Palo Alto signaled its dramatic economic turnaround on Thursday night when it passed a budget that adds police officers, accelerates street repairs and -- for the first time in years -- contains no service cuts whatsoever.
Bolstered by rising revenues in almost every tax category, the City Council gleefully approved at its special meeting a budget for fiscal year 2014, which begins July 1. For the first time since 2009, the budget contains no service reductions or proposals to outsource city functions. In fact, the changes the council made on Thursday to City Manager James Keene's proposed budget were additions rather than subtractions: more funds for teen services and for nonprofits that receive grants from the city.
Councilman Pat Burt, who chairs the council's Finance Committee, pointed to the budget as an indication that the city is going into a "positive long-term trend." Burt, who was elected in 2007, said this was the first time in his council tenure the city has had an opportunity to restore programs that have been cut. He noted that the budget turnaround was the result of both revenue growth and structural reforms that the city has undertaken in recent years, most notably greater cost-sharing by employees of pension and health care costs.
According to a staff report, the city has achieved $26.3 million in one-time and ongoing expense reductions since fiscal year 2010. It has also reduced the number of positions by 12 percent in the past four years.
"This is the first year that we've really seen the fruits of the difficult reforms we've gone through," Burt said.
Burt, whose committee reviewed the budget over a series of meetings in May, also had a hand in discovering a revenue source for teen programs that most in the city didn't know existed. The council in 2001 approved a funding plan, based on the city's Youth Master Plan, that would allocate 75 percent of revenues from commercial rentals of a city-owned lot to teen activities. The council agreed Monday to add $217,000 in these revenues to the Community Services Department, which would come back with a proposal for teen programs.
The thriving local economy had plenty to do with the budget turnaround. The city's tax revenues have gone up by 20.6 percent since 2009, from $65.8 million to $79.3 million.
The budget includes $159.8 million in expenditures in the General Fund and $287.1 million in Enterprise funds for a total of $446.9 million.
Mayor Greg Scharff said that while more needs to be done to address the city's long-term financial picture, council members "should all take a pause and congratulate ourselves."
"It has been a long road," Scharff said. "What we really achieved here is sound financial footing and a sound structure from which to move forward."
For more information on the budget, click here.
Comments
Old Palo Alto
on Jun 14, 2013 at 10:56 am
on Jun 14, 2013 at 10:56 am
Let's put a freeze on city hiring and salary increases for 2 years. Put the money toward fixing and repairing infrastructure.
My guess is that this will never happen. If there's a surplus, they'll find a way to increase the size of city government.
Another Palo Alto neighborhood
on Jun 14, 2013 at 11:13 am
on Jun 14, 2013 at 11:13 am
Good. Now let's stop all this talk about a bond for infrastructure and get the work done.
Greendell/Walnut Grove
on Jun 14, 2013 at 12:50 pm
on Jun 14, 2013 at 12:50 pm
I'm lived in 29 years in Palo Alto. I'm a board member of the WGNA.
Why do we have to spend every penny? What about SAVING some of the surplus. What about a "rainy day account?"
In good times you save to cover the bad times. This is responsible financial planning, especially with other people's money.
Community Center
on Jun 14, 2013 at 3:28 pm
on Jun 14, 2013 at 3:28 pm
When doesn't the council congratulate themselves?.. The big one is when the new mayor takes-- then they are all Back slapping each other. Soon they will be congratulating themselves over the may ell project, like they did for alma plaza. They are all so wonderful they want to get rid of term limits, so they can stay on forever. He is the progress coming along for your goals mentioned in the state f the city address, Greg? Maybe you can look into that gennady ( that is if you can stop worshipping the ground that Scharf walks on )
Barron Park
on Jun 14, 2013 at 4:01 pm
on Jun 14, 2013 at 4:01 pm
This is typical Palo Alto Weakly reporting---congratulating city of officials without asking tough questions? What about the estimated $300 million to $600 million in unfunded pension liabilities? Seems the city isn't going to try and pay down that debt while things are good, and instead kick the can down the road. And if this is such a great budget, why is council planning to ask us to raise property taxes next year to pay for repairing infrastructure that the city should have been maintaining over the years? Why are we going to increase our city debt if things are so good?
Greenmeadow
on Jun 14, 2013 at 4:30 pm
on Jun 14, 2013 at 4:30 pm
I just want to know one thing: What is our real expense when you present value the tally of all the pensions? Plan for that real expense.
Of course, if I were in charge of things, I'd rather just decide how much we should actually pay people, how much they should be forced to save (I'm not against that), pay them that and force them to save enough out of that for their own retirement so that we don't build up hidden liabilities anymore.
I don't mind paying people a lot for good service, we should just know how much that we are really spending and then we can better decide what we really want to spend it on.
Community Center
on Jun 14, 2013 at 5:47 pm
on Jun 14, 2013 at 5:47 pm
Dan-- the weekly does not want to bite the hand that feeds them. Plus the writer of the story holds scharf in high esteem. The weekly has always been the voice of the council
Old Palo Alto
on Jun 17, 2013 at 12:46 pm
on Jun 17, 2013 at 12:46 pm
William Morrison,
Thank you for some simple, refreshing, common sense. We must be from the same generation where we were taught not to spend everything. I like the way you think!
I was one of the few who took part in the recent survey, I was astonished at the list of possible expenditures the City was "considering" for PA. Only wish I'd been adding them up as the list was rattled off. Hundreds of millions of dollars. At one point, I asked the surveyor if I could make some statements that she could write down & submit. I told her that I thought the WHOLE City Council should be fired and the planning commission and the transportation director, Jaime Rodriguez. I wonder if any of these individuals even knows what a simple checkbook is and how it works.
Another Palo Alto neighborhood
on Jun 17, 2013 at 9:42 pm
on Jun 17, 2013 at 9:42 pm
$300-600 million IS the number for Palo Alto's unfunded pension liability. The City estimates $300 million, a Stanford estimate was closer to $600 million.
If that sounds bad, consider that the Economist estimated this week that the state of California's unfunded public pension liability might be $1 Trillion.
Interesting that all the self-congratulatory backslapping coincides with Jim Keene asking for raises for all the city management staff. Of course they all hope to have retired and moved on by the time the tsunami hits.