Main to Below Market Housing Fund 1,498,776 From Available GFAR balance 1,658,776$
612
2202 63323 Increase to Excess Claim Experience 42,000 p
Balance
42,000$
633
633 5404 62371 Theathre Needs 20,000 From Available Facilities Maintenance Internal Service Fund
20,000$
711
711 7301 62424 Additional Donation Received 5,000 Funds are not Expended
5,000$
TOTAL OTHER FUNDS EXPENDITURES 1,725,776$
FY 2021/22 MID-YEAR BUDGET ADJUSTMENT REQUESTS - OTHER FUNDS
Facilities Maintenance
Workers Compensation
Library Trust Fund
GFAR
Library Trust
23
SUMMARY OF KEY RECOMMENDED BUDGET ADJUSTMENTS
General Property Tax and Motor Vehicle in Lieu Fee: Staff recommends a decrease in projected
revenues of approximately $480,475 in General Property Tax and an increase of $75,142 Motor
Vehicle in Lieu fee which are in line with the estimates and forecasts provided to the Town from
Santa Clara County.
Sales and Use Tax: Staff recommends a $144,495 budget decrease to reflect current sales tax
trends based on MuniServices most likely projections.
Measure G – District Sales Tax: Staff recommends a $209,414 budget increase to reflect the
current trends of the one-eight cent sales tax based on MuniServices most likely projections.
Transient Occupancy Tax (TOT): Staff recommends a $479,960 budget increase based on the
current trends.
Cable Franchise Fee: Staff recommends a decrease in projected revenues of approximately
$83,610 in cable franchise fee based on current activities and trends.
Planning Permit Fee: Staff recommends a $100,000 budget increase based on the current
planning activities.
Plan Check Fee: Staff recommends a $25,000 budget increase based on the current plan check
activities.
Planning Administration Citation: Staff recommends a $10,000 budget increase based on the
current administrative citation revenue received.
Prop 172 – Public Safety Sales Tax: Staff recommends a $65,400 budget increase to reflect the
current trends of the Prop 172- Public Safety Sales Tax based on MuniServices projections.
Crossing Guard Services: The Town Council approved an agreement with All City Management
Services, Inc. (ACMS) to provide crossing guard services at selected school crossing locations in
the Town of Los Gatos. The Town contracts with ACMS and the expenses for Crossing Guard
services are shared between the Town, Los Gatos Union School District, and Union School
District. Town expenditures for the contract account for approximately twenty percent of the
annual cost. Staff recommends a revenue budget increase of $11,660 and a corresponding
expenditure increase of $14,636.
Tobacco Enforcement Grant: Staff recommends a $7,000 revenue budget increase to recognize
the receipt of Tobacco Enforcement Grant funds.
• Encroachment Permits: Staff recommends a revenue budget increase of $300,000 to recognize
increased developments happening in Town.
• Engineering Services: Staff recommends a revenue budget increase of $150,000 to recognize
increased developments happening in Town.
24
• Engineering Review Surcharge: Staff recommends a revenue budget increase of $50,000 to
recognize increased developments happening in Town.
• Grading Inspection: Staff recommends a revenue budget increase of $35,000 to recognize
increased developments happening in Town.
• Oak Meadow Park Reservation Fees: Staff recommends a revenue budget increase of $53,128 to
recognize the ongoing increased parks reservations during COVID.
• Oak Meadow Park Parking Fee: Staff recommends a decrease in the Oak Meadow Park Parking
fee revenue in the amount of $20,000 to recognize the inability to fill a booth attendant position.
Staff is in the process of procuring a pay station that will integrate with the Town’s current
parking enforcement efforts.
• Arborist Reimbursement Fee: Staff recommends a revenue budget increase of $16,000 to
recognize increased arborist review related to development projects.
• Town Share of Retiree Medical: Staff recommends an expenditure budget increase of $220,000
to recognize increased cost related the retiree medical services due to additional recent
retirements.
