Palo Alto fired a salvo Tuesday night in its war against traffic congestion when it approved a budget that dramatically increases the cost of parking in downtown and around California Avenue and invests nearly $500,000 in a new nonprofit charged with shifting drivers to other modes of transportation.
By an 8-1 vote, with Greg Tanaka dissenting, the council passed a budget that largely reflects both the city's financial health and its ongoing frustrations about traffic and parking. With revenues projected to go up by about 6 percent, the budget maintains all existing city services while making hefty investments in infrastructure projects such as the new public-safety building, two rebuilt fire stations and two new garages.
But even though the fiscal year 2018 budget reflects a healthy economy with a growing tax base, it also brings unwelcome news to employees in the city's two main commercial districts, downtown and California Avenue. The new fee schedule raises the annual permit fees at downtown garages from $466 to $730. On California Avenue, the price for a garage spot is going from $149 to $365.
At the same time, the budget makes an investment of $480,000 in the Palo Alto Transportation Management Association (TMA), a nascent nonprofit charged with reducing downtown drive-alone rate by 30 percent. The group estimated in its business plan that the city's contribution will allow it to achieve a 14 percent reduction in the coming year. The TMA is doing this through subsidies for transit and for ride-sharing services such as Lyft and the carpooling company Scoop.
The council broadly agreed that the TMA is the city's most promising strategy for dealing with its most pressing priority. While Councilman Tom DuBois called for the council to schedule broader discussion about parking costs and expected revenues, most his colleagues felt comfortable with moving ahead with the approval without any further conditions.
The only person who had an objection was Tanaka, who cited his meeting last week with a group of California Avenue merchants whom he characterized as "cranky" about the proposed change.
Tanaka said some complained to him that the higher permit fees will make it even more difficult for them to recruit and retain workers (dozens have also sent emails to the council expressing opposition). He also worried that the city's system of selling annual permits doesn't work well for part-time or seasonal workers in local retail operations.
"What's happening is that the parking fees are stacked against these community-serving retailers and restaurants," Tanaka said. "That's the anxiety I have over current parking increases.
"I think there is a segment of our constituents that's being hit and it's not being well addressed."
Others had no such reservations. Councilman Eric Filseth, who chairs the council's Finance Committee, argued that because traffic and parking problems are caused by employees who commute to Palo Alto, they should be the ones paying for the TMA. Even with the new permit prices, the cost of parking downtown would amount to about $2.81 a day, hardly unreasonable, he said.
Filseth called the change a "reasonable and appropriate way to fund the TMA."
While the council generally praised the new budget, members raised concerns about the one issue that continues to cast a cloud over every discussion of long-term finances: the growing costs of pensions and benefits.
Tanaka pointed to the city's gaping unfunded liabilities (which also include retiree health care) and argued that the issue should be called out more explicitly in the budget. While his colleagues rejected this idea, they agreed that pension costs remain a giant problem and one that the Finance Committee will be wrestling with after the council's summer recess.
Filseth noted that pension and health liabilities have grown by 14.6 percent this year, while revenues went up by 6 percent -- trends that portend an unsustainable future. He called fiscal year 2018, which begins on July 1, a "transition year" between a period of recovery from the 2008 recession and a new period of "gradually increasing fiscal constraints." In the new era, he said, an ever-greater share of the budget is taken up by "structural expenses that we don't have control over and that don't add any new value to the city."
"We've known for some time that eventually those liabilities would start to impact our regular operations -- competing for dollars with aquatics, safety, tree trimming and all the other things we spend time on," Filseth said. "That time has arrived."
But while Filseth called the document "the right budget for where we are today," local firefighters had some reservations about one of the budget's most conspicuous wildcards: a proposal to trim $1.3 million in expenses. The reduction was prompted by the city's ongoing negotiations with Stanford University over a fire-service contract -- a prolonged process that officials expect will lead to staffing changes.
While the budget doesn't specify where the cuts would come from, Capt. Ryan Stoddard, president of International Fire Fighters Association, Local 1319, said the proposal would effectively eliminate 11 full-time positions -- more than 10 percent for the department's workforce.
This, he said, would decrease service, deplete resources, result in a "brown out" of units and "assumes a higher risk tolerance on behalf of the community."
"Common sense will tell you that services cannot remain the same without 10 percent of the workforce," Stoddard said. "Something has to give."
Several residents expressed their own reservations about potential cuts to fire services. Neva Yarkin asked the council not to reduce fire services.
"When we get hit by a major disaster -- fire, flooding or whatever -- we should have enough equipment and personnel for all the residents in Palo Alto," Yarkin said.
In response to letters of concern from residents, Fire Chief Eric Nickel's issued a letter on Monday affirming that the budget -- while anticipating staffing changes later in the year -- "does not make any changes to current staffing models." Every model that the city is considering, Nickel wrote, "does not reduce effective service levels."
The budget does, however, assume that things will be done "differently."
"Given significantly rising costs, especially in public safety, we have to be open to doing some things differently, more efficiently and effectively," Nickel wrote.