Publication Date: Wednesday, January 26, 2005
Budget cuts: What will stay and what will go?
Budget cuts: What will stay and what will go?
(January 26, 2005) Services to be ranked at Saturday morning meeting
by Bill D'Agostino
There will be "no sacred cows" when it comes to balancing the budget, according to Palo Alto City Councilman Bern Beecham.
In fact, every city service -- from police protection to recreation classes to traffic calming -- will be on display and ranked by the end of the City Council's special retreat on Saturday morning. The city's elected officials will also vote on the city's new "Top Five" priorities during the important early-morning meeting.
Both discussions could lay the groundwork for how the city ultimately balances its budget for 2005-2006; the local government is facing a projected $5.2 million shortfall. A lower-ranked service could receive a larger share of those cuts, although the City Council will have the final say. (Utilities such as electricity and trash are not included in the discussion since they are budgeted separately.)
During Monday night's meeting, City Manager Frank Benest gave a broad overview of how the city's vast array of services could get tiered:
* Tier one: Services that impact public safety or heath or are legally mandated;
* Tier two: Services that are a "Top Five" priority, generate revenue or are required for the organization to run;
* Tier three: Services that enhance productivity or target at-risk seniors or youth; and
* Tier four: All other city services.
Those categories are not solidified, and council members expressed a desire to move some up and down the list. Councilman Jack Morton thought services generating revenue should share top billing, for instance.
Other council members expressed doubt about how the categories would actually be used to propose cuts in the budget.
"They seem extremely general and vague," Vice Mayor Judy Kleinberg said. "They don't speak to me in any kind of way."
The city manager said the rankings would only be used as one measure for cutting the budget, and encouraged suggestions about the process. "We're making this up as we go along," admitted Benest, who said he pursued a similar method as city manager in Brea.
However, because council members only have three-and-a-half hours for the retreat on Saturday, there will be limited opportunity for the public to address the officials. Mayor Jim Burch suggested people write or e-mail the council beforehand. (The council can be e-mailed at city.council@cityofpaloalto.org.)
The special meeting will begin at 8:30 a.m. in the Lucie Stern Community Center's Community Room, at 1305 Middlefield Road.
A vote on the city's "Top Five" priorities will preclude the discussion ranking all programs. Because of its inclusion in the second highest tier, however, it could be an especially important designation this year. The current "Top Five" are infrastructure; affordable housing; city finances; land use planning and traffic.
In recent years, city administrators have made more effort to make progress on those issues.
Ranking seems to be a Benest forte; he began the "Top Five" program when he began as Palo Alto's city manager in 2000.
The city's budget is approved in June after spring budget hearings.
The projected $5.2 million shortfall is the result of rising expenses and stagnant revenues. The former is mostly tied to rising health care and pension costs, while the latter is due to the area's economy lagging the growth in the state and national economy, according to a report on long-term finances the City Council heard Monday night.
Layoffs and service cuts are believed to be needed to close the city's $5.2 million gap.
"We don't believe there are too many creative rabbits we can take out of our hat," Benest said. In recent years, the city has balanced its budget primarily by freezing and cutting approximately 40 vacant positions, as well as unpaid employee furloughs and a few cuts to services.
Despite those ongoing cuts, the city has robust reserves. For instance, it has approximately $20 million in general "budget stabilization" reserves and $35 million reserved for maintaining city infrastructure like buildings, streets, parks and sidewalks. The "infrastructure reserve" has grown from $13 million in 2000.
However, city leaders have not, as of yet, expressed an interest in dipping into those reserves to balances its upcoming projected shortfall. That's because the city's deficit is projected to be long-term; unless permanent cuts are made to city spending, the deficit is projected to grow to $7.4 million in 2014-2015, according to the report.
"It's a must that we go through this process," Administrative Services Director Carl Yates told the council.
The city also has a list of projects without secured funding, including building a new library and upgrading the police headquarters. Under current city policy, those desires need a new source of revenue to be approved.
Staff Writer Bill D'Agostino can be e-mailed at bdagostino@paweekly.com.
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