Los Gatos develops plan to reduce projected $3.7M deficit

The Los Gatos Town Council on Tuesday night fleshed out a plan that would reduce the town’s projected deficit but still allow for dog poop bags in town parks and emergency tree removal in one neighborhood.

Town staff projected $58.1 million in revenues and $61.8 million in expenditures for the 2026 fiscal year, resulting in a $3.7 million deficit. Town council approved about $800,000 in cuts to shrink the deficit after nixing a proposal to eliminate the poop bags, which would have saved about $10,000.

In his presentation to the council, Town Manager Chris Constantin stressed emergency preparedness, prudent financial management and preserving Los Gatos’ “small-town charm” as his strategic priorities.

Constantin said the deficit was driven by the escalation of salaries, pension obligations and cost of supplies. He introduced a plan that would save around $800,000 without too much from cutting core services. He also suggested using $1 million from reserves to close the gap.

Approved cuts include leaving open part-time positions unfilled, saving $31,000. The town’s program for putting up unhoused residents in hotels would also be cut back to $20,000, saving $8,700.

Council also approved removing the decorative tree wrap lighting from downtown and reducing online and printed materials in the library. Funding for the town’s pruning and tree management is set to be reduced by 50%.

However, due to pressure from residents on Hilow Street, $80,000 from emergency reserve funds was allocated to remove some eucalyptus trees in the neighborhood in collaboration with Pacific Gas & Electric.

Hilow Street resident Diane Hambury said a fire marshal came to her house and advised her to remove the trees, especially since they’re already causing damage to her and her neighbor’s houses.

“I understand you, the council, last year, removed 18 trees on Overlook at an expense of about $186,000,” Hambury said. “Well, these are five, and I would ask that you could put this much smaller amount into your budget.”

Jeff Suzuki, president of the Los Gatos Anti-Racism Coalition, voiced concerns about cuts to the library, saying the town needs a place where citizens can inform themselves.

“The library is often viewed as just a place to rent books and DVDs,” Suzuki added. “In reality, it is really a nexus of information for the town.”

Constantin said the library’s online offerings, which include streaming media, e-resource databases and e-magazines, were already cut due to the timing of their contracts.

Jan Schwartz, vice president of the New Museum Los Gatos, urged support for NUMU despite budget cuts. NUMU pays $25,000 the town annually in rent. The total market cost for the space and utilities is estimated to be $554,410, which means NUMU gets a subsidy of almost $530,000

“We are stewards of Los Gatos cultural heritage, preserving the stories, artifacts and artistic contributions that contribute to our town’s character,” Schwartz said.

Jennifer Lin, CEO of the town’s chamber of commerce, requested the renewal of the chamber’s $88,000 contract with the town and in-kind support for the Taste of Los Gatos, an end-of-summer street festival held on North Santa Cruz Avenue.

“The results are clear: more commerce, strong business participation and a vibrant resilient local economy,” Lin said of the festival.

The proposed budget includes $88,000 from the general fund for the Chamber of Commerce contract. Staff anticipates that council will consider the contract by next month.