Facing a public outcry about recent proposals to cut funding for teen services, art programs and public safety staffing, the Palo Alto City Council on Tuesday agreed to scale back some of the cuts as it endorsed a budget that would eliminate more than 70 positions at City Hall.
The proposed budget, which the council plans to formally adopt on June 22, reverses some of the most contentious cuts that City Manager Ed Shikada had proposed in April. Responding to a council mandate to reduce costs, the budget had initially proposed closing the College Terrace Library, eliminating all Children’s Theatre productions and cutting dozens of positions in the Police Department.
Under the revised budget, the Children's Theatre would still see major cuts, but it would now be able to have two major productions and nine minor ones. The College Terrace Library would now stay open, though under the new model it would be one of three branches (along with the Children's and Downtown libraries) that are only open three days per week. And the Police Department will still see heavy cuts, though not as steep as the council envisioned two weeks ago.
Even with the revisions, the budget represents the largest contraction of city services in decades. It would eliminate 74 full-time positions from a City Hall workforce of about 1,033 employees, a 7% reduction. It would also eliminate 26 full-time-equivalent positions that are held by part-time workers, a move that impacts about 100 employees, Chief Financial Officer Kiely Nose told the council. The shuttle program, which runs along two routes, would be shut down; park maintenance would be reduced; and the city's footprint at Cubberley Community Center would shrink, creating uncertainty for the various nonprofit groups that have been subleasing space at the eclectic but dilapidated campus for years.
The budget that the council approved by a 6-1 vote, with Councilman Greg Tanaka dissenting, is based on the council's assumption that the local economy will take many months to recover from the debilitating impacts of the economic shutdown. With the city's sales- and hotel-tax revenues plunging over the course of the shelter-in-place order that the county enacted more than two months ago, the council is expecting to see a $38.8 million drop in revenues. The budget includes about $196 million in general fund expenses, a 20% reduction from the budget that the city was considering before the pandemic.
On Tuesday, the council concluded a series of public hearings that had spanned four days and more than 30 hours of debate before voting on a budget that no one was thrilled about but that nearly all deemed acceptable.
"I hope there's not going to be another year like this," Councilwoman Liz Kniss said at the conclusion of the Tuesday meeting.
The council's Tuesday task was made somewhat easier by the roughly $3 million that the city expects to save in the general fund from cuts to managers' salaries. Shikada announced last Thursday that the roughly 230 employees in the city's "managers and professionals" group, the only group not represented by a union, had agreed to concessions that represent about 15% of their compensation. He said he will be taking an additional 5% pay cut.
Shikada also indicated Tuesday that management continues to talk to the other labor groups about similar concessions, which could potentially mitigate some of the cuts. The discussions, he said, are "proceeding positively."
Tanaka voted against the budget after his colleagues rejected a series of motions that he proposed at the conclusion of the marathon meeting. He suggested that the city forgo a computer upgrade that Shikada had proposed. He also suggested that the city has too many managers and requested a "scope of control" analysis at City Hall (the council rejected both of these proposals).
While Tanaka said he hopes to see other labor groups participate in the "shared sacrifice" of balancing the budget, he and his colleagues weren't banking on any further concessions as they approved budget cuts for nearly every department.
The new budget restores six of the positions in the Police Department that were on the chopping block in the prior proposal. The council approved restoring positions in information management, animal services and investigations divisions. As a result of the Tuesday restorations, the council will no longer have to limit hours in the public lobby or shut down weekend service for animal control. More critically, patrol officers would not have to take up functions that have been traditionally held by civilians, Nose said.
"We really restored a lot of civilian staffing so we can make sure police officers will focus on patrol and they won't be distracted by other collateral duties that would creep into the scope of their work with reduced civilian staffing," Nose said.
The department, however, still stands to lose 21 positions, seven of which are currently vacant. And the Fire Department is still planning to switch to a "brownout" model that could result in temporary closures of stations when staffing levels are too low and increased reliance on county paramedics for emergency services. Park maintenance would now be slashed by 25%, not 50% as originally proposed. And the Lucy Evans Interpretive Center in the Baylands would now be open half the time, rather than completely shuttered, as previously proposed.
"These are not impacts that we take lightly to bring forward, and (we) recognize the significance of the impact to the community and to our workforce, quite frankly," Shikada said.
The cuts that the council approved Tuesday leave the city with a $744,000 surplus, which council members agreed to revisit in the fall. That fund is expected to pay for programs that are now in limbo because of the COVID-19 pandemic but that may become more viable later in the year, when shelter-in-place orders are no longer in effect and when transit ridership starts returning to its pre-pandemic level.
The council also agreed to cut $300,000 from the city's annual allocation to the Palo Alto Transportation Management Association, a nonprofit charged with reducing solo-driver commuting and encouraging people to take transit. With the nonprofit's mission getting increasingly tricky in the era of social distancing, the council agreed to provide about $450,000 in funding for the Palo Alto TMA rather than the usual $760,000. That funding would be used to support local businesses in recovering from the shutdown, potentially by helping to facilitate outdoor dining on commercial strips.
In approving the budget cuts, council members acknowledged that the process has been extremely unusual, both because of the magnitude of cuts and because of the deep uncertainty about what recovery will look like.
"This isn't anything that anybody likes to do but it had to be done and I think we got to a workable place here," Councilman Eric Filseth said.
Some residents thought the budget still goes too far in reducing funding for popular recreational programs, including those in the Children's Theatre, which would see $720,000 in cuts, and the Palo Alto Art Center, which would lose about $450,000.
Alvin Hom, a Gunn High graduate and former performer at the Children's Theatre, was one of many residents who asked the council to retain funding for the popular facility at Lucie Stern Community Center.
"Performing on stage showed me how much I enjoy making other people laugh and smile," Hom said, recalling his time at the theater. "It taught me the importance of enjoying life and made me want to find other ways of spreading happiness in my community."
Others urged the council to preserve community services by making further cuts in infrastructure spending, A group of 20 residents, including former mayors (Pat Burt, Peter Drekmeier, Lanie Wheeler), neighborhood leaders (Becky Sanders, Sheri Furman) and past and present members of the Parks and Recreation Commission (Ed Lauing, Keith Reckdahl, Jennifer Hetterly) and the Planning and Transportation Commission (Dan Garber and Arthur Keller) submitted a letter asking the council to rethink its priorities.
"By modestly reducing the historically high investments in big capital projects, re-bidding projects, and curtailing salaries and raises, we can eliminate the most severe cuts to employees and our critical, highly valued services," the letter states. "At the same time, the city can ensure it has an adequate reserve fund to be able to meet essential needs if the economy worsens more in the coming months."
Burt told the council that some projects in the proposed plan, including public art and proposed Rinconada Park improvements, should be reconsidered to offset some of the cuts to services.
"We've all seen that we had a crash in TOT (transient-oriented tax) but we have not adjusted the capital plan in accordance with the funding sources that were really driving the ability to move forward on that very aggressive schedule of new problems," Burt told the council. "A very minor, modest adjustment to that pace, corresponding to the decline in revenue dedicated to that, would allow probably full restoration of the service cuts that are being proposed."
For a detailed look at how the COVID-19 pandemic has impacted the local economy, employment, education and more, see "Life in Quarantine: How the COVID-19 pandemic has changed Silicon Valley," a series of interactive by-the-number graphics.
Find comprehensive coverage on the Midpeninsula's response to the new coronavirus by Palo Alto Online, the Mountain View Voice and the Almanac here.