December 15, 2004

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Palo Alto Online

Editorial: Palo Alto's hard(er) times just beginning

That is a core conclusion of a just-released Long Range Financial Forecast booklet presented to the City Council's Finance Committee last night (Dec. 14). The 10-year report -- written by a team headed by Carl Yeats, director of administrative services, and Joe Saccio, deputy director -- is to be discussed by the full council at a Jan. 29 study session.

That leaves plenty of time for everyone interested to do some homework. The 32-page booklet is a must-read for anyone who wants to understand the city's overall financial condition -- it is available in libraries, on the city's Web site and in City Hall.

The bottom-line conclusion is that while Palo Alto has many things going for it, the city also must make significant "structural" (permanent) cuts for long-term financial stability. And it continues to face major risks that could cut even more deeply into valued community services, programs and facilities.

On the positive side, Palo Alto has the lowest rate of indebtedness of any Bay Area city and a reserve fund already established to pay for future retirement-benefit obligations.

Those are not enough: On top of a $1.5 million deficit projected for next year's budget, the city faces a $5.2 million gap in the 2005-2006 budget, in spite cutting 40 staff positions through attrition over the past few years, the report warns.

Palo Alto is in its fifth year of "budget balancing challenges," and "this next effort may prove to be the most difficult yet for several reasons," the report states.

Reasons include that many discretionary cuts have already been made; wage negotiations will be "more complex as the city operates in a heavily unionized environment and participates in a regional salary marketplace"; and budget cutting "will require that hard decisions be made to determine 'essential' service levels."

The report leaves "essential" to be defined in future public meetings, when "budget battles" will likely become literal, both over service cuts and, later, in labor negotiations.

"The city does not have the fiscal leeway to meet all the demands of the labor market in which it operates," the report observes.

Palo Alto's "aging infrastructure" is well known -- from older buildings to antiquated storm drains. The "big three" facility needs include an updated, expanded library, a new police headquarters building and an upgraded Municipal Services Center, the report states.

Yet recent budget cuts are offset by huge increases in state retirement program (CalPERS) payments and a doubling of health-care premiums. Thus the city is just "treading water" with the cuts it has already made, the report says.

Anyone who cares about overall community well-being, or who has a favorite program or service, needs to read this report before engaging in the fray to save this program or that service.

No one wants to sacrifice service levels and programs, and everyone has the right, and responsibility, to fight for favorite programs. But those who engage knowledgeably and constructively within the context of the bigger picture are likely to carry the most weight with city leaders struggling to balance the necessary against the desired.

Editorial: The spirit of giving

As this week's cover story shows, the holiday spirit of giving in the Palo Alto area has many outlets, with opportunities for many more.

And for sharing that is extra-long-lasting, the Weekly's annual Holiday Fund provides grants to non-profit organizations for local programs benefiting children and their families. So far this year, the fund has received $124,792 in contributions from 282 individuals and 18 foundations, businesses and organizations.

The Holiday Fund will continue toward its annual $300,000 goal through January and the grants will be announced in April.

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