To balance the budget and account for increased policing costs, Saratoga plans to use $1.5 million from its reserves and reduce some services, staff said during an April 15 city council meeting.
Administrative services director Ryan Hinchman said staff balanced the 2026-2027 fiscal year budget assuming the city renews its public safety contract with the Santa Clara County Sheriff’s Office, which would demand almost $3 million more than what Saratoga already pays. This contract would be effective July 1 if there is no other alternative. To make ends meet, Hinchman said they cut $2 million from capital improvement projects, reduced pension payments by $500,000 million and reduced spending on contract services, training and meetings by $700,000.
“The magnitude of this sheriff’s increase is putting us in a very difficult position to balance the budget going forward,” Hinchman told the city council.
The city also plans to use $1.5 million from reserved funds to cover the remaining balance. Without any changes to spending, city staff predicted that reserves will be depleted in about three years.
The increasing costs of capital projects were driven by material costs and road maintenance, which was prioritized more recently after years of being postponed.
Saratoga reduced contract services for landscaping, repairs and fuel reduction by $410,000. They reduced the scope of tree maintenance from seven- to eight-year cycles to save $150,000. They also reduced staff overtime to save $100,000 and reduced costs for trainings and meetings across all programs by $50,000.
By making these cuts, Saratoga can save $710,000. However, the city still has to pay around $310,000 for election costs, water usage for parks and landscaping, and an upcoming traffic impact study. This allows for a savings of just $400,000. The traffic study is for a proposed traffic impact fee, which could garner $2 million to $3 million in revenue in the next several years.
Staff looked to other potential future reductions, like community support grants, community events, city events, commission and employee recognition dinners and council meals. While these cuts could save $337,000, they still would not be able to close the long-term gap.
Despite these cuts, there are some costs that Saratoga can’t avoid. Community development costs are mostly recouped by user fees. The city relies heavily on contracts for law enforcement, legal services, recreation and maintenance, so paying less for services means receiving fewer of them. Major expenses like public safety contracts, pension contributions, insurance, utilities and core infrastructure maintenance are out of the city’s control.
“Long-term budget solutions will require changing service priorities and accepting broader community impacts,” Hinchman said during his presentation.
Over the next five years, expenses are predicted to outpace revenues. City staff predicted earning $35.2 million in revenue this upcoming fiscal year, mostly from property taxes. They estimate property tax revenue will increase by 5% annually while the cost of contract services grows by 10%. The forecast was based on returning capital expenditure funding to $3.5 million per year and continuing to reduce operating expenses and to pay the 5% yearly increases under the new sheriff’s contract.
The council chamber was mostly quiet after the presentation was finished, save for a few questions.
“This is a bleak financial picture,” Hinchman said.