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By Diana Diamond

Is Palo Alto too generous in paying its staff?

Uploaded: Apr 14, 2020

Palo Alto spends $6 million a month on employee salaries plus health benefits. Just a little over a week ago, the Palo City Council decided, somewhat abruptly, to continue paying full salary to its 1,100 or so city employees full salary until the end of June. The city’s staff had been working at home so far for a month.

The council was told that Monday evening that because the Cal Ave and University Ave shopping areas are literally closing down due to the coronavirus, the city would lose $15 to $20 million before the end of this fiscal year. That sounds bad, but the city’s general fund is about $220 million.

What follows is uncomfortable for me to write, since I understand the problems of declining incomes and/or being laid off, having gone through that experience myself. But to continue “salaries as usual” to the end of June because, as Councilmember Liz Kniss said, “Kindness starts at home,” is a bit unusual, because most companies are giving two-week severance pay, at best. Some service employees, like waitresses and bartenders, gardeners and household cleaning people, get nothing at all. “Home” is all of us, not just city employees, who are among the best paid public employees in the country, with full health care and hefty lifetime pensions. Now they are getting a 3-1/2 month paid “transition period.”

That’s unheard of in private industry, especially during this health crisis. Hotels are empty, their staffs are gone, Lyft and Uber drivers have no business, restaurants have closed – many residents and workers in this town are in big financial trouble.
Without calculating the cost, our city council keeps its multitude of employees fully paid until the end of June. My guestimate: $21 million (@ $6m/month (plus that $15 to $20M loss of revenues).

Most city staffers (except police and fire) are working from home. About 100 have had their hours reduced, some down to zero. Yet this could be a great time to do some project research and planning. But I haven’t heard or seen of any new reports this past month. And what will these employees be working on until June 30? Do they have assignments? Nobody is building, business is lacking, traffic, thankfully has diminished. The city isn’t hiring. So what is happening?

I have a few ideas:

• Of course we shouldn’t keep employees at full salary, but perhaps a partial salary. I first thought of a 50 percent cut, but that’s unfair to the lower-paid staff members. How about $10,000 to each employee for each of the next three months or so – then see how things are going. That will cost considerably less.

• Maybe we should figure out if all these jobs are necessary? I doubt that 65,000 residents need 1,100 people to run our city daily. I know, the city can come up with all sorts of reasons why everyone is necessary, but it seems the city manager himself has a couple of assistants and deputies, and we are always hiring all these consultants. The city can cut, and this is the time to do it. One idea is to plan on a 20 percent workforce reduction without cutting any services.

• Maybe we should ask if our staff salaries (and those of other cities) are too high. City staffer play oneupmanship games --if one city gets raises, other city staffers in the area want even higher raises. Maybe instead cuts should be considered in these times when our economy is drastically dropping -- how about 15 or 20 percent cuts for managers? At least our council could explore such an idea. Taxpayers are hurting == many of them are out of work.

• Maybe some of these at-home employees can be put to use:
a) The return drop at the library is closed but an employee or two could unlock it and clean off all those books we have read.
b) What about a loan program (with interest) to all city employees who need financial help?
c) What about a similar loan program for small businesses? If we can keep people employed in some fashion that will help our economy.
d) How about having city employees assist agencies that are handing out food to the homeless in the area?

These are all off the top of my head and would need to be thoroughly – and thoughtfully – examined. But the times have certainly changed and this is the time when our cities can also make profound changes.

It doesn’t have to be business as usual.