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Lifted by rising revenues and guided by growing ambitions, the Palo Alto City Council approved on Monday a $1.1 billion budget that reflects the city’s growing fortunes since the pandemic.
The ambitious spending plan, which the council approved by a 6-1 vote, with just Greg Tanaka dissenting, would fund streetscape enhancements on California Avenue, the opening of a new community center on Bryant Street, expanded staffing at the Palo Alto Junior Museum and Zoo and additional firefighter positions in a College Terrace station that has been understaffed since the pandemic.
The newly approved budget adds 29 new full-time positions, nine more than City Manager Ed Shikada had proposed in May when he presented the budget to the council. It will bring the total headcount at City Hall to 1,092 in fiscal year 2025, which begins on July 1. This represents an increase from 1,063 in 2024, 1,018 in 2023 and 956 in 2022, when the city was still reeling from the economic downturn caused by the COVID-19 pandemic.
The city’s general fund expenditures outpace its revenues by around $20 million but the city is balancing the budget in part by transferring more funds from its utilities and tapping into reserves.
With its vote, the council endorsed the various revisions that the Finance Committee made to Shikada’s proposed budget over a series of May meetings. Most of the committee’s recommendations resulted in higher expenditures. These include adding staffing to Fire Station 2; providing another $300,000 for rehabilitation of a Homer Avenue building that will serve as the home of the new Palo Alto Museum; and creating a new special events program that funds cultural and recreational organizations that stage community events. The list of organizations that have requested funds through the program include Magical Bridge, which builds playgrounds for children of all abilities, and the United Nations Association Film Festival, which organizes a documentary film festival.
“The budget always reflects our values and there’s always too many wants and too few dollars to be able to spend,” Mayor Greer Stone said. “But I think this budget does a really good job at balancing the diverse needs within the community.”
The budget also seeks to reverse some of the cuts that the council made during the pandemic. Thanks to those reductions, the Hanover Street fire station has not had enough personnel to staff the station’s fire engine, which requires at least three firefighters. This staffing shortage has irked College Terrace residents, who have been calling for the council to restore staffing.
The new budget does that. At the same time, it leaves another fire station, at Mitchell Park fire station, with insufficient staffing. Bill Ross, a resident of College Terrace, suggested that the city analyze the costs of fully staffing the Mitchell Park station as well.
“We should be in a position, with a $1 billion budget, to adequately fund things for fire and life safety,” Ross said.
While more than two-thirds of the spending plan is devoted to utilities, the budget also includes a nearly $307 million general fund, which pays for police, fire, recreation and other city services not relating to utilities. The general fund has gone up from around $280 million in the current fiscal year. Four years ago, when the city’s economy was plunging and the council was slashing positions, the general fund included just over $185 million in expenses.
Among the biggest beneficiaries of the council’s largesse is the Palo Alto Junior Museum and Zoo, which will see five new positions and a new ticketing system. Some of the costs for the new hires and processes would be offset by higher fees. The council’s budget approval authorizes the raising of ticket prices for the recently expanded Rinconada Park institution from $10 to $14 during peak hours.
While past attempts to raise ticket prices at the children’s zoo ran into resistance, the council had few qualms on Monday about charging more for admission. Vice Mayor Ed Lauing, who serves on the Finance Committee, said he had recently visited the museum with his granddaughter and was delighted to see the place “totally jammed” with happy visitors.
“It makes me less worried about peak time cost of $14 because we’re oversubscribed and people literally can’t get in, and they’re disappointed,” Lauing said.
The council was less confident about providing $250,000 to Abilities United, a nonprofit that provides services to adults with disabilities and that is building a community space at Mitchell Park Place, a new affordable-housing development at 525 Charleston Road. Even though council members proved sympathetic to its cause and indicated that they want to support the project, they deferred action until later in the year, when the city has a better process in place for allocating funds to nonprofits.
Most other nonprofits request money through the city’s annual grant program, known as the Human Services Resources Needs Allocation Process. Abilities United appealed directly to the council.
