Cupertino revisits budget cuts, adds back multiple services

The City Council voted Tuesday to continue funding some city operations including tree and sidewalk maintenance, that were initially removed by staff when planning the 2024-25 budget.

Some Cupertino services that were slated to be cut next year are getting a second chance.

The City Council voted Tuesday to support funding multiple city operations, including tree and sidewalk maintenance, that staff initially proposed removing when planning the 2024-25 budget. The move comes as Cupertino considers reducing dozens of services next year to compensate for a $30 million decline in its sales tax revenue.

“After hearing from council instruction and also feedback from community members, that funding will remain as part of the proposed budget,” City Manager Pamela Wu said during the meeting.

City staff are aiming to reduce funding for operations and maintenance, infrastructure projects and city-sponsored events to meet roughly half of the $30 million total. Last year, the city eliminated more than a dozen vacant staff positions and decreased its contract services and special projects to reduce the shortfall by half. Next year’s budget, which is still being reviewed, will be finalized in May and approved by the council in June.

The city’s budget woes come after a 2023 state audit deemed its decades-long sales tax agreement with Apple improper. Since 1998, the tech titan, which is headquartered in Cupertino, has treated all online purchases of products within California as if they were made in the city, abiding by a 1950s law that looks at orders based on the location of the sale and not the customer. The deal allowed Cupertino to collect 1% of Apple’s 7.25% sales tax, and a third of the revenue was returned to the company.

Apple isn’t identified in city reports as the audited taxpayer, but city leaders in public meetings have indicated the tech titan was the target of the audit. Now, Cupertino owes the state a one-time repayment of $56.5 million, which is the estimated tax revenue the city collected from Apple between April 2021 and June 2023. The amount will be paid out of reserves, but the city says it needs to make the $30 million in cuts to prepare for the upcoming loss of sales tax revenue.

Staff initially proposed moving sidewalk and tree maintenance responsibility to adjacent property owners to free up roughly $1.45 million, a decision that was met with pushback by the council and residents.

Jennifer Griffin, who lives in Rancho Rinconada in Cupertino, said her neighborhood has beautiful trees and well-maintained sidewalks. The residents enjoy being outside, and don’t want to see those services abandoned.

“We were surprised when they proposed not maintaining the tress and sidewalk,” she said. “If you put the responsibility on the owners, a lot of them may not be able to afford having the trees cut down.”

The council supported funding half of the maintenance amount, per staff recommendation. Parks and recreation staff will plan to expand the time between tree trimming and reduce the frequency of road median maintenance to accommodate the change, according to city budget manager Thomas Leung.

Trees and sidewalk maintenance weren’t the only services added back to the budget. Per the council’s request, staff Tuesday presented on how several potentially cut services could be retained, including crossing-guard and ground-maintenance funding for local schools.

While these programs have been saved, others are not so lucky. Some community benefit programs, including Cupertino’s Fourth of July fireworks show and free Shakespeare in the Park festival, are expected to be defunded entirely. The city pays a hefty sum to keep both events going. The Fourth of July celebration needs $138,000 to fund the fireworks, sheriff, rental equipment and staff time, while the annual free Shakespeare event organized by the San Francisco Shakespeare Festival costs the city $30,000, according to city documents.

The city is exploring potential sponsorship or donation options with local organizations, including the Cupertino Rotary Club and Cupertino Library Foundation, to continue the events. Shakespeare in the Park began fundraising efforts in last year to save its 2024 show, receiving donations from the foundation, San Jose Water District and local residents. Fundraising efforts have been very fruitful, according Toby Leavitt  executive director of the festival.