With the city's financial recovery in full swing, Palo Alto is set to approve on Monday raises for more than 200 managers, as well as for City Manager James Keene and City Attorney Molly Stump.
The City Council is set to sign off on 5 percent salary hikes for Keene and Stump, according to the agenda that the city released late Wednesday. Their annual salaries would go up to $275,353 and $246,688, respectively. Both contract adjustments are set to be approved on the council's consent calendar, which means they will not be discussed unless council members choose to pull it from the calendar.
Later in the meeting, the council also plans to approve a resolution adopting a two-year contract with its "managers and professionals group," the only labor group that is not in a union. Though details of this contract were not released Wednesday (they were scheduled to be publicized Thursday), the group's salary adjustments typically mirror those of the Service Employees International Union, Local 521. In a contract that the council approved in March, the roughly 600 workers represented by the SEIU received 4.5 raises over a two-year period.
The SEIU contract also included salary realignments for hundreds of employees, with the goal of making them comparable to similar positions in other cities. This resulted in about 320 employees getting additional raises, which ranged from 2 percent to 10 percent. Managers are likely to undergo similar realignments under the contract that the council will consider on Dec. 8.
The raises come at a boom time for the local economy. Between fiscal year 2013 and 2014 (which ended July 30), the city experienced significant growth in sales tax, hotel tax and documentary-tax revenues. Sales taxes revenues went up by 14.9 percent; hotel taxes revenues jumped by 13.5 percent; documentary-transfer revenues increases by 14.7 percent; and property tax revenues went up by 6.4 percent.
Overall, revenues from the major categories in the general fund have jumped from $82.8 million in 2013 to $91.1 million in 2014.
On Tuesday night, the council's Finance Committee heard an update from Director David Ramberg, assistant director of the Administrative Services Department. Ramberg referred to the budget picture in 2014 as a "positive financial story," with higher-than-expected revenues and expenses that came in 1.2 percent under budget.
Lalo Perez, the city's chief financial officer, added that "we've been very fortunate that the economic recovery is going faster than we thought."
He attributed the positive number to both high revenues and the compensation adjustments that the council made during the 2009 recession, which included new requirements for employees to contribute to their health care and pension expenses.
The hot economy is also helping the city deal with its infrastructure backlog. Over the past four years, budget surpluses have allowed the city to add $20.5 million to its infrastructure reserve over the past three fiscal years.