After seeing the local economy collapse seemingly overnight, Palo Alto's elected leaders began to plan Monday for a grim "new normal" with fewer services, a leaner workforce and a retail sector decimated by the coronavirus pandemic.
The pandemic, which last month brought the local economy to a near halt, is expected to cost the city between $15 million and $20 million in lost revenues in the current fiscal year, Chief Financial Officer Kiely Nose said Monday night. At the same time, it is forcing the City Council to confront a myriad of complex and expensive issues, including a punctured safety net for vulnerable residents, uncertainty for city workers and a retail sector that has been brought to its knees by the economic shutdown.
Nose told the council that the impacts to the economy have been "very stark and very immediate." Downtown, she said, is "basically empty." And the city's daytime population has dropped significantly as everyone is sheltering in place or working from home, Nose said.
During a long and expansive discussion, the council took several steps Monday to ease some of the near-term impacts of the sudden recession caused by COVID-19. It unanimously agreed to extend payments to city employees, even those currently unable to work, until the end of June. It also directed staff to explore a program that would provide "life support" in the form of grants and utility relief to small businesses that have been devastated by the coronavirus shutdown. And it decided to explore another rent-relief program for residents who are currently protected from evictions by both local and county ordinances but who would be required to pay all the back rent once the emergency is over.
The shutdown has already rippled through City Hall, which has seen its staff of about 1,100 employees trimmed down to roughly 600 "essential" employees, including police officers, firefighters, rangers and workers from the Utilities and Public Works departments. While these employees continued to report to work, another 400 shifted to telecommuting and were able to perform their duties remotely. The remaining 100 have seen their hours reduced, in some cases down to zero, as the city shut down its recreational programs and closed all community centers and libraries.
Chief People Officer and Human Resources Director Rumi Portillo told the council that the past few weeks have been "a period of great anxiety for our workforce." The current pay period at City Hall is winding down on April 10. Without the council's policy guidance, the city was preparing to start making significant changes in the following period, including reduction of hours and changes of employment statuses, she said.
At the same time, Portillo said, some employees are dealing with the fact that schools have closed and they don't have good child care.
"With each day, their anxiety increases. ... The idea of entering into a time of potentially not having health coverage and pay is something of increasing concern to the workforce," Portillo said.
For the council, the toughest decisions will be made in May, when the city refines and adopts its budget for fiscal year 2021, which begins on July 1. The Monday vote did not address the long-term impacts of the recession, though it did throw a lifeline to employees.
The council's action, which was championed by Councilwoman Liz Kniss, gives employees who are facing administrative leave a reprieve of sorts for at least the next two-and-a-half months. Kniss stressed the importance of taking care of city workers, telling her colleagues that "kindness starts at home." Others agreed.
"I think given how quickly this crisis has come upon us and that we are approaching the end of fiscal year and we don't know all the needs we have for our nonessential workers in the coming months, this is the prudent action," Mayor Adrian Fine said.
Councilman Greg Tanaka spoke at length about the need to help local businesses. Many, he said, have already shut down and will not reopen after the emergency. In other cases, business owners are reaching deep into their own pockets to pay workers and keep their operations alive.
Tanaka urged his colleagues to follow the example of Mountain View, which has a program in place that allows private companies to contribute to a fund that provides grants to small businesses.
"There are people who are hurting big time and can really use this assistance," Tanaka said.
The council did not make any decisions about what types of businesses would get priority for grants under the new program or how much businesses would receive. It did, however, request that the city convene a roundtable of business owners to help put such a program together.
The council also agreed to abandon the city's traditional budget-setting process, which entails a review by the Finance Committee before the budget goes to the full council for adoption. Instead, given the magnitude of the changes that have to be made, it will be the full council that will make all the refinements and decisions on what to cut.
"We can't yet guess or put forward what those changes are going to be, but they're going to be significant changes in terms of service delivery in the city, for residents, for businesses and for city staff members," Fine said.
Find comprehensive coverage on the Midpeninsula's response to the new coronavirus by Palo Alto Online, the Mountain View Voice and the Almanac here.