Do Palo Alto city officials ever, ever have enough money? | An Alternative View | Diana Diamond | Palo Alto Online |

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By Diana Diamond

Do Palo Alto city officials ever, ever have enough money?

Uploaded: May 23, 2022

Palo Alto has nearly a $1 billion (that’s a “B”) budget scheduled for this coming 2022-2023 fiscal year. That in itself is amazing for a town with a 62,000-plus population. And it causes me great concern about the increasing dollars the city says it needs to operate.

As City Manager Ed Shikada recently wrote to the city council, “The city’s long-term fiscal health requires additional sustainable revenue to meet community service priorities . . . sustainability is not achieved with existing revenue sources alone.”

Will that dollar “need” ever diminish? I haven’t seen that happen in years. And now the city wants to impose a business tax which, if adopted by residents, will bring in between $10.9 to $43 million annually (depending on the per-square-foot rate charged by the city).

About 10 years or so ago, this city had a $140 million general fund (not adjusted for inflation). This coming year the spending budget in that fund is $247.8 million. So, as I sit back and think about those sums, I ask myself what improvements have I seen in this town over the years? Buildings like the Mitchell Park library and the Junior Museum resulted, in part, because of a lot of community contributions. Great places! The new $23 million pedestrian-bicycle bridge across Highway 101, which took more than 10 years to plan and build, is a nice expensive asset, but it did cost a lot.

Let’s talk about why our city is spending nearly $1 billion a year; I will start with salaries. They’ve certainly been spiraling up this past decade. And nearly every year employees keep on getting increases – for doing the same work. Cost of living had an average inflation rate of 3.15% per year between 2016 and today. City salaries, in general, have increased more than that each year, especially if we include raises.

The city payroll last year was $124 million; the number of employees at city hall earning more than $300,000 rose to seven, the highest ever. City employees also got an additional $17.7 million in workers’ benefits, such as medical, dental and vision benefits. Plus, the city paid out some $49.2 million in employee pensions.

I don’t know about you, but, to me, that’s a lot of money and bennies.

According to the Daily Post, City Manager Ed Shikada was the top wage earner, collecting $385,896 in 2021 (the U.S. president got $400,000). Shikada has a lot of help in his job – his support staff (e.g., deputy city manager, assistant city manager, some assistants) amounts to about nine or ten positions. Second highest was Fire Capt. Mark von Appen who received $331,293. That includes $168,381 in overtime. And City Attorney Molly Stump took third place, earning $328,847 in total pay. She has several deputy attorneys on her staff.

Total pay can include vacation payouts, car allowances, etc. But it does not include health benefits, which all employees receive.

Bear with me, because numbers can be a boring read, but this is important stuff for residents to understand because our town of 62,000 is spending a massive amount of money, and the appetite for more money hasn’t changed much over the years.

Palo Alto’s operating budget will swell to nearly a third more this coming year, compared to last year, according to the Weekly. The operating budget slated for 2022-23 is $934.2 million, up 32.8 percent(!) from the current year. That includes the $237.8 million in the General Operating Fund, which goes to general business expenditures, including employee salaries. The Capital Budget funds major improvements to city facilities and infrastructure.

During last year’s deficit stage, the city cut back on employees; the payroll decreased by only 1.6 percent (about $2 million). Strange, since more than 100 positions were temporarily cut. And now Shikada wants to reinstate 39 full-time employee positions to catch up to previous levels. That would bring the city’s total to 1,015 positions.

Shikada’s budget proposal for 39 employees (and I hope I understood his numbers) include three firefighter trainees, four new fire department positions, including one admin, four additional police officers, two police dispatchers and a management analyst in Shikada’s office who would serve as the city’s “equity and inclusion officer” (?). In the Utilities Department, four new positions would be hired to help residents transition to “advanced metering infrastructure” -- “smart meters,” that will be installed on residents’ homes.

Early this month, to my surprise, Shikada said he wanted to add an additional 23 more positions, costing $3.7 million for the 2022-023 fiscal year, presumably getting to a 1,038 employee level. A lot of this money would come from the city’s proposed business tax – if it passes. Shikada is presuming it will, but given the inflation in this country, I am not sure people are willing to even have businesses taxed more.

These 23 proposed hires include detectives and offices for the Psychiatric Emergency Response team, a park ranger for the Baylands, zoological assistants at the Junior Museum to take care of the animals there (two porcupines, three lemurs, seven meerkats and 10 birds). Also, a downtown housing planner, and assistants for the libraries, community centers, etc. are on the hire list Not all are full-time posts.

The question I ask is are theyall necessary?

Phew. I guess I could toss all these increases and expenditures into the air and say, well, it’s only money, and if our city wants to spend it, why not.

But the Puritan in me says wait, all these expenditures need much more examination. It’s us who will pay for them – and us includes local businesses, which will pass on the business taxes to its customers – us.

The way the city works, the city manager can ask for more staff and more money, and there’s no downside in his asking. It‘s up to the city council to control the budget, and sometimes that’s hard to do because they all want to “get along,” which means there are few checks-and -balances.

So what is the incentive for the manager not to ask or the council to pare down his requests? And what is the incentive for the council to disagree with his asks?

Maybe it’s resident pressure. Maybe it’s up to us, in concert with the council. I realize the members already spend a lot of time on city business, but handling the budget is a big and important part of their job – or should be. Maybe we need to let the council know we are concerned.

Obviously, I am.