Rising revenues and savings in a new firefighter contract have brought Palo Alto a rare bit of good news on the financial front -- developments that should stave off personnel cuts in the current fiscal year.
The City Council Finance Committee discussed on Tuesday (Oct. 18) the latest updates for the 2012 budget and agreed that the latest projections have made it unnecessary for the city to consider staff reductions -- at least in the current fiscal year.
The projections show that a number of key revenue sources have done better than the city had projected when it approved the budget in June. Revenues from the documentary-transfer tax and from sales tax are each $1.2 million above projections; hotel taxes have exceeded expectations by $600,000.
At the same time, the city will save at least $1.1 million thanks to concessions in the new contract with the firefighters union, a contract the council approved Monday (Oct. 17). The new agreement includes a second pension tier for new employees and worker contributions toward retirement and medical costs.
Staff expects to save additional funds, about $1 million, from revisions to staffing levels -- revisions made possible by the abolition of the minimum-staffing clause in the firefighter contract.
This means that the $4.3 million hole in the city's current budget is no longer as daunting as it was when the document was adopted in June. The city plans to cover the balance of the deficit by taking money from the budget stabilization reserve (which increased by $2.7 million) and by obtaining concessions from other public-safety unions.
"The bottom line from my perspective is that we don't have to talk about cuts (in personnel) to balance the budget," Schmid said at the end of Tuesday's meeting.