Cupertino Launches Community Budget Survey as State Scrutinizes Long-standing Apple Tax Deal  

Photo courtesy of City of Cupertino website.

The City of Cupertino launched a survey last week to help identify community preferences related to budget-balancing strategies it may need to implement to address a potential 73 percent reduction in local tax revenues based on a forecast provided by the City’s finance director earlier this month.  

 The potential drop in Cupertino’s annual tax revenues is the result of ongoing scrutiny by the California Department of Tax and Fee Administration (CDFTFA) into the City’s tax-sharing arrangement with Apple. Although CDTFA’s audit is confidential under state law, reporting by Bloomberg indicates that the State is likely investigating how Apple treats its online sales to California customers. Under the arrangement, the tech giant considers all its digital transactions with customers in the Golden State as having originated in Cupertino.  This agreement has resulted in significant sales tax revenue allocations to the City – a situation that the State appears poised to rectify through its audit. 

The City’s website notes that the survey is offered against the backdrop of the municipality’s “financial hardships” and anticipates “changes in the City’s short- and long-term financial outlook which may lead to reductions in some services.”  The survey asks respondents to weigh which services they would prefer to see reduced and other revenue strategies they would like the City to pursue.   

Responses to the survey will be accepted through May 16, 2023, and presented to the City Council during a Special Meeting on May 17.  Members of the broader Cupertino community can take part in the survey by following this link