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Numbers are important, even (or especially) in city budgets

Original post made by Diana Diamond on Jul 17, 2007

Please do not glaze or even gloss over the numbers. Numbers are important, even in things like city budgets, because it's our money -- our tax dollars -- that are involved in these numbers.
With hardly an acknowledgement of the extra money the city now has, City Manager Frank Benest breezed through his budget report to the council a couple of weeks ago.
Among his parade of numbers was a $10.4 million increase in revenue to the general fund.
Yes, the general fund went from $128.5 million last fiscal year to $138.9 million this year -- an 8 percent increase. That's a lot.
Not a single council member mentioned it during the council budget discussion. Granted, some of the council's Finance Committee members knew about the increase from an earlier meeting with Administrative Services Director Carl Yeats. There was little council discussion at that session either.
All we've been hearing recently from City Hall is how the city needs more money. It recently raised our utility rates; the council just agreed to ask voters to approve a 2 percent higher hotel tax; a business license tax is an undercurrent; and not too long ago the council struggled to find $2 million for a then-impending deficit.
So now the city has $10.4 million more. How will it be spent?
Well, roughly $6 million or so will go toward city employee retiree medical benefits; $2 million will be spent on regular employee salary and benefit increases; and $3 million is for infrastructure improvements (ah, something for the residents). A full 72 percent will go to employee salaries, benefits and retiree costs.
We all know employee costs are increasing. City Auditor Sharon Erickson reports that in the past five years Palo Alto's employee-benefit costs went up a whopping 96 percent; this year they went up another 6 percent. Last year the city spent $84.5 million on salaries and benefits; this year it will be $89.6 million.
I wanted to see how Palo Alto compared to other cities, so I chose four at random and compared the population, the general revenue fund (the annual budget) and the number of employees.
Palo Alto, with 62,000 (night-time) population, has a $139 million annual city budget funding 1,074 employees -- including 235 Utilities Department workers -- or 839 employees not counting Utilities.
By contrast, Redwood City, with 76,000 population, has a budgert of $79 million and 607 employees.
Neighboring Menlo Park, with 33,000 population, has a city budget of $36 million with 220 city employees.
And well-off Saratoga, with a 30,000 population, skimps by with an annual city budget of just $14 million and 58 city employees. Saratoga has half the population of Palo Alto, 10 times less income ($14 million) than Palo Alto (almost $140 million), and almost 1/20th the number of employees. Saratoga does rely on the county for fire and library services.
Palo Alto has twice the population of Menlo Park, four times the income, and roughly five times as many employees. Palo Alto has 14,000 fewer residents than Redwood City, $60 million more in income, and (excluding utilities) 232 more employees.
Where does this lead me? To a conviction that Palo Alto, compared to most other cities, has far more employees that are costing us a lot of money and draining the resources we have for spending on things such as libraries, parks, police stations, road repairs and the like.
I know we have heard for years that Palo Alto offers more "services," and that residents demand these services. If the council tries to cut something like summer noontime concerts or the Children's Theater, supporters fill the council chambers complaining.
But most of us, I think, would tolerate some cuts in town, particularly for nonessentials, if we knew that the money could be used to fund overall community needs -- such as revamping our libraries.
Indeed, Erickson came out with a report on the libraries two weeks ago that found them shabby, dreary places compared to libraries in neighboring cities. Another recent audit report showed that our streets are $28 million behind in repairs.
I decided to look into how much an average employee costs this city with the notion that while we can say Palo Alto has 232 more employees than Redwood City, what does that really mean?
The city has average salary and benefits figures for employees, by units. The average salary/benefits package for a firefighter in the fire unit is $157,000; in the police unit it is $158,000. The average Service Employees International Union (SEIU) unit salary is $106,000 a year, representing 55 percent of city employees. The average in the managerial unit is $153,000.
If the average worker translates, for example, into $120,000 a year, if we cut 10 workers out of the 839 non-utilities employees, we would "save" $1.2 million. If 100 leave through attrition, retirement or whatever, we would "save" $12 million, and we would still have 132 more employees (excluding utilities) than Redwood City.
At $12 million savings a year, in four years we would have $48 million -- enough money to build a new library -- without paying any interest. In nine years we could build a library and a new police station, without interest (usually equivalent to the cost of a building). And with no parcel taxes or bond measures.
An amazing concept?