• Special Studies: Staff recommends an expenditure budget increase of $75,730 to cover the cost
for special studies related to the Business Tax Ordinance Review, Council Retreat, NUMU Antique
Map, and Compensation Study.
• Executive Recruitments Services: Staff recommends an expenditure budget increase of $28,400
to cover additional executive recruitment services.
• Arborist Reimbursement Fee: Staff recommends a revenue budget increase of $16,000 to
recognize increased arborist review related to development projects.
• Underground Utility Locator: Staff recommends an expenditure budget increase of $25,000 in
multiple programs to recognize the increased construction activities in the first half of the fiscal
year.
• Playground Safety Equipment: Staff recommends an expenditure budget increase of $3,027 to
recognize the playground equipment installation needed to replace broken/hazardous
equipment at Bachman Park.
• Civic Center Fountain – Safety Enhancements: Staff recommends an expenditure budget
increase of $25,638 to recognize an increase in the contract amount and also for extra charges
for the Plaza Fountain due to re-starting it after the COVID shutdown.
• Emergency Storm Responses: Staff recommends an expenditure budget increase of $13,271 to
recognize urgent expenditures during late December storms.
25
• Urban Forest Manager: Staff recommends an expenditure budget increase of $105,000 for the
addition of an Urban Forest Manager position to manage the Town’s urban forest and fire safety
program. Funding for the current fiscal year of the position is available from the tree
replacement deposit fund while in future years the Department is proposing to reclassify the
Town Arborist position as it becomes vacant. The Salary Schedule with the Urban Forest
Manager classification is a separate attachment to this agenda item.
Other Fund Revenues and Expenditures
Adult Recreation Center HVAC Cooling System: Staff recommends a $160,000 expenditure
budget increase from available General Fund Appropriated Reserve balance for replacing failing
HVAC units in the Adult Recreational Center.
• 224 West Main Property: Staff recommends an expenditure budget increase of $1,498,776 to
transfer the original Redevelopment money utilized for the purchase of the 224 West Main
Property for development for low and moderate housing. Since low/mod housing has not been
developed on the property as of 12/31/2021, staff recommends transferring the $1,498,776 to
the Below Market Housing Deposit account for future development of low/mod housing. Funds
are being drawn down from the available $1,460,210 Reserve for Parking and an additional
$29,568 GFAR balance.
Workers Compensation Activities: The Town is self-insured for workers’ compensation claims up
to the first $250,000 of expenses per employee claim related to medical treatment and disability
payments. Individual employee claims that exceed $250,000 in cost are fully insured through the
Town’s excess insurance carrier. The annual premium cost is determined by the history of claim
payments for the Town and also by the other local agencies that participate in the joint powers
authority pool for the same amount of excess insurance. Based on the recent claims experience
and increased costs related to two older claims for former Town employees, the annual premium
was more than anticipated when preparing the annual budget. Staff is requesting an adjustment
of $42,000 to replenish the workers’ compensation program insurance premium from the
available Workers Compensation Fund balance.
Theatre Needs: Staff recommends a $20,000 expenditure budget increase from available
Facilities Maintenance Internal Service Fund balance for additional expenses related to the Los
Gatos Theatre Building for startup of the facility – roof repair, fire system inspection, elevator
inspection, fire and building alarm costs.
Library Trust programming: Library Trust consists of funds that are received from philanthropic
donation from the non-profit fundraising organization Friends of the Los Gatos Library. Due to
impacts from COVID-19, the Friends normal fundraising operations were greatly reduced
resulting in lower anticipated donated amount in the budget; however, the Friends were able to
donate an additional of $15,000 this year. Staff anticipated spending $5,000 of the additional
donation in the current fiscal year.
26
American Rescue Plan Act (ARPA) Fund:
The FY 2001/22 budget was adopted prior to the receipt of American Rescue Plan Act (ARPA) funds.
