Town staff presented Council on Feb. 15 with a dismal picture of a pandemic recovery requiring around $2 million in deficits through 2026/27, although this year isn’t turning out as bad as anticipated.
In fact, Los Gatos expects to be $500,000 less in the hole than it originally thought it would sink.
Steve Conway, the Town’s interim finance director, noted in his report that the projected deficit for fiscal 2021/22 is less than originally estimated due to projected increases in Educational Revenue Augmentation Funds, property taxes and Transient Occupancy Tax (TOT), which comes primarily from hotels.
So instead of a $1.9 million deficit, Los Gatos is looking at a $1.4 million deficit this year.
The Town is projecting savings due to staffing vacancies and retirements.
Staff reported decreases in sales tax, property tax, and franchise fee revenues.
Coun. Matthew Hudes thanked the finance department for its hard work and asked why business license monies have been decreasing in recent years.
Gitta Ungvari, Los Gatos’s finance and budget manager, said that tax structure hasn’t changed for quite a long time. It was also affected by reclassifying Netflix from a retail business to an e-commerce platform (which provided additional revenue for a couple years), and by the departure of Roku, which moved to San Jose.
“Definitely it was a significant company that we lost,” she said.
Hudes noted that while the TOT was performing better than initial estimates, things aren’t going well for accommodation providers.
“We were pleasantly surprised to get an extra half-million, but we’re still down below half of what we were getting in TOT,” he said. “What measures can we take to more-rapidly increase TOT?”
Town Manager Laurel Prevetti noted Council has been investing in destination marketing to try to encourage people to stay in Los Gatos again.
Los Gatos Chamber of Commerce Executive Director Catherine Somers said of the $55,000 grant it had received for this outreach, it’s only primed the pump of the local tourism economy with less than half of that, so far, due to successive coronavirus waves.
Staff also recommended Council approve an urban forest manager to eventually replace a retiring arborist—adding the new position, which would be oriented around wildfire prevention, would still be filled by a trained arborist.
Coun. Mary Badame made a motion to receive the budget update, authorize the proposed adjustments and give the go-ahead to the tree-manager change, and this was seconded by Coun. Hudes.
But then he asked if it was OK to add on an additional item—getting staff to price-out the cost of a disability pilot project that residents had been in his ear about—and she agreed, at first.
Vice Mayor Maria Ristow noted that data viewed by Council indicates no problems with accessibility.
“I’m not suggesting we vote to do it at this point,” Hudes said. “I’m asking for an estimate.”
Staff said it would probably take 6-12 hours of administrative work to come up with realistic figure.
Prevetti said slipping in such an amendment—that wasn’t part of Council’s strategic priorities–“seems a bit odd.”
Coun. Badame withdrew her motion and made a new one without the friendly amendment about wheelchair-access, which was approved unanimously.
After Coun. Hudes learned, from staff, they’re already in the middle of assessing disability issues in the community, he declined to pursue this point further, for now.
Mayor Rob Rennie indicated he wasn’t warm to Hudes’s amendment, anyway.
“It feels like we’re talking about something that’s not in this agenda item,” he said. “It feels a bit like adding pork into bills that Congress does. I’m struggling with, What exactly are we talking about?”
Council also agreed to spend “up-to” $120,000 on as many as eight street-fair “Promenades” next summer, although members urged the Chamber to seek in-kind contributions from businesses to reduce this figure, if possible.
The money is to come from ARPA funds.