An exterior of an office building with the title Cupertino City Hall written on the front, behind green bushes.
Cupertino officials have nearly balanced the city budget through additional revenue sources, eliminating vacant positions and cutting city services. Photo by Annalise Freimarck.

Cupertino has almost balanced its coffers after facing a looming multimillion-dollar deficit for months, but the city will still have to contend with anticipated revenue drops in future years.

The Cupertino City Council unanimously approved the approximately $146.6 million budget for fiscal year 2024-25 Tuesday, leaving the city roughly $200,000 shy of balancing its anticipated $10.1 million budget shortfall. The city got there through additional revenue sources, eliminating vacant positions and cutting city services.

Cupertino used roughly $5.6 million from interest earnings in its investment portfolio, as well as grant and fee revenue from Silicon Valley Hopper, an affordable transportation program, to balance the budget. In April, officials cut roughly $8.7 million in services, including extending the tree-trimming timeline and eliminating five vacant positions: a limited-term special project executive, two public works project managers, a maintenance worker and an innovation & technology manager.

The cuts and revenue infusion balance out an expected $4.3 million increase in expenses, largely due to a roughly $3.8 million cost estimate for the transportation shuttle program, some of which will be offset by grant and fee revenue.

Councilmember Kitty Moore said Cupertino’s finances are headed in the right direction after facing a large deficit.

“The budget has been an ongoing effort to prudently rein in cost and ensure that we don’t leave idle funds because each dollar invested wisely and spent judiciously matters,” she told San José Spotlight.

The deficit began when the city lost sales tax revenue from tech giant Apple, whose headquarters are in Cupertino, after an audit from California’s Department of Tax and Fee Administration last November. While the city has addressed most of its $10.1 million deficit for the next fiscal year, it will need to make approximately $6.2 million in cuts by 2032-33 to be deficit-free.

Tina Kapoor, deputy city manager, said Cupertino anticipates a financial surplus for the next three fiscal years, which could help address the remaining shortfall. But the city also forecasts a deficit beginning in fiscal year 2028-29 due to declining revenue, a transfer of funds into a capital reserve and the sunsetting of a utility user tax. Kapoor said addressing the existing deficit in record time is still a feat.

“Achieving a balanced budget is a significant accomplishment, especially given the steep reductions in revenue,” she told San José Spotlight. “The feedback and suggestions stemming from (community) engagement have ensured that our budget aligns with the needs of the community.”

In the next few years, the city could also see upticks in revenue from new developments. The De Anza and Cupertino Village Boutique hotels are expected to be finished in 2027 and 2028 after they received building extensions from the city council in April.

Claudio Bono, a Cupertino resident for more than 10 years and manager at the Cupertino Hotel, said he agrees with the adopted budget and hopes the city can find innovative ways to increase revenue in the coming years.

“The cuts that needed to be taken made sense and it showcases that we are tightening our belt where we need to be, but it’s also reflective of the times,” he told San José Spotlight.

Moore said she’s seen community members step up to aid the city in partnerships with their businesses and organizations during economic hardship.

“It’s a good sign people understand what’s going on and they want to help out,” she said. “I think in some ways, it could make us stronger as a community.”

Contact Annalise Freimarck at [email protected] or follow @annalise_ellen on X, formerly known as Twitter.

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