Los Gatos has managed to balance its budget despite a multimillion-dollar deficit by cutting funding for programs and services, ranging from library resources to legal fees. But it might not be smooth sailing for long.
The Los Gatos Town Council unanimously approved a fiscally sound budget for fiscal year 2025-26 June 3 after facing a $2 million budget deficit largely caused by expenses outpacing cash flow. Town officials balanced the roughly $60 million budget by pulling about $900,000 from its general fund reserve, along with roughly $1.1 million in cuts and savings. The town is still projecting revenues won’t keep up with expenses in the coming years, with a potential five-year structural deficit ranging from $5 million to $6.5 million.
Cuts for this fiscal year include $104,350 in library services, $138,000 in outside legal fees, $100,000 in tree pruning, $67,650 in decorative tree lighting and $8,700 in resources for homeless residents. Los Gatos also managed to save more than $423,000 in costs from its internal service operational funds and employee pension benefits.
Mayor Matthew Hudes is glad the town, which primarily relies on sales and property tax for revenue, will enter the fiscal year with a balanced budget. He said while future fiscal uncertainty is concerning, Los Gatos will work diligently to address impending shortfalls. Town officials are working to determine the accuracy of the five-year projections.
Hudes said the town has significantly improved its financial management over the past two years.
“The budget is tight, and therefore we have to watch things more closely, but at this point no significant cuts,” he told San José Spotlight.
The town’s financial management didn’t prevent cuts this year, including to the hotel program for homeless residents. The council reduced the program’s annual budget to $20,000. It allows unhoused people to stay the night in local hotels during cold or wet weather and bad air quality.
Los Gatos officials said the program’s funding will be enough to cover it through the winter unless the town experiences exceptional circumstances.
Tim O’Rorke, supporter of the hotel program and Vincentian at St. Vincent de Paul at St. Mary of the Immaculate Conception, said he’s worried about where the program will get extra money if it runs out of funding throughout the year. Santa Clara County has given the town thousands of dollars to supplement the program, but is facing its own multimillion-dollar shortfall.
Despite that, O’Rorke’s optimistic because the program will continue helping people for the third year in a row. He trusts town staff to allocate funding appropriately.
“We certainly don’t want to set our expectations so high that the programs aren’t in effect,” O’Rorke told San José Spotlight. “If they are in effect, that means a lot to me.”
Los Gatos was also considering cutting $500,000 from the $1 million previously allocated for hiring an emergency manager. The council chose not to cut that funding in the high fire risk town, allocating about $80,000 of that money toward removing five fire-prone eucalyptus trees near homes on Hilow Road.
Ed Lozowicki, who’s lived in the Hilow neighborhood for 42 years, said the trees have been a concern for years. PG&E is removing 15 trees there now that interfere with their power lines, but Lozowicki and his neighbors needed the town to step up for the five remaining. He’s glad the town is removing them because of how dangerous they are during fire season.
“The way they’re positioned on Hilow Road, they could easily spread embers to all of the houses in the neighborhood and block emergency vehicles from coming in,” Lozowicki told San José Spotlight.
Contact Annalise Freimarck at [email protected] or follow @annalise_ellen on X.
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