Saratoga, Cupertino and Los Altos Hills introduced a counterproposal to the Santa Clara County Sheriff’s Office’s newest contract offer on March 23.

The three municipalities contract their law enforcement and public safety services out to the county and have been doing so for decades. They had a decade-long contract that ended in 2024 before being extended for two years. That contract will expire in June.

County Executive James Williams said in an interview that the contracts they had with Saratoga, Cupertino and Los Altos Hills had an “artificial and arbitrary cap,” leading to the county paying for the increasing police costs through its general fund. During a Saratoga city council retreat in January, officials said that expanded state-mandated training, greater reliance on technology and significantly expanded reporting and accountability requirements led to higher costs. Williams said the gap between costs and payments has grown to $9 million per year, adding that the county has an obligation under state law to ensure cost recovery for contracted services. Usually, police services are funded by cities and towns, and the county general fund is not responsible for them.

“All we are seeking here is to ensure actual full cost recovery, nothing more but nothing less than full cost recovery,” Williams said. “And unfortunately today, we’re in a situation under the current contract where there’s a $9 million gap between the costs of providing services and the contract amounts.”

Covering this gap would increase the municipalities’ public safety contracts by hundreds of thousands to millions of dollars. Saratoga’s contract would increase by $2.9 million, forcing the city to pay almost $12 million each year to continue the service. According to a Cupertino press release, the county’s proposal would bump that city’s yearly contract from $19 million to $26.5 million starting July 1. Los Altos Hills currently pays $2.8 million for its contract with the sheriff’s office, but under the new contract the town would pay around $890,000 more, making the total contract almost $3.7 million.

Saratoga, Cupertino and Los Altos Hills put together a website to advocate for transparency surrounding the increased costs, saying that the proposed 36% increase is “out of line with actual policing costs and driven by significant overhead cost allocation charges unrelated to frontline officers and direct service delivery.” Their counterproposal includes an initial 12% increase starting July 1 to reflect updated deputy sheriff salary benefit costs; a partnership with the county to figure out a cost-allocation model by Sept. 1 that adheres to state law; a three-year phased implementation of remaining overhead and cost-allocation charges; and full cost recovery with future salary and benefit changes incorporated by July 1, 2029 and beyond.

“If we had the ability to spread out these overhead costs and pay whatever the deputies increases are in the first year, and have them really sharpen their pencils and figure out what true overhead costs are allocated to us as a city for the services we use, that would be much more palatable,” said Saratoga Mayor Chuck Page in an interview.

Williams said the term “overhead” is being misused and that the costs that go into that overhead are direct services like investigation costs, even if they are not patrol services. He also said the cities have known that there was a growing gap between the cost of the contract and the cost of the services they receive that has been compounding year after year.

However, the mayors of the three cities state on the website that while the county said it warned them two years ago that it would partially stop subsidizing sheriff services by mid-2026, “the actual magnitude of the proposed increase…was far greater than anything they anticipated based on those earlier signals.”

In Saratoga, Page said, sheriff’s deputies typically handle patrols and traffic enforcement. Los Altos Hills Mayor Rajiv Bhateja said the contracted police force typically deals with property crimes like burglaries and car and mailbox break-ins. Cupertino Mayor Kitty Moore did not immediately respond to requests for comment.

If they were to shoulder the burden of paying for the county’s contract offer, Cupertino and Saratoga project deficits, while Bhateja said his town may have to look into cutting from other areas of the budget, like reducing staff or delaying projects, to make ends meet. The three municipalities are known as donor cities because they pay more in taxes to the county than they receive in services.

“We’re paying for county services already; 94% of our property taxes that do not come to the town goes to the school district, goes to the county, goes to the fire district and all kinds of other places,” Bhateja said. “We’re not a net user of county services; we’re a net donor of county services.”

None of the mayors is saying that law enforcement would cease under their governance, but they acknowledge that there may be effects to service quality and continuity if no deal is reached, so they are starting to explore policing alternatives. Cupertino is exploring contracting with a different law enforcement agency or even starting its own police department. Saratoga considered a similar option, and Page said they toured the Los Gatos-Monte Sereno Police Department for ideas. Bhateja said Los Altos Hills previously hired private security to deal with rising occurrences of property crime.