It's a problem many communities would envy: a sizzling economy that pumps an ever increasing stream of cash into municipal coffers.

But as Palo Alto's newly approved budget suggests, prosperity brings its own problems, including traffic, parking shortages and a growing demand for city services. Also, more tension over development and unplanned citizen uproars over things like airplane noise, basement construction and Eichler design guidelines -- conflicts that inevitably lead to studies, consultants and, at times, policy changes.

As City Manager James Keene wrote in his introduction to the budget: "(The) demands and conflicts emerging from our vibrant economy have heightened the intensity of the 'Palo Alto Process,' with new analyses and data generation demands, and deep dives into complex problem solving within an engaged public process across a wide range of issues."

The budget aims to tackle some of these challenges. It includes funding for two new parking-permit programs, the solution of choice for some residential neighborhoods seeking relief from commuters' vehicles and for an urban-design specialist who would help the city craft guidelines for new homes in Eichler neighborhoods.

Palo Alto's budget for fiscal year 2017 includes $642.4 million in citywide expenses, including a General Fund (which pays for most city services and projects, not including utilities) of $194.1 million.

The General Fund includes a $68.2 million capital-improvement program for 2017, with most of the money earmarked for projects on the council's list of infrastructure priorities: a new public-safety building, two new parking garages, the replacement of two fire stations and a host of biking projects.

Mayor Pat Burt noted during Monday's discussion that various city councils had been talking for over a dozen years about the city's "massive infrastructure expenditure" but had no idea where to find the needed funding.

"What the city has done over the last several years is transform our budget to get to a point where we're investing over $45 million this year in infrastructure -- that's keep-up, catch-up and new projects," Burt said. "That's a major change that has happened. We have worked ourselves into a solution and we have to realize that's a big deal."

The healthy local economy helped, according to city officials. Tax revenues, which have been consistently climbing for several years now, just underwent another upward revision. Property-tax and utility user-tax revenues are each projected to go up by about 11 percent from the prior year, to $39 million and $12.4 million, respectively. In each case, the newest projections from the Administrative Services Department exceed the ones from April by more than $1 million. Sales-tax revenues are projected to grow by 5.5 percent from the prior year, to $29 million.

Expenses are rising just as rapidly. Salaries and benefit costs, which make up about 60 percent of the General Fund, are set to increase by $6.9 million, or 4.3 percent, in the new budget. And eight new positions will be added, including four in Public Works and 2.5 in Planning.

Given the rising costs, Keene had proposed using money from the city's Budget Stabilization Reserve to balance the annual budget, an idea that met resistance from the council's Finance Committee. Instead, the committee and staff agreed to strike from the budget a few capital projects that wouldn't be shovel-ready in the coming year in any event.

Among the more controversial proposals in the budget was a plan to reduce the trimming cycle for local trees from seven to 15 years. The Finance Committee pushed, bringing it down to 10, though Councilwoman Karen Holman lobbied to keep it at seven.

Keene's assurances that the city can always revisit the decision if it has a negative effect on local trees offered Holman little comfort.

"If we lose trees because we're not adequately maintaining them, how do we go back and restore those trees? It's not possible," she said.

Her proposal to retain a seven-year cycle garnered no support. A separate motion, made by Councilman Eric Filseth, to use half of the funds currently budgeted for "sustainability contingency" to increase the frequency of tree trimming faltered by a 4-4 vote, with Holman, Vice Mayor Greg Scharff and Councilman Tom DuBois supporting it.

During the discussion, Scharff marveled at the fact that the council is being asked to cut tree-trimming costs during a time of a thriving economy.

"This is the up-cycle. Things don't get better than this," Scharff said. "And winter is coming. Recession is going to come. If we're cutting the services now, that just concerns me."

The council also agreed to add $750,000 into a trust dedicated to pension liabilities. Burt and Councilman Greg Schmid both talked about the importance of investing in unfunded liabilities, though Schmid also acknowledged that this will mean deferring some infrastructure spending.

The council also agreed to allocate $50,000 for emerging needs in human services and directed its Policy and Services Committee to consider raising the city's spending on grants to local nonprofits. In addition, the committee was directed to explore creating a low-income fee program for adults in the Community Services Department.