Staff Report
MEETING DATE: 05/17/16
5
ITEM NO
:
COUNCIL AGENDA REPORT
DATE: MAY 12, 2016
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: OPERATING AND CAPITAL BUDGETS
A.CONSIDER THE TOWN OF LOS GATOS PROPOSED OPERATING AND
CAPITAL BUDGET FOR FISCAL YEAR (FY) 2016/17
B.CONSIDER THE TOWN OF LOS GATOS PROPOSED CAPITAL
IMPROVEMENT PROGRAM FOR FISCAL YEARS 2016-2021
RECOMMENDATIONS:
1.Consider the Town of Los Gatos Proposed Operating and Capital Budget for FY 2016/17
2.Consider the Town of Los Gatos Proposed Capital Improvement Program for FYs 2016-2021
BACKGROUND:
The Proposed Operating and Capital Budget for FY 2016/17 (Attachment 1, previously distributed) is
the Town Manager’s recommended comprehensive financial plan to provide services to the Town of
Los Gatos and address the priorities set by the Town Council. The Proposed FY 2016-2021 Capital
Improvement Program (Attachment 2, previously distributed) is a five-year capital improvement plan
which identifies projects to construct and maintain the Town’s infrastructure. Any changes to the
Proposed Operating and/or Capital Budgets directed by Council at the May 17, 2016 budget hearing
will be incorporated into the implementing documents to be presented for Council approval on June
7, 2016.
DISCUSSION:
Both budget documents were prepared with contributions from all Town Departments. Of particular
note, the Finance Department took the lead in developing revenue and expenditure forecasts, ensuring
that the most current information was used in the preparation of the documents. In addition, the
Department of Parks and Public Works provided guidance on the development of the Capital Budget
based on its familiarity with the Town’s facilities, equipment, and infrastructure.
In September 2015, the Town Council reaffirmed its Core Goals (community character, good
governance, fiscal stability, quality public infrastructure, civic enrichment, and public safety), and
Reviewed by: Assistant Town Manager Town Attorney Finance
S:\COUNCIL REPORTS\2016\05-17-16\Budget & CIP\Staff Report - Budget FINAL.docx
PAGE 2
MAYOR AND TOWN COUNCIL
SUBJECT: OPERATING AND CAPITAL BUDGETS
MAY 17, 2016
DISCUSSION (Cont’d):
established the 2015-17 Strategic Priorities (see page A-11 of the proposed Operating Budget,
Attachment 1). The Proposed Budgets are based on the following principles:
1.Develop and recommend balanced budget maintaining services and prudent reserves,
2.Continue to make progress on Strategic Priorities identified by the Town Council; and
3.Identify opportunities to enhance service delivery through technology and open government.
FY 2016/17 Operating Budget
The transmittal letter in the FY 2016/17 Proposed Operating Budget provides an executive summary
of the budget, including the fiscal outlook, key budget assumptions, and proposed adjustments to the
operating budget (beginning on page A-1, Attachment 1).
The Town continues to focus on priority issues that involve maintaining public safety and Town
infrastructure including streets and parks; and providing library, community development, and other
services. Those services are coordinated with other Core Goals that protect the Town’s fiscal health
and ensure cost efficient and effective delivery of Town-wide administrative services. The Town’s
proactive approach to reducing operating expenditures, identifying revenue enhancements, and
implementing operating efficiencies has been an effective fiscal approach.
Reflecting the positive economy, the FY 2016/17 budget is balanced and the five-year financial
forecast projects limited surpluses in the next five years. As in most municipalities, services are
provided directly by employees to the Town’s residents, businesses, and visitors. As a result, the
costs of salaries and benefits account for 34.6% of the Town’s total expenditures. The Proposed
Operating Budget does not include any potential results from the labor negotiations that are currently
underway with two of the Town’s three bargaining groups and the negotiations that are about to start
with the third union. The FY 2016/17 Proposed Budget includes funding the Town’s reserves,
anticipated employee benefit cost increases, retiree healthcare and pension payments, and other
anticipated expenses. For these reasons, the FY 2016/17 budget proposes to maintain service levels
and provide for minimal staffing changes.
FY 2016-20 Capital Improvement Program
The FY 2016-2020 Capital Improvement Program (CIP) sets forth a five year plan for proposed
street-related, parks, and public facility projects. The transmittal letter contained in the CIP (see
Attachment 2, beginning on page A-1) provides a summary of the program including funding
sources, completed projects, and the proposed projects for FY 2016/17. Only the first year of the
plan is formally adopted with funds appropriated by the Town Council as part of the budget process.
During the September 2015 Strategic Priorities discussion, the Town Council identified several
capital budget priorities, including Almond Grove Street rehabilitation project funding, downtown
parking, traffic and parking around the schools, and other initiatives. These priorities are reflected in
the proposed CIP. The proposed five year plan includes the full funding for the Almond Grove
streets to enable a bid of the remaining eight streets in early 2017.
PAGE 3
MAYOR AND TOWN COUNCIL
SUBJECT: OPERATING AND CAPITAL BUDGETS
MAY 17, 2016
DISCUSSION (Cont’d):
Several additional items are not included at this time because two efforts are underway to inform
specific projects. One effort is the completion of the Traffic and Parking around Schools Study and
the other is the preparation of the Bicycle and Pedestrian Master Plan. We look forward to
completing this work for Council consideration and bringing forward specific improvements in future
budget discussions.
Budget Discussion
At its May 17, 2016 meeting, the Council will have an opportunity to listen to public testimony, ask
questions, and direct changes to the Proposed Operating and/or Capital Improvement Program
Budgets. Any changes to the Proposed Operating and/or Capital Budgets directed by Council or
identified by staff as a “clean-up” items will be included for Council consideration in the resolution
formally adopting the Budgets to be considered by Council in June.
COORDINATION:
The preparation of the budget documents involved the participation of all Town Departments.
FISCAL IMPACT:
The fiscal impact is presented in summary form in the Financial Summaries chapter of the Proposed
Operating and Capital Budget for FY 2016/17.
ENVIRONMENTAL ASSESSMENT:
Is not a project defined under CEQA, and no further action is required.
Attachments:
1.FY 2016/17 Proposed Operating and Capital Budget (Previously Submitted)
2.FY 2016-2020 Proposed Capital Improvement Program Budget (Previously Submitted)