On June 2, Los Gatos approved a $78.8 million operating budget and a $6.5 million capital improvement program for fiscal 2026-27.
That brings the total budget to $85.3 million in expenditures, against $84 million in revenues ($77.6 million for operating and $6.5 million for capital). The Town is pulling $1.3 million from reserves to cover the difference across both budgets, however staff notes Los Gatos still has plenty in the bank.
The budget included $3.2 million in operating spending beyond what staff had originally proposed. At the May 19 budget hearing, Council approved $1.5 million for the Vehicle and Equipment Internal Fund, $335,083 boost to facilities projects in the Facilities ISF fund, $134,368 increase in the General Fund for four Parks and Public Works contracts that came in higher than expected and a new “Long-Term Community Benefit” Capital Fund, among other changes.
“Los Gatos is in a strong financial position, which I’m very proud of,” said Mayor Rob Moore. “Our residents expect that of our Town government.”
The financial plan features a $366,000-a-year salary for Town Manager Chris Constantin—more than 20% above former town manager Laurel Prevetti’s base salary of 289,572, from 2023.
And it includes a new base salary for Town Attorney Gabrielle Whelan of $310,000, up from the $249,900 she made when she started in 2022—and about 23% more than the former town attorney, Robert Schultz, made back in 2021 ($239,382, according to openpayrolls.com).
At the February mid-year budget update, Council said increased sales tax estimates had helped to reduce the deficit. At that time, the Town Attorney asked for $100,000 more for outside legal costs.
COUNCIL PLEASED WITH BUDGET REPORT BY NEW ADMIN SERVICES DIRECTOR KRISTINA ALFARO
On May 30, Finance Commissioner Phil Koen sent a letter to the Town thanking Constantin and Administrative Services Director Kristina Alfaro for the “rigor” of their financial report.
However, he also questioned the wild swings in Town Hall accounting.
“The FY 2023-24 Operating Budget projected a challenging fiscal path,” he said, noting the five-year forecast showed operating deficits of $3.1 million in 2024-25, $2.8 million in 2025-26, $3.2 million in 2026-27, $3.5 million in 2027-28 and $4 million in 2028-29. “Based on those projections, the General Fund reserve balance—which stood at $24.5 million at the end of FY 2023-24—was on track to be reduced to approximately $15.4 million by the end of FY 2026-27.”
The Town’s assumptions were not grounded in objective analysis, Koen charged.
“Revenue projections that miss by $10 to $14 million per year, consistently and in the same direction, are not the product of bad luck or a bad economy,” he said. “In my view, the prior forecasts were built around a narrative—specifically, that the Town faced structural deficits serious enough to justify calls for additional taxation—rather than around what the underlying data actually supported. Revenue sources like property tax, permits, and interest income were persistently and significantly underestimated year after year.”
Council has explored new tax measures at various points in the last few years—fearing a dreaded “structural deficit”—but they’ve never quite made it to the ballot box.
At the June 2 meeting, Alfaro explained that to calculate totals this year, Town staff moved away from the department estimates it had relied on in the past and now looks at how spending is going over the first three months for projections. This led to a more than $3.5-million shift in a positive direction.
“We’re trying something a little new this year,” she said. “We did a trend analysis.”
Vice Mayor Maria Ristow asked her to expand on that.
“We needed to adjust our methodology a bit,” Alfaro said, stating—had the current approach been used last year—the estimate would’ve been much closer to the result. “I’m really looking forward to seeing where we end, and any potential adjustments we need to make as we go forward.”
Recent months have seen politicians raise concerns about Trump Administration funding cuts (causing Council to slash $810,000 in services last May).
Revenues in the General Fund are anticipated to drop by $3.4 million to $62.2 million.
And hotel tax revenue has remained relatively weak.
The estimated $18.8 million in the Capital Program expenditure budget will carry forward to the 2026–27 Capital Program Budget.
“There were real funding gaps that we had last year; we did a variety of things to create efficiency in the budget,” Moore said. “This year was different, because we had tightened our belt pretty significantly, so this year was (about) getting more realistic about the true costs of services and what our contracts were really going to come out to.”
The budget was approved unanimously.
“I was very impressed with how much the Town Council came together on our most important financial topics,” Mayor Moore said. “We’re in a very fortunate position where we get to continue delivering wins.”
One line item he’s particularly excited about: $100,000 towards the design of a public restroom.
