Portola Valley adopts FY 2026–27 budget with structural deficit; council asks staff for ongoing cost reviews

The Portola Valley Town Council adopted the FY 2026–27 operating and capital budget after a multi-hour presentation and extended discussion. Finance Director Tony McFarland (staff presentation) said the town anticipates roughly $8.4 million in general fund revenues against about $9.1 million in expenses, leaving a projected deficit near $679,000 driven in large part by an increase in the county sheriff contract and the expiration of one-time credits.

McFarland and councilors reviewed revenue assumptions (property tax growth, modest user‑fee increases), expense drivers (the sheriff contract increase and consultant costs), capital priorities (street resurfacing and trail maintenance), and the town’s reserve forecast (reserves projected to decline toward policy thresholds without new revenue). The council debated possible service reductions, timing for mid‑year budget adjustments, and staffing levels; some councilors urged maintaining wildfire and emergency preparedness spending.

Why it matters: The adopted budget frames municipal services and capital work for the year and highlights the town’s structural gap. Councilors and public commenters urged continuing to seek new local revenues (possible ballot measures), to scrutinize the sheriff contract and other large line items, and to avoid cuts that would compromise public safety or core services.

Decisions and next steps: The council adopted the budget as presented and requested ongoing staff work to identify potential savings and to return with mid‑year adjustments if warranted. Staff noted possible state VLF (vehicle license fee) relief or supplemental funding that could reduce the projected shortfall, but those amounts were not budgeted as certain revenue.