Palo Alto officials approved the city's 2012 budget Monday night with little discussion, no protests and one glaring asterisk.
The $146 million budget includes $4.3 million in anticipated concessions from the city's public-safety unions -- concessions that the city could have a hard time achieving. The city remains in a standoff with its firefighters union over a new contract and the two sides are preparing for arbitration proceedings in the fall. The police union's contract expires at the end of this month.
The uncertainty over labor concessions has cast a shadow over what has otherwise been a relatively breezy budget season. Unlike in the previous two years, when the city cut employee benefits, outsourced services and reduced its workforce by about 10 percent, this year's budget was balanced with few major changes and no service reductions.
The budget includes a restructuring of the city's Public Works Department, a move that consolidates six divisions into three and is anticipated to save about $300,000. It also creates an Office of Emergency Services and an Information Technology Department (information technology was previously a purview of the Administrative Services Department). It achieves about $1 million in budget cuts from various departments.
But the City Council, which approved the document 8-0 with Nancy Shepherd absent, acknowledged that the difficult part is still to come.
"I know what this budget does highlight still is the anticipated movement without our public-safety negotiations," Vice Mayor Yiaway Yeh said. "That's a really important goal in terms of achieving equity across our labor units in terms of concessions and reaching an economically sustainable solution."
If the city fails to get the concessions from the public-safety unions by this fall, the council will consider other ways to cut costs in these departments, including staffing reductions and fire station brownouts.
Palo Alto officials have been adamant about achieving permanent, structural budget reductions rather than relying on one-time cuts or on reserves. Though this year's budget season has been relatively smooth, the city is projecting deficits of about $7 million in each of the next two years.
"The last couple of years have been very difficult as we struggled to bring costs and revenues in line," Mayor Sid Espinosa said. "It has meant we had to work closely with all departments to reduce staff sizes and see where we can become more efficient.
"That work is not done."