Los Altos Hills reviews proposed FY 2026–27 budget as sheriff contract and fee study reshape finances

Town of Los Altos Hills officials on May 15 presented a draft FY 2026–27 operating budget and a five‑year capital improvement plan that together show a modest operating surplus but depend heavily on a fee study and a negotiated sheriff contract.

“General fund revenues are $20,300,000,” Thomas said as he summarized the draft, noting that the figure represents roughly a 12.6% increase over last year and yields “a surplus of around $700,000 before any transfers to the capital fund.” Thomas presented the proposal to the joint City Council and Finance & Investment Committee (FIC) during a special study session.

Why it matters: staff and committee members said the budget’s apparent cushion depends on two moving pieces. First, the town’s contract with the county sheriff’s office is rising substantially — staff cited an increase from about $2.7 million last year to roughly $3.34 million in the draft, an increase of roughly $700,000 (about 25%) — and second, a fee study that would reprice many town permits and service fees is projected to raise charges-for-service and is being used in revenue forecasts.

“We start this process in February… and this budget software has helped reduce a lot of the staff time,” Cody, the city manager, said in opening remarks, adding that staff consider the town to be “in a good standing” relative to neighboring jurisdictions but that structural pressures exist.

Staff highlighted key line items and assumptions: the draft proposes two additional full‑time equivalents (a principal planner and a code enforcement officer), raises the personnel budget from roughly $5.5 million to $6.2 million, and budgets a capital program of $5.1 million that includes an annual road rehabilitation ($1.4 million), sanitary sewer rehab ($900,000), a parks and recreation building replacement ($1.3 million), and town hall HVAC improvements ($280,000). The Heritage House Native Garden project appears in the CIP with a Valley Water grant and a general‑fund contribution pending final grant award.

Committee members pressed staff for detail on the fee study, which the town expects to place on a council agenda and a public hearing in June. Several FIC members said the fee study materially affects the forecast and asked for the calculations behind the recommended fee changes and an implementation and communications plan before the council acts.

Council members also probed alternatives to the current law enforcement arrangement after staff noted that existing patrol coverage equates to about 60% of the town’s hours and roughly 0.8 full‑time equivalent deputies on average. Mayor Battaglia raised models used by other jurisdictions — including special‑assignment officers and volunteer‑based “VIP” programs that give residents unarmed, uniformed patrol presence — and asked staff to bring more information to a forthcoming public‑safety meeting.

Next steps: staff told the committee they will provide an updated budget document for FIC review on June 1 and return to the City Council for adoption on June 18. The fee study will require a public hearing at a regular council meeting; staff said fee changes would take effect about 30 days after council approval.