Staff Report.Budget Adoption
PREPARED BY: Arn Andrews
Assistant Town Manager
Reviewed by: Town Manager and Interim Finance Director
110 E. Main Street Los Gatos, CA 95030 ● (408) 354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 06/21/2022 ITEM NO: 16
DATE: June 15, 2022
TO: Mayor and Town Council
FROM: Laurel Prevetti, Town Manager
SUBJECT: Operating and Capital Budgets
a. Adopt a Resolution Approving the Town of Los Gatos Fiscal Year (FY)
2022/23 Operating Budget and FY 2022/23 – 2026/27 Capital
Improvement Program (CIP), New Appropriations, Additional Council
Actions on May 17, 2022 and Revisions Related to Salary and Benefit
Costs as Presented in the Labor Agreements Agenda Reports on June 7,
2022; American Rescue Plan Act Budget Adjustment, Minor Corrections,
and Carry-Forward Appropriations.
b. Adopt a Resolution Approving Commitment of Fund Balances under
GASB 54.
c. Approve FY 2021/22 Budget Adjustments:
1) Major Revenue Adjustments to Match Year-End Estimated Revenues
as Directed by the Town Council on May 17, 2022; and as Determined
from Updated Information
i. Property Tax Revenue Increase in the Amount of $582,609,
ii. Sales Tax Revenue Increase in the Amount of $428,828 ($361,806
in regular Sales Tax and $67,022 in Measure G Sales Tax)
iii. Business License Tax Revenue Increase in the Amount of
$175,000,
iv. Transient Occupancy Tax Increases in the Amount of $75,000, and
v. Recognize $36,308 General Fund Salary Reimbursement for
Capital Improvement Staff Work.
2) Expenditure Increases to Reflect Past Actions:
i. In the Amount of $300,000 to expense the $300,000 available
General Fund Pension/OPEB Reserve to the CEPPT Trust.
ii. In the Amount of $136,308 General Fund Salary Reimbursement
for Capital Improvement Staff Work.
3) Approve American Rescue Plan Act Budget Adjustments.
PAGE 2 OF 3 SUBJECT: Operating and Capital Budgets DATE: June 15, 2022
RECOMMENDATION:
Operating and Capital Budgets
a. Adopt a Resolution Approving the Town of Los Gatos Fiscal Year (FY) 2022/23 Operating
Budget and FY 2022/23 – 2026/27 Capital Improvement Program (CIP), New
Appropriations, additional Council Actions on May 17,2022 and Revisions Related to Salary
and Benefit Costs as Presented in the Labor Agreements Agenda Reports on June 7, 2022,
American Rescue Plan Act (ARPA) Budget Adjustments, Minor Corrections, and Carry-
Forward Appropriations
b. Adopt a Resolution Approving Commitment of Fund Balances under GASB 54.
c. Approve FY 2021/22 Budget Adjustments:
1) Major Revenue Adjustments to Match Year-End Estimated Revenues as Directed by the
Town Council on May 17, 2022; and as Determined from Updated Information
i. Property Tax revenue Increase in the Amount of $582,609,
ii. Sales Tax Revenue Increase in the Amount of $428,828 ($361,806 in regular Sales
Tax and $67,022 in Measure G Sales Tax)
iii. Business License Tax Revenue Increase in the Amount of $175,000,
iv. Transient Occupancy Tax Increases in the Amount of 75,000, and
v. Recognize $36,308 General Fund Salary Reimbursement for Capital Improvement
Staff Work.
2) Expenditure Increases to Reflect Past Actions:
i. In the Amount of $300,000 to expense the $300,000 available General Fund
Pension/OPEB Reserve to the CEPPT Trust.
ii. In the Amount of $136,308 General Fund Salary Reimbursement for Capital
Improvement Staff Work.
3) Approve American Rescue Plan Act (ARPA) Budget Adjustments.
BACKGROUND:
On June 7, 2022, staff presented a report to the Town Council which included Resolutions for
adoption of Operating and Capital budgets and approval of GASB 54 fund balances (Attachment
1). The budget adoption resolution included recommended changes from the May 17 budget
meeting, revenue adjustments, capital transfers, carry-forward appropriations, and minor
corrections. In addition, the budget resolution included expenditure adjustments associated
with recent labor agreements and corresponding revenue adjustments. At the June 7th Town
Council meeting, staff also recommended administrative American Rescue Plan Act (ARPA)
budget adjustments to comport with final Treasury guidance and audit documentation.
Given that the recommended budget adjustments associated with the successful completion of
labor agreements had not previously been reviewed by the Finance Commission, the Council
voted to refer the item back to the Finance Commission and continue the item to June 21,
2022.
PAGE 3 OF 3 SUBJECT: Operating and Capital Budgets DATE: June 15, 2022
DISCUSSION:
On June 13, 2022, staff presented the Finance Commission with a budget update which
included a summary of the terms and costing associated with the labor agreements. Staff also
presented the recommended corresponding revenue adjustments to offset the additional
salary and benefit expense. And lastly, staff provided a detailed discussion of the
recommended ARPA administrative procedures. Attachments 2 through 4 are supplemental
materials provided to the Finance Commission to facilitate the review of the budget.
The Finance Commission asked numerous questions of staff to understand the changes
pertaining to the labor agreements. The Commission also requested an updated Five-Year
Forecast to assist with the work ahead to evaluate potential cost savings and revenue
enhancements. At the conclusion of the Finance Commission discussion, members voted
unanimously to accept the staff’s budget balancing approach to pay for the labor agreements,
including use of Measure G funds and OPEB (utilizing the OPEB 115 Trust to fund budgeted
retiree Pay Go healthcare expenses) as presented in the June 7, 2022 staff report to Council.
CONCLUSION:
Staff recommends approval of FY 2021/22 budget adjustments, adoption of a Resolution
approving the Town of Los Gatos Fiscal Year (FY) 2022/23 Operating Budget and FY 2022/23 –
2026/27 Capital Improvement Program (CIP), approve American Rescue Plan Act Budget
Adjustments for FY 2021/22 and 2022/23, and adoption of a Resolution approving commitment
of Fund Balances under GASB 54.
COORDINATION:
The preparation of the budget documents involved the participation of all Town Departments
and the Finance Commission.
FISCAL IMPACT:
The fiscal impact is presented in summary form in the Financial Summaries chapter of the
Proposed Operating and Capital Budget for FY 2022/23.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachments:
1. June 7 2022 Council Staff Report and Resolutions
2. Labor Agreements
3. Labor Agreement Summary
4. FY 2020/21 and 2021/22 Budget Balancing Options
5. ARPA Administration