Federal funds brighten Palo Alto's bleak budget outlook | March 26, 2021 | Palo Alto Weekly | Palo Alto Online |

Palo Alto Weekly

News - March 26, 2021

Federal funds brighten Palo Alto's bleak budget outlook

City is eligible for $12.5M in grants from American Rescue Plan

by Gennady Sheyner

After a year of budget cuts, service reductions and staff layoffs, Palo Alto is preparing to get $12 million from the federal government — money that the city is banking on to smooth its path to economic recovery.

The money, which will be released through grants over the next two years, can be used to pay employee salaries, restore services that were slashed because of plummeting revenues over the past year and invest in critical infrastructure. The allocation is part of the $42.6 billion that the state of California and the various counties and cities in the state are set to receive through the American Rescue Plan, a $1.9-trillion stimulus bill that federal lawmakers approved last month.

This total includes $8.3 billion for cities and smaller municipalities, as well as $7.6 billion for counties. Santa Clara County is slated to receive $373.9 million in relief, while San Mateo County would get $148.7 million.

Allocations to individual cities are based on the Community Development Block Grant formula, which considers factors such as population, poverty and housing needs. For smaller municipalities, the allocations are based on population.

Under the approved plan, Palo Alto stands to receive $12.5 million in federal aid, while Mountain View would get $14.8 million and Menlo Park would be eligible for $6.5 million. Atherton and Woodside are eligible for $1.3 million and $1 million, respectively, while Portola Valley could receive up to $860,000.

For Palo Alto, federal funds are expected to provide a measure of relief after a year during which its hotel- and sales-tax revenues have plummeted precipitously, prompting the council to make $40 million in budget cuts last spring and to eliminate about 80 full-time positions. The council has been planning for another $6 million in budget cuts in fiscal year 2022, which begins on July 1.

City Manager Ed Shikada said at the March 15 meeting of the City Council that he is still waiting for additional information about restrictions for the use of the federal funds, as well as requirements for timing.

"We will continue to monitor and will be reporting that information to the council," Shikada said.

Shikada said the city is also looking for any opportunities that local nonprofits and businesses may have to take advantage of the programs that are part of the stimulus bill, which also included direct payments of $1,400 to individuals earning up to $75,000 and couples earning up to $150,000, extension unemployment benefits and child tax credits, $128 billion in grants to education agencies and $350 billion in aid to state and local governments.

While the stimulus bill is expected to help the city balance its budget in the fiscal year 2022, the City Council is still looking at ways to cut costs in the current year, particularly from its capital improvement plan. The current budget includes $174.4 million for infrastructure spending, which includes $102.8 million for a new public-safety building, a project that the council approved last month after decades of planning.

In recent weeks, staff had identified about $2.7 million in cuts from this year's capital plan, which includes savings in categories such as sidewalk repairs, City Hall renovations, maintenance of parking lots and enhancements to downtown garages. On Monday night, the council directed staff to trim an additional $2.5 million, though it did not specify which projects should be scaled back, deferred or scrapped entirely.

"I think we're all sick of cutting services, which means we've really got to dig hard on the capital plan now," Council member Eric Filseth said at the Monday meeting, noting that some projects would likely need to be postponed by many years.

Council member Greg Tanaka called the recent announcement of federal funding great news, though he also acknowledged that the stimulus aid is not enough to overcome the city's ongoing financial challenges.

"Sure, we're going to get money from the federal government, but our revenue is still down a lot, and there are a lot of needs that we have," Tanaka said. "I think we need to start looking at this and try to do some value engineering, try to really prioritize what is truly needed."

One near-term project that the council has shown no inclination to postpone is the completion of the Charleston-Arastradero street improvement project, which is about to enter its third and final phase. The council is preparing to approve later this spring $6.6 million in contracts for the project, which includes new median islands, bulb outs, bike lanes, traffic signal improvements and street trees.

This third phase of the project is focusing on major intersections at El Camino Real, Middlefield Road, Louis Road and Fabian Way, according to staff.

Numerous residents, including bike advocates and students, urged the council on Monday to move ahead with the project, which they said would bring critical safety improvements to a busy corridor that serves 11 schools, including Gunn High and Fletcher Middle. Robert Neff, a longtime bike advocate said these portions of corridor are "long, long, long overdue for improvements.

"The goal of our bicycle network is to make it easy to get to destinations safely and comfortably on fairly direct routes," Neff said. "These two sections will finally make important connections safer and more comfortable for all cyclists."

