Signaling its renewed push to tackle local traffic problems, the City Council approved on Monday a budget that establishes an Office of Transportation and adds funding for a nonprofit charged with shifting drivers away from cars and toward other modes of transportation.

By a 6-1 vote, with Councilman Greg Tanaka dissenting, the council approved a budget for fiscal year 2020 that continues and, in some cases, builds on the council's recent efforts to address mounting pension obligations, infrastructure needs and — most notably — transportation challenges.

Specifically, it adds resources to the city's transportation operation, which is charged with overseeing (among other things) the growing number of residential parking programs and the city's multiyear effort to redesign its railroad crossings.

The budget comes at a time of economic prosperity, with revenues growing by 8.2%, or $17.7 million, since the prior year. Of that amount, $13 million came from new tax revenues, with sales-, property- and hotel-tax revenues all showing healthy growth.

The biggest initiative in the new budget is the creation of the Office of Transportation, which will debut with 13.5 positions and which will add two more in the coming months. Before the move, the city's transportation planners made up a division in the city's Department of Planning and Community Environment.

The move underscores transportation's emergence as a top council priority and an area that demands extra attention from City Hall. In another sign of this shift, the council recommended contributing $750,000 this year to the Palo Alto Transportation Management Association, a nonprofit charged with reducing single-occupancy vehicles in the downtown and California Avenue areas. This is a major increase from the $480,000 that the city contributed last year. It is also $90,000 more than the $660,000 that the Finance Committee recommended last month, during its budget review.

Councilwoman Liz Kniss said the TMA, which purchases Caltrain passes for low-income employees and middle managers in the downtown area, is "heading in just the right direction" when it comes to getting cars off the road. She noted that the council had just scrapped its plans to build a downtown garage and that the savings from that project more than offset the additional contribution to the nonprofit.

Councilman Tom DuBois, who chairs the council's Finance Committee, supported her proposal, but suggested that the council should look for a different model to support the fledgling nonprofit. Businesses, he said, should do more to support the TMA.

"What we have right now is not sustainable," DuBois said.

Despite this change, DuBois observed Monday that the budget is by and large a continuation of prior efforts.

"It's an evolution," DuBois said. "There's nothing revolutionary here."

At the same time, the budget reflects the city's increasing reliance on public-private partnerships to provide key services to the community. Over the past year, the council had launched partnerships with Team Sheeper to manage the swimming programs at Rinconada Pool and with Pets In Need to oversee animal services. These partnerships had allowed the city to eliminate six-and-a-half full-time-equivalent positions from the 2019 budget.

The budget also underscores several persistent challenges, including growing labor costs and pension obligations. The council agreed to add a $6.2 million contribution to an irrevocable trust to address the problem, which raises the council's total contributions since 2017 to $22 million.

The budget also assumes a far more conservative rate of return on CalPERS investments (6.2%, well below the 7% rate used by CalPERS) than was used in the past, a change that adds about $3.8 million to expenses in the current fiscal year. The new approach on pensions has been championed by Mayor Eric Filseth, who led the push last year to adopt what many consider to be a more realistic rate. Kniss lauded the change.

"It's really an about-face from where we were before," Kniss said. "It's important that the public knows that we are allocating this for the future."

While the council majority supported the budget, Tanaka suggested that the city should be taking advantage of the prosperous economic times by stashing money in reserves. He also suggested that the city cut its expenses by $18 million this year, a recommendation that the rest of the council rejected.

"I'd love for us to be putting away some money during these booming times because these booming times will not go on forever," Tanaka said.

In addition to adopting the budget, the council also approved increases for utility rates, which collectively will add about $15.62 to the average monthly bill in the coming fiscal year, bringing it to $312.15 per month, according to staff. The rate changes include a 5.5% hike to electric rates; an 8.5% increase to gas rates; a 4.4% increase to the water rates; and a 7% increase to the wastewater rate.