Comments (21)

Posted by Ronnie, a resident of Midtown
on Jul 17, 2007 at 3:59 pm

Diana said:
"But most of us, I think, would tolerate some cuts in town, particularly for nonessentials, if we knew that the money could be used to fund overall community needs -- such as revamping our libraries."

We might all agree with the first part of the sentence (the part before the --), but agreeing on what is nonessential and what is an overall community need is the sticking point. What is vitally important to one person may seem nonessential to another. There are many people who feel that libraries are no longer useful and not a high priority for funding.


Posted by Ad infinitum, a resident of Another Palo Alto neighborhood
on Jul 17, 2007 at 5:10 pm

Diana,

How many times are you going to recycle this same old column? We have too many employees, we pay them too much, they have too many benefits...blah, blah, blah. How about a topic you haven't covered 37 times before/


Posted by Mike, a resident of College Terrace
on Jul 17, 2007 at 6:17 pm

Where is it written that quantity is anathema to quality?

Where is it written that reductions in quantity, enable quality?

These are the faulty assumptions that lead to automatic thinking, which is not thinking at all.

Certainly, we could cut some things - but maybe we should add some things too.

More, later...


Posted by Sam Gompers, a resident of Midtown
on Jul 17, 2007 at 6:41 pm

I agree with Ms. Diamond that there are many "services" that, while nice frills to have, could be cut without much notice by most residents. I also agree with the many commentators on this board who have said that the city is managed so inefficiently that the same services we have not could be provided by fewer employees than we currently have if the city were managed better.

But while most residents might support cutting frills or increasing the efficiency with which we employ our labor-force, neither of these is likely to happen. The reason for this is that city employees have become a potent political force in town which the council is by and large afraid to cross.

Councilmember Cordell's adamant insistence that any proposal to partner with a private entity for the running of the Children's zoo last fall not cost the city any jobs is one example of this. The way the entire council backed down when purple-shirted union members showed up en mass when the council considered (but rejected) a proposal to outsource 4 park maintenance jobs last year is another.

More recently, we've seen the head of the Firefighters Union interfere directly with city staffing plans for fire stations in interests of preserving union jobs and overtime pay.

It's hard to think of our leafy west coast town a bastion of labor activism, but the problems we face with our employees and unions are every bit as difficult as New York faced with its in the 70's when that city almost declared bankruptcy. Until we face up to that, we will continue to spend ever greater portions of our treasury on the wages and benefits Diamond details.

And we'll never solve our budget problems no matter how much revenue rises.


Posted by Not so fast, a resident of Duveneck/St. Francis
on Jul 17, 2007 at 7:32 pm

Sam, you have hit the nail right on the head--while people may be in favor of cuts, in general, as soon as service/frill is proposed for the budget ax, a vocal group will stand up to oppose it. there is no problem with that per se. the problem is that the city council does not have the spine to actually follow through on these suggestions ( asillustrated in your post above) and take the necessary action to make what may be painful budget decisions. the council is afraid to stand up and take actions that is needed--they are afraid to upset anyone and abhor conflict (conflict for the city council includes the airing of strong opinions).
but no matter the budget situation, they alwyas have enough money to reward there cronies on the city hall payroll (see the article about monday's city council meeting where a select group of higher ups in the city were rewarded with 10% pay raises and some like Frank Benest, probably because of his expert handling of the Harrison affair, was also given a bonus by the city council)


Posted by Tim, a resident of Crescent Park
on Jul 17, 2007 at 8:58 pm

Diana,

Other cities around us have been building up their tax base for some time. We could cut city workers, but every year we lose more businesses to these other cities. Other than eating out, I do almost all my shopping in other cities, like so many others. How about doing one story on that instead of this one every six months.


Posted by ToldUso, a resident of Another Palo Alto neighborhood
on Jul 17, 2007 at 9:06 pm

Agreed

All these points have been discussed over and over and nothing has been done.

