Most Los Gatos residents have expressed concern about the Town's budget with an assumption that revenues are down significantly due to the Covid crisis. In reality, the Town of Los Gatos is in a good financial position relative to other cities for a few reasons:
Most of the Town revenue comes from property taxes which have not yet declined significantly with the Covid crisis. The Santa Clara County Tax Assessor estimates declining property tax revenues are on the horizon, but current revenues are fairly flat.
Unlike surrounding communities, Los Gatos receives a much smaller portion of revenue from sales taxes. Many cities have experienced a dramatic decline in sales tax revenue and have had to make difficult decisions about which services to reduce or cut. Many residents may be surprised to hear that much of Los Gatos' sales tax revenue comes from our grocery stores. Although retail and restaurant revenues declined drastically over the past several months, grocery store sales increased offsetting those declines. The net effect is that sales tax revenue to the Town has been relatively flat since the Covid crisis started. Additionally, the Town residents voted to increase sales taxes slightly on a recent ballot initiative which brought in approximately $800,000 in revenues to the Town.
The recent annexation of several smaller Unincorporated Santa Clara County pockets into the Town of Los Gatos has provided about a million-dollar increase in property tax revenue. Residents in the larger pockets who may consider annexation at a future date should note that property taxes are not higher after annexation, but the taxes go to the Town instead of to the County.
The Town has maintained conservative budgeting practices for many years, with the expectation that an economic downturn was inevitable. The number of Town staff has remained relatively flat even as revenues have increased over time.
Heidi Owens will continue the conservative financial management upheld previous Council members. She is fiscally conservative and will not vote to increase taxes on the residents in the Town. Heidi would like to review the existing fund accounts, particularly the capitol improvements budget and interdepartmental services funds, to identify whether there are excess funds that can be reallocated for more pressing priorities.
Unfunded Pension Liability
Like most municipalities in California, the Town of Los Gatos has a significant unfunded pension liability. Heidi has attended Finance Committee meetings to gain a better understanding of the advice provided to the Council. The Finance Committee has discussed many important concepts the Council has yet to act upon. For example, the Committee members say the unfunded liabilty is increasing over time. If the Town doesn't increase payments above the CalPers recommended amounts, the Town will become more and more indebted to CalPers. This is concerning and the Committee has recommended an aggressive repayment approach. Heidi Owens agrees with the Committee's recommendation that budget windfalls the Council approves as payments toward the unfunded pension liability should be paid immediately (within two weeks).
Ballot Initiative - Town Finance Committee
Heidi Owens supports the ballot initiative that will increase the responsibities of the Finance Committee. The initiative gives voting power to the appointees to the Committee, creates more frequent meetings, and changes the appointment methodology. We are lucky to have highly educated and experienced finance executives living within the Town and the Council should use every opportunity to take their advice. More importantly, it is important to electe candidates with deep financial experience. The reason this ballot initiative was created was the sense among someTown residents that the Town Council was not providing enough oversight on budgeting issues. The current Town Council members do not have finance backgrounds and have not been detailed in their review of proposed budgets. Heidi Owens has a Masters in Business Administration and has managed very large, complex budgets during her leadership career at Cisco. She will be actively oversee the budgeting process in a very detailed and engaged manner. A vote for Heidi Owens is a vote for fiscal responsibiity and oversight.