“It may in fact be a good initiative but we just didn’t feel we had enough information to act on it,” said Council member Pat Burt, who chairs the Finance Committee. “We have a process that really attempts to flesh out this need of many different community organizations. This proposal hasn’t gone through that process.”
The approved budget is banking on continued growth in revenues, which have been on an upswing since the economically dismal days of 2021, when general fund revenues reached a low of $201 million. With property-, sales-, and hotel-tax receipts all rising, general fund revenues totaled over $261 million in the current fiscal year. The 2025 budget assumes revenues of more than $287 million.
The revenue growth is, however, eclipsed by the rising expenditures. To balance the books, the city is preparing to transfer a greater share of revenues from the gas utility to the general fund. In 2024, the transfer totaled 11.9% of general fund equity. In 2025, it will go up to 14.5%. The city is also drawing on its budget stabilization reserve to fill a gap of about $7 million in the current fiscal year.
Tanaka, who votes against the budget every year, accused his colleagues and staff of not exercising fiscal discipline. He challenged the assertions by staff that the budget is “balanced” and noted that the city is now relying on reserves to meet its growing expenses.
“I think there’s a lot of valuable things we can do and fund but I think at some point we have to say, ‘How do we live within our means?'” Tanaka said. “We’re not going through the depth of Covid. There’s not some sort of economic disaster that we’re going through.”
I wish there were more funds directed at street safety, including speed and traffic enforcement. Just last week, at 10:30 a.m on a weekday, an Uber driver recklessly bypassed me at a stop sign on Greer. Yes, blasted at high speed through the intersection in the opposite lane as I stopped for the sign. Later, he waited for me to approach down on the same street, and he leapt out of his car to stop me and yell through my open passenger window with racist and ageist insults. All I could say was, “Don’t speed through stop signs, don’t speed through stop signs!” I was shaken for hours afterwards. Too startled to get a license plate and aware that police seem to have bigger fish to fry.
Thank you Gennady Sheyner for your continued excellent reporting. For the record the Firehouse on Hanover serves Foothills Park, Palo Alto Hills, Stanford Research Park and partners with Stanford. Many in College Terrace are aware of the toxic emissions accident from CPI where Barron Park residents were impacted. There have been research facilities in Stanford Research Park formerly Industrial Park that could harm residents should accidents occur. The Diablo Winds have roared back early in the season. I am grateful to Chief Blackshire, residents and the city council for supporting safety for residents.
“The revenue growth is, however, eclipsed by the rising expenditures. To balance the books, the city is preparing to transfer a greater share of revenues from the gas utility to the general fund. In 2024, the transfer totaled 11% of general fund equity. In 2025, it will go up to 14.5%. The city is also drawing on its budget stabilization reserve to fill a gap of about $7 million in the current fiscal year.”
So the continued spending and hiring spree means continued utility rate hikes.
I dearly hope that some of the city council candidates with FINALLY make fiscal responsibility and government accountability priorities.
Road safety needs more effort and one of the best ways for winter evenings would be the lighting. We have lights that are too weak and make too many shadows. Additionally many lights are hidden in trees. On a similar subject, too many stop signs are hidden by trees as well as other important signs. Getting these signs more visible by either cutting the trees or moving the signs would help. Also getting sidewalks cleared of overhanging trees and bushes that take over half the sidewalk would help.
These things affect everyone and would simply make the streets safer for drivers, bikes and pedestrians.
Trucks and SUVs parked near corners & intersections mask cross traffic, making safe intersection crossings and left hand turns unsafe. Occasionally, stop signs are hidden by tall vehicles, such as trucks and vans, parked near corners.
Let’s not forget the large amount in pension payments the City is expected to pay on the near horizon. Please have and keep a reserve fund for the pensions you’ll have to pay these 29 new employees!
And, as per the 6/19 Daily Post, Pat Burt said PA should spend even more money advertising that our utility rates are lower than PG&E’s, implying that we should shut up and suck it up.
Last year they justified our high rates by saying we get dividends just like PG&E shareholders.
Hello? PG&E shareholders get their dividends in CASH while we get ours in all the intangible benefits CPAU provides the community — aka virtue-signaling.
Too bad our “leaders” can’t see the difference.