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By Diana Diamond

Why I am suspicious about PA’s budget cuts

Uploaded: May 25, 2020

When I first saw a list of proposed cuts the city staff had recommended for the Palo Alto city budget (due to a COVID-19 $38 million loss of revenue), I became suspicious. Many of the cuts, it seemed, would affect programs for residents, like eliminating the Palo Alto shuttle, shortening library hours and cutting community services programs for children and families.

Yet back in early April, City Manager Ed Shikada, with council agreement, decided that all employees, whether furloughed or not, would continue with their current salaries until the end of June – some 80-plus days of full salary even if they were sitting at home. I got worried. That represented about $5 million in additional expenditures. Surely he knew by then of the $38 million deficit. And this money was going to staff, not to residents. Yet he must have known of the impending deficit.

And then in May, Shikada said he would take a 20 percent salary cut this year, and ask other managers to return 15 percent of their salaries to city coffers through a “compensation giveback” (maybe there’s a tax advantage to this?). But the bulk of city salaries could not be touched, he said, because of union contracts, which both the council and city staff indicated would be difficult to negotiate with unions. Why?

Stanford Hospital cut 20 percent of all employee salaries, and they deal with some of the same unions. And Stanford has valuable health care workers during this coronavirus time, who are more valuable, in my estimation, than the jobs of many city employees.

Mayor Adrian Fine said that city employees, because of negotiated contracts, “are programmed to receive certain increases that the council has agreed to and they cannot change unless they agree to it.” Why not ask employees to agree to it and reopen negotiations? I mean these are dire times.

Our downtown is almost empty, most restaurants are closed and have “take-out only” signs, hotel occupancy is way down, and as a result the city is losing sales tax and hotel occupancy taxes.

Then my next uncomfortable feeling was what the staff and city manager were suggesting be cut from the budget (this still has to be decided by the city council, and it will talk about it Tuesday night, May 26). On the list was reduction of the police and fire department staff, contracting out ambulance services to an outside organization that would lengthen the response time for an ambulance (DURING THIS CORONA OUTBREAK!) getting rid of the shuttle, maybe permanently closing College Terrace Library, reducing code enforcement – you get the idea. All the things we residents rely on.

But what wasn’t cut is even more interesting – multi-million-dollar capital projects, like our public safety building and some parking garages and fire stations --- all programs designed to make our working conditions for some city employees more enjoyable. Whether that was done by design or coincidence, I am not sure, but I know police have been longing for a new facility for the past 20 years, even though their building is less crowded than it used to be due to staff reductions.

Then last Friday former Mayor Pat Burt and former park commissioner Pat Markevitch wrote a wonderful op-ed column in the Weekly delving into this very problem (https://www.paloaltoonline.com/news/2020/05/22/guest-opinion-a-better-way-to-save-vital-city-services “A Better Way to Save City Services.”

They very effectively argue that the budget-cutting process has become cloudy, and the reasons and rationale for making some cuts -- or exaggerating some – have been kept from public view. But, they show, that for 2020-21, capital improvement fund expenditures have soared in the budget – to about the $170 million level (in a year the council is cutting $38 million in actual programs that serve the public. They rightfully suggest that any new agreement to do any capital budget project should not be made until mid-fiscal year, so we all can see how the revenue loss problem is faring in January, as in more than $38 million!?

Some of these capital improvements are needed, but not immediately, Burt says. Some can wait – and the costs of some projects must be rebid because of a depressing economy. The city’s Budget Destabilization Fund has been reduced from $45 million to $25million so the city had money to pay for the full-salary furloughs (“kindness starts at home” [for employees but what about residents?), Councilmember Liz Kniss commented. As I recall, no one asked how much this would cost and how it would affect the $38 million deficit.

Please read Burt’s and Markovitch’s column – it’s important.

And this budget problem is just the beginning of a possible multi-million crisis for our fair city. Once businesses and restaurants close, it will be hard for them to return. Once business travel becomes less of a business practice, it will be harder to recoup hotel taxes from emptier hotels.

Palo Alto city employee salaries have to be cut – across the board. As the Weekly noted, according to the city budget members of the management of professionals group have a base salary of $149,306, and with benefit $240,791. We’re not quite talking poverty level here.

This is the time for the city to stop spending and start saving. If this doesn’t happen, we tax-paying residents are being screwed.