Accounting procedures require the revenue to be recognized in the newly established ARPA Special
Revenue Fund. ARPA adopted revenue and usage budgeted for FY 2021/22 is being reclassified to the
ARPA Fund. Council approved ARPA funded expenses will be recorded as an expenditure in the ARPA
Fund and as ARPA income replacement in the program ultimately receiving the revenue with the
appropriate budget adjustments. The table below summarize the budget adjustment required to
reclassify this revenue.
Fund Program Account
111 1201 43217 ARPA - Intergovernmental Revenue (2,844,315) Reclassification to ARPA Fund
111 5301 43217 ARPA - Intergovernmental Revenue (45,070) Reclassification to ARPA Fund
633 5404 43217 ARPA - Intergovernmental Revenue (261,382) Reclassification to ARPA Fund
731 7301 43217 ARPA - Intergovernmental Revenue (35,000) Reclassification to ARPA Fund
241 1241 43217 ARPA - Intergovernmental Revenue 3,185,767 Reclassification from General Fund
-$
111 1201 67109 (296,382) Reclassification to ARPA Fund
241 1241 68219 ARPA - Income Replacement Expense 296,382 Reclassification from General Fund -$
American Rescue Plan Act (ARPA) Fund
ARPA - Grant Expense
FY 2021/22 MID-YEAR BUDGET ADJUSTMENT REQUESTS - ARPA RECLASSIFICATION
27
GENERAL FUND FINANCIAL SUMMARIES AND ESTIMATES
The following table is the Schedule of General Fund Operating Revenues Versus Operating Expenditures
for the second quarter of FY 2021/22 which includes comparison information from the prior year.
The FY 2021/22 Adjusted Budget column includes the adopted budget and items that Council approved
during the course of the first two quarters of the fiscal year, such as additional funding for special
studies, salary adjustments for Police Dispatchers, and miscellaneous carry over grants from prior fiscal
year.
The FY 2021/22 Estimated column contains projections of final balances for the current fiscal year based
upon staff analysis, the early trends observed through the second quarter in sales tax and property tax
projections, and the proposed mid-year adjustments as listed in this report.
The FY 2021/22 Estimated figures also include analysis on potential salary and other expenditure
savings; however, budget adjustments are only recommended as identified in this Report.
Staff continues to fine tune the detailed analysis of the FY 2021/22 year-end estimated revenue and
expenditure numbers and an update will be provided with the presentation of the Proposed Fiscal Year
2022/23 Operating Budget.
28
FY 2020/21 FY 2020/21
Q2% of
FY 2019/20
Q2% of
FY 2020/21 FY 2021/22 FY 2021/22 FY 2021/22ActualsQ2ActualsAdjusted
Budget
Q2 Adjusted
Budget
Estimated YE
Including
Mid-Year
Proposed
Revenues
Property Tax 15,826,162$ 5,481,928$ 34.6%36.3%5,761,081$ 15,881,866$ 15,401,391$
VLF Backfill Property Tax 4,052,672 - 0.0%0.0%- 4,154,320 4,229,462
Sales & Use Tax 6,794,218 2,429,968 35.8%29.7%2,143,460 7,213,540 7,069,045
Measure G Sales & Use Tax 1,139,386 383,684 33.7%42.8%412,881 964,319 1,173,733 Franchise Fees 2,499,463 807,883 32.3%37.3%968,181 2,597,630 2,503,560
Transient Occupancy Tax 1,044,820 399,620 38.2%77.4%711,861 920,040 1,400,000
Business License Tax 1,386,943 224,388 16.2%13.4%167,942 1,250,000 1,250,000
Licenses & Permits 2,999,711 1,494,487 49.8%82.5%2,180,000 2,641,779 3,065,997