Been there, done that, where's the t shirt


Posted by John M., a resident of College Terrace
on Jul 17, 2007 at 10:07 pm

I've been thinking a lot about this recently, and have concluded that the REAL minority in Palo Alto is NOT those who want to cut services. If that was the case, we would be electing City Council members _in the majority_ that want to cut services. Since when has that been the case?

Occasionally, we have seen one or another member of City Council that will profoundly challenge the service levels of our city - or ask questions about the deep operational details of staff positions, ad nauseum - as did one recent City Council member who left the Council last term.

There is no doubt that Palo Alto is challenged, but things are not as bad as they seem - even to the "sky is falling" crowd.

Here's a prediction:

Palo Alto will continue to grow, and demand top-notch service levels - some how, some way, Palo Altans and their policy makers will find will find a way to fund those service levels.

Taxation, selling off or leveraging assets (PAU?), creating significant intra-regional efficiencies, compelling business development efforts, etc. - all will play a role.

I think the real challenge is going to be how to balance the ingredients listed above. It won't be easy, and will call for a new kind of leadership, long-term.






Posted by John M., a resident of College Terrace
on Jul 18, 2007 at 10:44 am

CORRECTION FOR MY LAST POST _ _ apologies for the clumsy language (above)

I've been thinking a lot about this recently, and have concluded that the REAL minority in Palo Alto are those who want to cut services. Otherwise, we would be electing City Council members _in the majority_ that want to cut services. Since when has that been the case?
Occasionally, we have seen one or another member of City Council that will profoundly challenge the service levels of our city - or ask questions about the deep operational details of staff positions, ad nauseum - as did one recent City Council member who left the Council last term.

There is no doubt that Palo Alto is challenged, but things are not as bad as they seem - even to the "sky is falling" crowd.

Here's a prediction:

Palo Alto will continue to grow, and demand top-notch service levels - some how, some way, Palo Altans and their policy makers will find will find a way to fund those service levels.

Taxation, selling off or leveraging assets (PAU?), creating significant intra-regional efficiencies, compelling business development efforts, etc. - all will play a role.

I think the real challenge is going to be how to balance the ingredients listed above. It won't be easy, and will call for a new kind of leadership, long-term.


Posted by pat, a resident of Midtown
on Jul 18, 2007 at 2:32 pm

The only problem with Diana writing versions of this column multiple times is that no one ever pays attention! How many times will she have to alert us before we wake up and demand that Council takes the budget seriously and spends our tax dollars wisely?

The fact that our city is overstaffed compared to many neighboring cities usually elicits the response, "But we offer more services." Yet I've never seen anyone from City Hall enumerate just what we have that other cities don't.

Sam Gompers and Not so fast are absolutely right. Our city "leaders" don't have the spine to do what's right for the city. The city council's number one priority seems to be "lets not offend anyone." They're like bad parents who are afraid to say "no" to their kids. Child comes home and says, "Johnny got a new iPod/car/computer/iPhone/whatever." Parents are in debt, have bills to pay, are trying to save for retirement and Johnny's college fund. Instead of educating Johnny on wise financial planning, parents give him what he wants because they don't want him to feel deprived.

Hillary Freeman, former council member who was on the finance committee, was the only one who ever took the budget seriously and asked the kind of questions that every council member should be asking.

I hope Diana keeps reminding us of how badly Council handles its fiscal responsibility.


Posted by Mike, a resident of College Terrace
on Jul 18, 2007 at 5:06 pm

What I find interesting about pat's and Not So Fast's posts is that they complain about Diana repeating herself; in fact, this is exactly what Pat and Not So Fast do on this issue - in the very same way - while always getting a rib-poke into the City Council about how "spineless" the Council is. Is that productive? I don't think so.

What I haven't seen from those who naysay current or proposed service levels is any analysis - except for pure raw _dollar_ cost (with no opportunity costs EVER mentioned - is what Palo Alto would look like w/oo most of the services they think are unnecessary.

What's even more mind-boggling is that - in the last case - pat's opinion flies in the face ofo the expressed MAJORITY of Palo Alto citizen preference.

Why keep whistling in the wind, folks? the budget is not going to shrink. How about coming up with ways that we can make government more productive WITHOUT cutting costs?

Any ideas?


