Palo Alto signaled its dramatic economic turnaround on Thursday night when it passed a budget that adds police officers, accelerates street repairs and -- for the first time in years -- contains no service cuts whatsoever.
Bolstered by rising revenues in almost every tax category, the City Council gleefully approved at its special meeting a budget for fiscal year 2014, which begins July 1. For the first time since 2009, the budget contains no service reductions or proposals to outsource city functions. In fact, the changes the council made on Thursday to City Manager James Keene's proposed budget were additions rather than subtractions: more funds for teen services and for nonprofits that receive grants from the city.
Councilman Pat Burt, who chairs the council's Finance Committee, pointed to the budget as an indication that the city is going into a "positive long-term trend." Burt, who was elected in 2007, said this was the first time in his council tenure the city has had an opportunity to restore programs that have been cut. He noted that the budget turnaround was the result of both revenue growth and structural reforms that the city has undertaken in recent years, most notably greater cost-sharing by employees of pension and health care costs.
According to a staff report, the city has achieved $26.3 million in one-time and ongoing expense reductions since fiscal year 2010. It has also reduced the number of positions by 12 percent in the past four years.
"This is the first year that we've really seen the fruits of the difficult reforms we've gone through," Burt said.
Burt, whose committee reviewed the budget over a series of meetings in May, also had a hand in discovering a revenue source for teen programs that most in the city didn't know existed. The council in 2001 approved a funding plan, based on the city's Youth Master Plan, that would allocate 75 percent of revenues from commercial rentals of a city-owned lot to teen activities. The council agreed Monday to add $217,000 in these revenues to the Community Services Department, which would come back with a proposal for teen programs.
The thriving local economy had plenty to do with the budget turnaround. The city's tax revenues have gone up by 20.6 percent since 2009, from $65.8 million to $79.3 million.
The budget includes $159.8 million in expenditures in the General Fund and $287.1 million in Enterprise funds for a total of $446.9 million.
Mayor Greg Scharff said that while more needs to be done to address the city's long-term financial picture, council members "should all take a pause and congratulate ourselves."
"It has been a long road," Scharff said. "What we really achieved here is sound financial footing and a sound structure from which to move forward."
For more information on the budget, click here.