Intergovernmental 1,573,697 818,352 52.0%9.5%370,615 3,881,836 1,130,125
Town Services 4,835,962 3,691,233 76.3%100.5%3,854,415 3,834,579 4,152,549
Fines & Forfeitures 103,467 31,638 30.6%58.4%118,809 203,450 218,120
Interest 876,460 (1,485,278) -169.5%-15.4%(85,001) 551,233 551,233
GASB 31 to Market (780,399) 517,744 -66.3%114.7%(126,168) (110,000) (110,000)
Use of Property 36,372 - 0.0%- - -
Miscellanious Other 335,906 1,367,206 407.0%24.4%153,036 626,631 964,163
Park Construction Tax 14,921 - 7,680 7,000 8,280
Debt Service - Entry Eliminated for ACFR 1,908,494 - 0.0%0.0%- 1,899,850 1,899,850
ARPA Income Replacement - Entry Eliminated for ACFR 79,176
Proceeds for Sales of Assets 1,201,369 - 0.0%-
Fund Transfer In 652,056 104,659 16.1%16.5%104,659 633,352 633,352
Total Revenues & Transfers In 46,580,856$ 16,267,512$ 35%36%16,743,451$ 47,151,425$ 45,540,860$
Use of Other Funding Sources:
Use of Reserves - Capital/Special Projects - Capital 3,401,479$ -$ 0.0%0.0%-$ 550,000$ 550,000$
Use of Reserves - Capital/Special Projects - Other 250,596$ 250,596$
Use of Reserve - Pension/OPEB 4,532,500$
Use of Reserve - Accumulated Measure G - - - 590,581 590,581
Use of Reserves - Surplus Property - - - 1,200,000 1,200,000
Use of ARPA - Income Replacement - 1,444,021
Use of ARPA - Community Grants 550,000 Total Other Funding Sources 7,933,979$ -$ 0%0%-$ 3,141,177$ 4,035,198$
Total Revenues and Use of Reserves 54,514,835$ 16,267,512$ 30%33%16,743,451$ 50,292,602$ 49,576,058$
Expenditures
Town Council 192,280$ 99,787$ 51.9%45.2%91,800 202,891$ 193,559$
Attorney 537,296 311,520 58.0%33.8%226,341 669,733 554,137
Administrative Services 4,667,995 2,467,813 52.9%45.3%2,584,905 5,701,385 5,501,110
Non- Departmental 8,642,563 4,437,554 51.3%32.0%1,159,874 3,628,466 4,046,008
Community Development 4,994,391 2,589,502 51.8%63.4%3,460,301 5,461,716 5,094,473
Police 16,570,836 9,041,998 54.6%47.6%8,266,574 17,376,333 17,289,979
Parks & Public Works 8,175,987 4,185,306 51.2%46.7%4,020,953 8,605,418 8,332,422
Library 2,828,873 1,445,899 51.1%44.4%1,356,415 3,053,708 2,886,606
Capital Outlay 2,365 - - - -
Total Department Expenditures 46,612,586$ 24,579,379$ 53%47%21,167,163$ 44,699,650$ 43,898,294$
Debt Service - Entry Eliminated for ACFR 1,908,494$ -$ 0.0%0.0%-$ 1,899,850$ 1,899,850$
ARPA Income Replacement - Entry Eliminated for ACFR 79,176$
Transfers Out 3,401,479 - 0.0%0.0%- 2,801,047 2,801,047
Total Additional Non-Departmental Expenditures 5,389,149$ -$ 0%0%-$ 4,700,897$ 4,700,897$
Total Operating Expenditures 52,001,735$ 24,579,379$ 47%43%21,167,163$ 49,400,547$ 48,599,191$
Allocate to Budget Stabilization/Catastrophis Reserve 65,764 Allocate to Compensated Absences 110,509 Allocate to Surplus Property Reserve 1,200,000 Allocate to Sale of Property Reserve 5,302 Allocate to Pension/OPEB Reserve 300,000 Allocate to Measure G - Capital 482,160 586,867 Allocate to Restricted Pension Trust 390,000 390,000
Excess (Deficiency) of Revenues Over Expenditures 831,525$ (8,311,867)$ *(4,423,712)$ *19,895$ -$
SUMMARY OF REVENUES AND EXPENDITURES
GENERAL FUND
*FY 2020/21 and FY 2021/22 Q2 Net Operating Revenues are negative because some revenues budgeted for the entire fiscal year are received in the third or fourth quarters and
fund expended in the first or second quarters.