Posted by Not so fast, a resident of Duveneck/St. Francis
on Jul 18, 2007 at 7:32 pm

Mike--go back and re-read my post--I say nothing about Diana Diamond repeating herself.


Posted by Walter_E_Wallis, a resident of Midtown
on Jul 18, 2007 at 8:29 pm

How about a choice - allow city workers the choice between unions and civil service protection, not both. If they chose unions, then we need to enact a ban on union participation in city elections as a body.


Posted by Just a Thought, a resident of Another Palo Alto neighborhood
on Jul 19, 2007 at 1:49 am

Did you noticed that Dianna did not mention what percentage of the budget employee expenses were of the other cities? Did she mention what the median price of those homes where? Yes, the school systems deserves much of the credit, but city services must count for something otherwise people would not want to come to Palo Alto. Go ask your fellow neighbors in other cities how many times they have their streets swept a month? How soon does the police respond to non-emergency situations? How safe they feel? Don't kid yourselves to think that she is comparing apples to apples. She is in the business of attracting attention with half thruths. Many of you are educated people do her article contain all potential pros and cons to make it a balance review? Part of the problem is that Palo Alto has a high silent majority - you wonder why? Maybe they are satisfied with the services they receive? Did Dianna mention the City Auditor's survey that has high levels of satisfaction? If she is such as expert why doesn't she run for office and clean it up?

Just asking?


Posted by RollingEyes, a resident of University South
on Jul 20, 2007 at 10:26 am

"Government of the people, by the people, for the people" -- Abraham Lincoln

"Government of the government, by the government, for the government" – Hamilton Avenue

What's all the fuss? In our own way, we win. Our neighbors may have better libraries, etc., than we got, but our city government is bigger than their city government. And it can underachieve them anytime. Besides, our city manager is a bigwig in the state city managers society. Are theirs?



Posted by Rolling Hills, a resident of Midtown
on Jul 20, 2007 at 11:30 am

Not to mention that we have a much more comprehensive Global Warming policy than any of our neighbor cities.


Posted by bruce, a resident of Midtown
on Jul 24, 2007 at 9:46 pm

Mike, Can you suggest ways in which the city can be made more productive without cutting costs?


Posted by Senor Blogger, a resident of Palo Verde
on Jul 25, 2007 at 1:04 pm

DIANA,
MY GOLLY''''''''
KEEP GOING
YOU'RE ON A ROLL
COME ON EVERYBODY,
LET'S JUMP ON THIS
SHE'S REALLY GOT LOTS OF GOOD POINTS WORTH CONSIDERING


Posted by Mike, a resident of College Terrace
on Jul 25, 2007 at 2:22 pm

bruce,

the city can be FAR more aggressive about developing new business

the city can be FAR more effective in leveraging assets with other communities - including Stanford

the city can do FAR better in consolidating services with some of its municipal neighbors

the city can do FAR better in creating efficiencies that remove barriers to doing business

the city can do FAR better in streamlining its processes, to remove costlydelay in getting things done, and things built

...for starters...


Posted by echarles1, a resident of Midtown
on Jul 30, 2007 at 2:52 pm

I was born and raised in Palo Alto. Today I live in Mountain View. I could not be happier to have escaped the Berkeley-ization of my home town. Palo Alto, I will always love you but you are ridiculous. The idea that Palo Alto has such amazingly superior services compared to neighboring towns is a joke. Parks and roads appear in better shape in Mountain View. The downtown in Mountain View is not infested with aggressive beggars. Mountain View's main library is state-of-the-art. Palo Alto's main library is undergoing some kind of ugly internal renovation that is ruining its design integrity. My advice, Palo Altans don't vote for any more local politicians with global warming policies and foreign policies, unless they also have tools in hand to fix the roads and weed the meridians. Someone has to do it see as the extra 200 or so employees aren't!


Posted by george, a resident of Palo Alto Hills
on Aug 3, 2007 at 1:24 pm


Diana writes for the best interest of Palo Altans. Just because
one has read the same subject, doesn't mean it shouldn't be repeated; there are always new readers to her columns.

Unless there is a conflict of interest, why would one attack
a journalist who is doing her job to keep our city government
honest?


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