The Los Altos Fiscal Year 2025-2026 budget is stable, based on discussions during last week’s City Council meeting, and the general fund remains healthy with strong reserves as of the mid-year budget review.
Overall, the city is in a stable financial position, according to a mid-year budget presentation given by Los Altos Finance Manager Bo-Kyoung Kim. FY 2025-2026, which was adopted in July of last year, set goals of $65.1 million for revenue and no more than $57.4 million in expenditures.
Following the presentation, council unanimously approved the mid-year financial update and adjustments. Council also approved an updated California Public Employees’ Retirement System (CalPERS) pay schedule.Currently, the city’s revenue is at 39% of the budget and expenditures are at 48% of the budget. At the midyear point, expenditures are tracking well and the city has used less than half of the approved expenditure budget.
“We’ve spent $27.8 million, which is 48% of the Fiscal Year 2026 approved appropriation,” she said. That number included a one-time CalPERS Unfunded Accrued Liability (UAL) payment – excluding that $5 million expenditure, all-department spending is closer to 38%, she said. CalPERS UAL is the annual payment of UAL, which is the gradually written off dollar amount needed for funding previous service credit earned for benefit-receiving, active city employees and for those entitled to deferred benefits, according to CalPERS.
However, both revenue and expenditures are up compared to the FY 2024-2025 mid-year budget review, Kim said, but expenditures are actually less than they seem based on the one-time CalPERS UAL payment.
“Revenue is up 7%, expenditures look up about 20%, but without the $5 million CalPERS UAL payment – expenditures are actually down about 7% compared to last year,” Kim said.
Overall, the city’s departments are stable and tracking with the expected mid-year spending patterns, and there were no material expenditure variances by the mid-year budget analysis, Kim said. Leading in expenditures is the Public Safety department, which is at 54% of its expenditure budget.
“(This is) primarily due to increased pension contribution related to the safety plan, and a significant portion of UAL payments was allocated to this department,” Kim said. “But overall, all departments remain stable with no operation overruns identified at midyear.”
The largest, most stable revenue source of income for the city is property tax, which accounts for 31% of the revenue. Kim also said there has been strong income performance for services, including development services (92%) and public works engineering fees (93% collected). Compared to FY 2024-2025, development revenues are up 4%. Currently, Public Works and development services are at 74% of their FY 2026-2026 revenue budgets, leading the city’s departments.
“Especially charges for services are higher than last year, like continued development applications and plan review activities, which includes plan checks, energy plan checks and over-the-counter review and other entitlement-related fees,” Kim said.
Sensitive revenues, including California’s Utility User Tax and Transient Occupancy Tax are performing as forecasted or better.
However, permanent revenue is slightly lower than last year, she said, “Because FY 2024-2025 included a large project that generated unusually high collections.”
Adjustments accommodated a Homestead/Foothill/Grant intersection feasibility study ($75,000) for the Homestead quarter project, a downtown circulation study ($100,000), and the reappropriation of $174,754.
Councilmember Jonathan Weinberg, who currently serves as the region’s representative to the Santa Clara Valley Transportation Authority Board of Directors, encouraged staff to tread carefully with the feasibility study since he believed the project was not a major priority for the board.
“I’m pleading with you – don’t do anything in the study or make proposals that will let VTA kick this down the line,” he said. “Because if that happens, the chances of us seeing the Homestead quarter project come to fruition are going to be severely diminished.”