** FY 2021/22 General Fund Budget included the ARPA revenue receipt, now the ARPA revenue is budgeted in a Special Revenue Fund.
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FINANCIAL SUMMARIES OF OTHER FUNDS
The group of financial summaries on the following pages present data by governmental, proprietary and
fiduciary fund types. For each, the fund information starts with a beginning fund balance, adds current
year revenues, and subtracts current year expenditures, resulting in an ending fund balance. Adopted
budget amounts are provided as a basis for comparison of actuals to date.
Special Revenue Funds (Governmental Fund Type)
Special Revenue Funds account for the proceeds derived from specific revenue sources that are legally
restricted or assigned to special purposes. The Town’s Special Revenue Funds are Community
Development Block Grant Fund, Housing Conservation Program Fund, Urban Runoff Source Fund (Non-
Point Source), and several Landscaping Lighting District (LLD) Funds, and the Newly established
American Recovery Program Act (ARPA) Fund. Staff recommends designating ARPA funding as a special
revenue fund instead of the recognizing it in the General Fund. This requires revenue budget
decreases/increases in the amount of $3,185,767 for General Fund and In the ARPA Special Revenue
Fund respectively and expenditure budget decreases/increases in the amount of $296,382 for the
General Fund and ARPA Special Revenue Fund respectively.
CDBG Non-Point LLD's
Grants Source ARPA
Beginning Fund Balance 166,654$ 371,240$ 172,355$ -$
Budgeted Revenues - 231,323 39,680 3,185,767
Total Actual Revenues - 2nd Qtr -$ 96,385$ -$ 3,413,961$
Budgeted Expenditures - 221,044 100,199 296,382
Total Actual Expenditures - 2nd Qtr - 97,568 11,896 -
2nd Quarter Ending Fund Balance 166,654$ 370,057$ 160,459$ 3,413,961$
Special Revenue Funds
Budget to Actuals Comparisons
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Capital Projects Funds (Governmental Fund Type)
Capital Projects Funds account for resources used for the acquisition and construction of capital facilities
by the Town. Funds in this category are the GFAR (General Fund Appropriated Reserve) Fund, Traffic
Mitigation Fund, Grant Funded CIP Projects Fund, Utility Underground Fund, Gas Tax Fund, and three
Storm Drain Funds. Staff recommends budget adjustment in the amount of $160,000 for the Adult
Recreation Center HVAC Improvements and the Redevelopment funding of $1,658,776 used for the
purchase of the 224 W Main Property to be transferred to the Below Market Housing Program deposit
account. Staff will continue to monitor these revenues and expenditures throughout the remainder of
the year. The Grant Funded CIP fund displays a deficit balance because this grant fund expends Town
dollars first, then provides documentation of these expenditures to the State of California or other
granting agencies and is reimbursed for those costs. The reimbursements eventually result with the
fund “breaking even” or a zero fund balance.
