Palo Alto's animal shelter may have been saved from the chopping block last month, but the city's cash-strapped animal-services operation will soon see significant changes, including higher fees and fewer staff members, under a proposal the City Council approved Monday night, July 23.

In its final action before a month-long recess, the council unanimously approved a plan to raise fees for spaying and neutering by an average of 22 percent for residents of Palo Alto and its partner cities, Los Altos and Los Altos Hills. For others, the fees would go up by about 50 percent. With the increase, the average fees would be $95 and $125 for residents and nonresidents, respectively.

The council also approved staff's recommendation to eliminate 2.5 positions from the 13-member operation -- a shelter supervisor, an animal-control officer and a volunteer coordinator. The lattermost position would remain in place for the coming year because of an anonymous $35,000 contribution.

The changes at the shelter are driven by Mountain View's decision to leave the partnership in the Palo Alto facility and to switch to the newer shelter operated by Silicon Valley Animal Control Authority. The move, which will become finalized this fall, will deprive Palo Alto of $470,000 in annual contributions.

Council members expressed regret Monday at having to reduce staff but agreed that the city has no choice.

"I wish we hadn't had to do this," Vice Mayor Greg Scharff said. "I think circumstances dictated it."

Councilman Larry Klein agreed.

"It's always hard to lay off good people," Klein said. But noted that the cuts must be made given that Mountain View is no longer in the picture.

"Our service area has been reduced so it's almost inevitable that we'd have some reductions since we're serving less people," he said,

Klein pointed out that the reductions wouldn't take place until Jan. 1, which means there is still a shred of hope that they can be averted if the operation raises enough money from donations. But City Manager James Keene noted that even if one-time donations provide a temporary reprieve, they would not obviate the need for the city to pursue permanent cost reductions.

"Obviously, what we need to achieve are ongoing structural savings," Keene said. "If we got some donations that can offset costs in a particular year, that would only delay decisions until there's a sustainable donation."

The changes, while significant, are a far cry from the city's earlier proposal to shutter the animal shelter and to outsource the entire animal-services operation. The plan, which staff recommended in the spring, triggered an outcry from local animal advocates and shelter volunteers, many of whom formed a new nonprofit group, Friends of the Palo Alto Animal Shelter, to raise funds for the animal services.

Luke Stangel, president of the new nonprofit group, called the proposed fee increases "totally appropriate" but urged the council to reduce animal-control staff through attrition rather than through layoffs.

"Layoffs are more than a line item on a budget," Stangel said. "They have very real impacts."

In addition to raising fees, city officials hope to raise revenues in the local shelter on East Bayshore Road by extending hours of operation and more aggressively marketing the shelter's services. The hope is to increase the volume of spay and neuter surgeries by 25 percent.

Altogether, the city expects the higher fees for spaying, neutering and other services (including dog licenses, vaccinations and adoptions) to increase annual revenues by $185,349. Staff cuts would reduce expenditures by another $284,426.