Numbers are important, even (or especially) in city budgets
Original post made by Diana Diamond, Palo Alto Online blogger, on Jul 17, 2007
With hardly an acknowledgement of the extra money the city now has, City Manager Frank Benest breezed through his budget report to the council a couple of weeks ago.
Among his parade of numbers was a $10.4 million increase in revenue to the general fund.
Yes, the general fund went from $128.5 million last fiscal year to $138.9 million this year -- an 8 percent increase. That's a lot.
Not a single council member mentioned it during the council budget discussion. Granted, some of the council's Finance Committee members knew about the increase from an earlier meeting with Administrative Services Director Carl Yeats. There was little council discussion at that session either.
All we've been hearing recently from City Hall is how the city needs more money. It recently raised our utility rates; the council just agreed to ask voters to approve a 2 percent higher hotel tax; a business license tax is an undercurrent; and not too long ago the council struggled to find $2 million for a then-impending deficit.
So now the city has $10.4 million more. How will it be spent?
Well, roughly $6 million or so will go toward city employee retiree medical benefits; $2 million will be spent on regular employee salary and benefit increases; and $3 million is for infrastructure improvements (ah, something for the residents). A full 72 percent will go to employee salaries, benefits and retiree costs.
We all know employee costs are increasing. City Auditor Sharon Erickson reports that in the past five years Palo Alto's employee-benefit costs went up a whopping 96 percent; this year they went up another 6 percent. Last year the city spent $84.5 million on salaries and benefits; this year it will be $89.6 million.
I wanted to see how Palo Alto compared to other cities, so I chose four at random and compared the population, the general revenue fund (the annual budget) and the number of employees.
Palo Alto, with 62,000 (night-time) population, has a $139 million annual city budget funding 1,074 employees -- including 235 Utilities Department workers -- or 839 employees not counting Utilities.
By contrast, Redwood City, with 76,000 population, has a budgert of $79 million and 607 employees.
Neighboring Menlo Park, with 33,000 population, has a city budget of $36 million with 220 city employees.
And well-off Saratoga, with a 30,000 population, skimps by with an annual city budget of just $14 million and 58 city employees. Saratoga has half the population of Palo Alto, 10 times less income ($14 million) than Palo Alto (almost $140 million), and almost 1/20th the number of employees. Saratoga does rely on the county for fire and library services.
Palo Alto has twice the population of Menlo Park, four times the income, and roughly five times as many employees. Palo Alto has 14,000 fewer residents than Redwood City, $60 million more in income, and (excluding utilities) 232 more employees.
Where does this lead me? To a conviction that Palo Alto, compared to most other cities, has far more employees that are costing us a lot of money and draining the resources we have for spending on things such as libraries, parks, police stations, road repairs and the like.
I know we have heard for years that Palo Alto offers more "services," and that residents demand these services. If the council tries to cut something like summer noontime concerts or the Children's Theater, supporters fill the council chambers complaining.
But most of us, I think, would tolerate some cuts in town, particularly for nonessentials, if we knew that the money could be used to fund overall community needs -- such as revamping our libraries.
Indeed, Erickson came out with a report on the libraries two weeks ago that found them shabby, dreary places compared to libraries in neighboring cities. Another recent audit report showed that our streets are $28 million behind in repairs.
I decided to look into how much an average employee costs this city with the notion that while we can say Palo Alto has 232 more employees than Redwood City, what does that really mean?
The city has average salary and benefits figures for employees, by units. The average salary/benefits package for a firefighter in the fire unit is $157,000; in the police unit it is $158,000. The average Service Employees International Union (SEIU) unit salary is $106,000 a year, representing 55 percent of city employees. The average in the managerial unit is $153,000.
If the average worker translates, for example, into $120,000 a year, if we cut 10 workers out of the 839 non-utilities employees, we would "save" $1.2 million. If 100 leave through attrition, retirement or whatever, we would "save" $12 million, and we would still have 132 more employees (excluding utilities) than Redwood City.
At $12 million savings a year, in four years we would have $48 million -- enough money to build a new library -- without paying any interest. In nine years we could build a library and a new police station, without interest (usually equivalent to the cost of a building). And with no parcel taxes or bond measures.
An amazing concept?