GFAR*Traffic *Grant Funds*Storm Utility Gas
Fund Mitigation CIP Drains Undergd Tax
Beginning Fund Balance 15,433,836$ 2,322,525$ (699,244)$ 2,917,689$ 3,201,310$ 1,425,095$
Budgeted Revenues 7,393,484 1,026,219 7,907,473 104,540 52,490 1,401,865
Total Actual Revenues - 2nd Qtr 1,742,745 159,207 895,330 177,314 34,562 598,329
Budgeted Expenditures 20,620,538 1,441,246 7,854,224 659,447 348,003 2,650,576
Total Actual Expenditures - 2nd Qtr 4,558,512 159,207 1,200,646 39,248 427 868,215
2nd Quarter Ending Fund Balance 12,618,069$ 2,322,525$ (1,004,560)$ 3,055,755$ 3,235,445$ 1,155,209$
Capital Project Funds
Budget to Actuals Comparisons
* GFAR, Traffic Mitigation, and Grant Funds balances are combined in the ACFR. The combined balance of $15,115,912 is
presented as an Appropriated Reserve. The Traffic Mitigation Fund balance includes $1,951205 deferred revenue.
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Internal Service Funds (Proprietary Fund Type)
Internal Service Funds finance and account for special activities and services performed by a designated
Town Department for other Town Departments on a cost reimbursement basis. Included in this fund
type are the Equipment Replacement Fund, Workers’ Compensation Fund, Joint Powers Authority Pooled
Liability Network (PLAN) Self-Insurance Fund, Information Technology Fund, and the Facilities
Maintenance Fund.
Staff recommends a $20,000 expenditure budget adjustment to cover additional expenses related to the
donated Los Gatos Theatre building. In addition, staff recommends expenditure adjustments in amount
of $42,000 from the available Workers’ Compensation Fund to provide for the excess insurance premium
due to increased claim activities. Staff will continue to monitor expenditures and propose a revised cost
allocation if needed during the FY 2022/23 budget preparation.
Equipment Workers Self Information Facility
Replacemt Compensation Insurance Technology Maint.
Beginning Fund Balance 1,889,536$ 1,673,019$ 1,021,082$ 2,870,823$ 156,341$
Budgeted Revenues 570,957 1,007,620 423,332 914,018 1,181,297
Total Actual Revenues - 2nd Qtr 317,925 602,947 200,987 509,809 475,412
Budgeted Expenditures 808,083 1,782,569 850,716 1,064,959 1,203,193
Total Actual Expenditures - 2nd Qtr 46,960 1,039,436 703,807 644,963 362,656
2nd Quarter Ending Fund Balance 2,160,501$ 1,236,530$ 518,262$ 2,735,669$ 269,097$
Internal Service Funds
Budget to Actuals Comparisons
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Trust and Agency Funds (Fiduciary Fund Type)
Town Trust and Agency Funds have estimated fund balances as of December 31, 2021 of $570,185 for the
Library Trust Funds and $243,825 for the Successor Agency (SA) Trust Fund. AB1x26 is the “Dissolution
Bill” that eliminated the Town’s Redevelopment Agency effective February 1, 2012. AB 1484 is the
“clean-up” bill that revised and attempted to clarify AB1x26. In accordance with the law, the Successor
Agency continues to wind down the affairs and operations of the former Redevelopment Agency by
implementing programs and activities in accordance with the State-approved Recognized Obligation
payment Schedule (ROPS). The Successor Agency monies are now accounted for in a Private Purpose
Trust fund and no longer part of the Town’s Financial Statements.
Staff recommends a $15,000 revenue budget increase and a $5,000 expenditure budget increase in the
Library Trust to recognize and partially spend the additional donation received in the current fiscal year.
Library SA
Trust Trust
Beginning Fund Balance 552,877$ 247,344$
Budgeted Revenues 59,100 3,500
Total Actual Revenues - 2nd Qtr 30,167 1
Budgeted Expenditures 88,955 1,501,540
Total Actual Expenditures - 2nd Qtr 12,859 4,343
2nd Quarter Ending Fund Balance 570,185$ 243,002$
Trust & Agency Funds
Budget to Actuals Comparisons
* Certification of Participation Long Term Debt ($14,423,890) and net land and
building value ($6,579,430) are not presented in the Fund Balance. FY 2022 transfer
of Successor Agency property to the Town's BMP Housing Program not presented in the
Fund Balance.