With Palo Alto's economy sizzling, City Council members are preparing for the first time in more than a decade to raise the amount of money offered to nonprofits serving some of the city's neediest residents.

The council's Finance Committee unanimously agreed on Tuesday that it's time to consider increasing the city's grant allocations, which were trimmed in the leaner years of the Great Recession and had not been restored. Even though the city's budget climbed from about $115 million in fiscal year 2005 to an estimated $170 million in fiscal year 2015 (which starts on July 1), the city's assistance to nonprofits that provide social services has remained relatively flat. The most recent changes took place in 2007 and 2009, when the total funding available for grants was slashed by 5 percent.

Now, council members are preparing to reverse this trend. With revenues surging in just about every tax category and budget forecasts projecting several years of surpluses, Finance Committee members suggested that this might be a good time to raise the current allocation of $1.2 million by up to $200,000. While the committee approved the 16 grants that would be distributed this year under what's known as the Human Services Resource Allocation Process (HSRAP), members also directed the city's Human Relations Commission to consider further allocation of up to $200,000.

The commission, which is charged with vetting applications from nonprofits and issuing grant recommendations, has been arguing in recent years that the city should raise its HSRAP budget. Last month, commission Chair Jill O'Nan told the council's Policy and Services Committee that there is a general concern that the program is chronically underfunded.

Councilwoman Karen Holman said she would like to see the city dedicate 1 percent of its budget toward the grant-allocation program. She called the city's failure to reach this threshold "a concern and an issue."

"I think we're woefully lagging in that regard," Holman said.

Councilman Pat Burt agreed and suggested another proposal for shielding nonprofits from the vagaries of the economy: a rainy day fund that would allow the city to maintain funding levels during lean years.

"This is an area that has the greatest need during a downturn," Burt said. "If we have cuts to these programs in the downturns, it's really counter to the need level."

Chair Marc Berman, who two weeks ago started a new job as director at the Silicon Valley Education Foundation, also favored the rainy-day fund idea. Thanks to his new position, Berman said, he is "quickly getting an appreciation for how much every dollar counts."

Even so, Berman and his colleagues agreed that the increase should be capped at $200,000. While Burt initially suggested having the Human Relations Commission consider "incremental" increases to the allocations, he later agreed to set a $200,000 limit at the urging of Vice Mayor Liz Kniss.

The committee also signed off on this year's grant allocations, which are in the second year of a two-year cycle. The two largest grant recipients are Avenidas and Palo Alto Community Child Care, which will receive $431,184 and $436,830, respectively. For these two nonprofits, which serve seniors and low-income children, this could be the final year in the grant process. Last month, the council's Policy and Services Committee voted to break them out of the program and fund them on a separate track, effectively shielding them from competition from other local nonprofits.

The city also plans to award grants to 14 other nonprofits, with allocations ranging from $5,823 for the Community Technology Alliance to $103,434 for Adolescent Counseling Services. Other recipients are Abilities United, Downtown Streets Team, DreamCatchers, InnVision Shelter Network, La Comida de California, MayView Community Health Center, Momentum for Mental Health, the Palo Alto Housing Corporation, the Peninsula HealthCare Connection, Senior Adults Legal Assistance, Vista Center for the Blind and Visually Impaired and Youth Community Service.

Representatives from several of these nonprofits attended the Tuesday meeting and thanked council members for their assistance. Georgia Bacil, directing attorney at Senior Adults Legal Assistance, said the grants allowed her organization to double the number of annual appointments made with Palo Alto seniors in the past year. Bacil said her organization, which provides legal advice to low-income seniors, continues to see great demand, with many seniors facing eviction or suffering from physical or financial abuse.

Karen Anselmo, director of operations at Community Technology Alliance, said her organization plans to use the grant funds to give poverty-stricken people cell phones. The organization has provided technical support to various local nonprofits, including the Downtown Streets Team and the InnVision Shelter Network. One of its programs involved providing homeless people with voice mail and dedicated phone numbers, a "lifeline to the world" for those applying for jobs. As part of its pilot program, it hopes to distribute 250 cell phones to homeless people.

"In the United States, mobile technology is not designed for people who are homeless and extremely low income," Anselmo said. "Plans are expensive and there are a lot of rules and limitations to them."

The 14 grants (not counting Avenidas and Palo Alto Community Child Care) total $348,163, about $200,000 shy of what the agencies had requested in their applications. The Housing Corporation, for example, asked for $47,730 for a program called "Stepping Stone to Success," which provides academic support to students. It is scheduled to receive $10,000. And InnVision, which asked for $25,000, will only receive about half of that amount.

The Finance Committee's decision doesn't guarantee that these agencies will now get their full requests funded. It does, however, mean that they could see additional funding and that other nonprofits could be added to the city's list of grant recipients in the coming months, as the council proceeds with putting together the fiscal year 2015 budget.