After years of reducing funding for community and city services in an effort to close a multi-million budget deficit, Cupertino now has a more favorable financial outlook, according to city officials.
The City Council on Tuesday adopted next year’s $132 million fiscal budget. The money, which is mostly collected through a mix of local sales taxes and fees — will be used to fund various improvement projects and city and community needs.
Unlike the past two fiscal years, the 2025-26 budget will be able to fund more long-awaited requests from several city departments, according to Administrative Services Director Kristina Alfaro.
“The last two years we’ve been in a reduction mode,” Alfaro said. “It’s been very bare-bones to nothing being asked for, even if the need existed, because the resources simply did not exist.”
The amount of money the city is expected to spend next year out of the General Fund totals $99.2 million, a 10.2% increase compared to last year’s, largely spurred by salaries for additional positions and increases in contracts, special projects and capital outlay, according to city documents. The fund, which is used to pay for core services, has an estimated revenue of $97,229,134 this year.
About 31% of the money will be used by the Public Works Department, which handles permits and developments, maintenance services and streets and sidewalks-related issues, and 20% will be utilized for law enforcement.
There were close to $4 million in department-related requests this year, which included plans to add new part-time and classified positions and special projects.
Cupertino had cut close to $30 million over the past two fiscal years in order to compensate for a decline in its sales tax revenue. The move came after a California Department of Tax and Fee Administration audit declared Cupertino could no longer receive sales tax revenue from Apple and had to pay back the amount the city had collected.
But a settlement reached last year with the state administration allowed Cupertino to keep roughly $74.5 million in Apple sales tax. The city ended up only paying Apple back $12.1 million, which is the amount the city collected from the tech giant in the last two years.
The settlement has provided some financial breathing room for the city, although departments had to be mindful of their requests to ensure the city continues to have enough money in the upcoming years, Alfaro said Tuesday.
Mayor Liang Chao said she is concerned the city is spending more money from the General Fund than its budget allows. The city still has to find ways to compensate for the loss of future Apple’s sales tax dollars, she said.
“I am concerned we are overly optimistic that we are out of the woods,” Liang said. “It feels like we are not really because our sales revenue is the same situation as last year.”
Alfaro said the proposed spending amount this year is likely higher than what the actual amount will be. Staff are also seeing a downward trend in the amount of city spending over the years.
“We’ll see the fruits of what we’re doing as we get through the 24-25 and 25-26 (actual budget),” she said. “But we are seeing a downward actual expense trend.”
