Cupertino City Council is considering adding a tax measure to the 2026 ballot after facing potential hikes in public safety costs and flagging revenue to the City.
The issue comes as Cupertino’s contract with the Santa Clara County Sheriff’s Office – which the city relies on for police services – is under negotiation and set to expire in June. Under its current contract, the city pays $18.6 million dollars in its contract with the sheriff’s office – nearly a fifth of the city’s budget. While specific details have not yet been released, a report by Cupertino staff considered possible cost hikes of between $1.9 million and $7.6 million .
The sheriff’s office did not immediately respond to a request for comment.
The consideration also comes after a change to sales tax received from Apple. For decades a tax deal between Apple and the city netted Cupertino millions in tax revenue from the lucrative tech giant.
But in 2023, the California Department of Tax and Fee Administration audited the city and determined the state should receive that revenue instead. The shift led to the loss of millions of dollars in income to the city and resulted in a $12 million payout from Cupertino last year.
The city will also see a current tax measure on utilities, which raises $4 million annually, expire in 2030.
Given the multiple financial pressures, the city staff presented several options to bring more revenue to the city, including a quarter-percent sales tax increase that could raise $5.4 million, an increase in taxes on hotels and short term rentals that could raise $1.9 million, and a parcel tax that could raise $3.7 million.
Mayor Kitty Moore acknowledged that as the city developed more housing it would require more public safety services, and Councilmember Sheila Mohan noted that even as the population had stayed roughly stagnant, the demand for city services had only increased.
Even so, others balked at the thought of increased taxes, and instead asked for budget cuts. “We do not have a revenue problem, we have a spending problem,” said Cupertino resident San Rao at the meeting. “Residents are overburdened with taxes. We have an economy that is shedding jobs due to AI, and this is not the time to impose more tax.”
Many on the City Council expressed little appetite for increasing taxes and questioned the likelihood that any tax measures could pass, but others acknowledged that weighing them could be prudent, since ballot measures must be submitted by summer to ensure they are ready for the November election.
“Of course we don’t want to raise tax(es), but we need to have this discussion early,” said Vice Mayor Liang Chao. “If we don’t have this discussion, and we find out we can’t balance our budget in June, it’s too late.”
The City Council did not make a final decision as to how to manage the financial pressure at Tuesday’s meeting, though they opted to explore the tax measures further, prioritizing those which would put the least burden on city residents while also asking for a more detailed analysis of the budget and possible cuts.
“We simply can’t put something on the ballot without having proof to the public that this is really necessary,” said Moore.
As part of that move, they sought to explore fees on developers to help pay for public safety and a potential tax on rideshare use. The council also expressed interest in renewing the public utility tax.
The measures are expected to return for discussion by February or March, according Cupertino city staff.
Stephanie Lam contributed to this report.
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