Cupertino Budget Crisis

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About 40% of the City of Cupertino's revenue comes from sales taxes. But with a state audit, the sales tax revenue is estimated to drop 73% this year, from $42.1 million to $11.4 million, a $30.7 million change. The City of Cupertino's budget will change from surplus to deficit. See staff report for details.

Below is a screen shot of the staff report.

The city offered three strategies: reduce fund, cut expenditure and increase revenue.

Below is a screen shot of fund reduction.

Below are screen shots of expenditure reductions.

Below are screen shots of increasing revenue.

The City of Cupertino is conducting a survey.
How should Cupertino balance its budget?

Below are some ideas not offered in the city survey above.

A hiring freeze while the budget is in deficit. The Staff per 1000 residents ratio is at all time high (3.40). How about scale it back to FY 14-15 level (2.62)?

Given the population is 60,869 in FY2023-24, we can save 47 to 52 positions. Each position costs about $186,000 per year (See Expenditure Reduction Strategies above). The saving is about $8,742,000 to $9,672,000 per year.

Note: Cupertino Budget At A Glance for FY23-24 shows 207 total staff for FY23-24, while page 42 of Cupertino Adopted Budget for FY23-24 shows 212 total staff. The Budget At A Glance shows 10% population reduction for FY23-24. I don't know whether this is accurate. So used previous year's population number for calculation.

Freeze city staff salaries and benefit unless the budget is balanced or has a surplus. This will encourage city staff to pursue a balanced budget as well.
Cupertino pays Santa Clara County Sheriff each year for law enforcement services. But cities like Sunnyvale (larger than Cupertino) and Campbell (smaller than Cupertino) have their own police department. Should Cupertino study the strategy to have its own police department?

Cupertino Reserving $56.5 Million to Repay Tax from Apple Sales

The related survey can be found here.

Lookingaround

@long This is a good summary you have put together.

https://data.census.gov/profile/Cupertino_city,_California?g=160XX00US0617610#populations-and-people
Census data on Cupertino is interesting. Very wealthy population.

Cupertino has one of the lowest per capita police costs, and no city-owned police facility. Why would they drive up the law enforcement cost? Interesting idea to bring in house, probably way too expensive.

The unassigned fund balance is now at $80M. It has been steadily increasing for the past ten years.

The sales tax estimate is now adjusted to $9M down from $11M.

Would you alter your suggestions now from what you made before?

You may enjoy watching the State Assembly Revenue and Taxation meeting regarding sales tax with a rep from CDTFA explaining the matters: https://www.assembly.ca.gov/media/assembly-revenue-and-taxation-committee-20231115 At minute 54 it gets more interesting. You can read the transcript quicker, but there is a presentation as well you will get in the video.

Great work!

long

@lookingaround Thank you for the comments.

My explanation for the law enforcement cost increase was that was the number the County Sheriff charges to Cupertino. I guess it's more costly to setup the in house police department at first, but the running cost should be lower than what the County Sheriff charges. But it's just a guess, I would love to see a research to compare the two options.

For sales tax, in a perfect world, each city should receive the sales tax from their residents. For each $100 on taxable spending, the city should receive $1 (the other $8 goes to the state, county, etc). Cupertino should receive only $60K per month or $720K per year if average resident spending is $100 per month. $9M sales tax is equivalent to $1250 non grocery spending per resident (not per household) per month. I don't know about other families, but my family should be much lower than this number. I think even $9M sales tax for Cupertino is still higher if we go to a fairer system.

My suggestions are not the most important things. Cupertino verified voters' voice is more important. I am glad my suggestion 1 and 2 made the top 2, which were also surpassed 55% of participated registered voters. I am quite glad with this results. The results were published here.