The list of projects that could see less funding include improvements to the newly rebuild Junior Museum and Zoo, resurfacing of the synthetic turf at the Magical Bridge playground at Mitchell Park, the replacement of Fire Station 4 at Mitchell Park and the roof replacement at the Municipal Services Center on East Bayshore Road.

Staff Writer Gennady Sheyner can be emailed at [email protected]


Posted by Len Ely
a resident of Old Palo Alto
on Mar 25, 2021 at 11:04 am

Len Ely is a registered user.

Hope they don't use the money for the new Police building!

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Mar 25, 2021 at 11:17 am

Online Name is a registered user.

Hope they use the money to pay up in the successful $12,000,000 citizen lawsuit by Miriam Green against Palo Alto Utilities for overcharging us to siphon money from us into the General Fund to pay high city salaries and keep the consultant gravy train running. But instead the city attorney is wasting more of OUR money appealing.

There's also the other successful class action lawsuit against PAU for illegally adding a surcharge to our landline phone bills for 2013-2014.

Paying us back OUR money sooner rather than later would be great. Even greater would be stopping their annual siphoning of $20,000,000 in overcharges from us into the General Fund.

Posted by Rabbi Feldman
a resident of another community
on Mar 25, 2021 at 11:35 am

Rabbi Feldman is a registered user.

Federal bonus money will most likely be allocated towards city administrator salaries/retirement benefits, additional police funding, and Foothills Park maintenance.

All of which is unnecessary.

Posted by Chelsea Chang
a resident of Downtown North
on Mar 25, 2021 at 12:08 pm

Chelsea Chang is a registered user.

Giving the PACC $12M to spend is like giving child $500 to spend in a candy store.

Bad things will come of it like rotten teeth and dental bills.

City should use the money and rebate Palo Alto residents for municipal rip-offs.

Posted by Bystander
a resident of Another Palo Alto neighborhood
on Mar 25, 2021 at 10:19 pm

Bystander is a registered user.

Looks like there is a pot of gold buried at the end of the rainbow. Quick, quick, spend it quickly, make plans of how to spend it, quickly, quickly, before the rainbow fades.

Seriously though, everyone will want a share of this for their pet project.

Posted by Whitey McWhiterson
a resident of Midtown
on Mar 26, 2021 at 5:50 am

Whitey McWhiterson is a registered user.

Next city council decision: let all those people lining up to try and get into Foothill Park every day, who I know, aren't free because they are low income or active military or student drivers or various other groups with grievances to be named later, pay 20$ a car and park on the grass where the deer use to be. Bingo. More Money!

Posted by Native to the BAY
a resident of Old Palo Alto
on Mar 26, 2021 at 9:14 am

Native to the BAY is a registered user.

The City Manager has done a really poor job of leading us through the Pandemic. Once again, pushing his job onto locally cash poor, overstretched, underpaid, underfunded non-profits. Really? He's now looking for his cost of living raise with the FedRelief's 12M -- the only thing he held back last year in receiving. What has our fully paid, working from home highest City Hall salary earners done for Palo Altans over the course of a year? Pushed out A weekly COVID Report? hmph. Sitting in front of their computer screens, Zoom meetings and outsourcing the tough work to overwhelmed non-profits (Life Moves) -- hyperlinking websites that lead us down paths of nothing. When are libraries set to open? Rec and Park dept? City Council in person meetings? Seems retain and dining is at 50% capacity in doors. How come not city services???? Hmph... Idea. How about highest earning City staff help the lowest earning residents of Palo Alto? Surely such action was taken during WWII ... After-all this is a war of another sort.

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Mar 26, 2021 at 9:58 am

Online Name is a registered user.

Speaking of that Covid "newsletter," you're right; it's a recycled joke mostly written by the librarians who are charged with "researching" questions about Covid etc.

Re the City Manager, his City Priority Survey's results are wrong and incomplete; efforts by one council member to get them to fix the password reset were unavailing. Maybe that's why top city priority include Fiber-to-the-Home and "Wellness" instead of traffic, unfunded pension liabilities or real problems. So they're staffing up for Wellness education and a Fiber-to-The-Home service that undoubtedly has AT&T and the other big providers terrified -- when they're not laughing at PA"s wasteful hubris.

Being involved citizens wanting to comment to City Council, last night several of us searched the City Council email package for the usual link to community letters to ensure we weren't repeating ourselves. That link is gone -- and has been gone -- for at least several weeks.

Why you might think they don't want to hear from us -- or let us see what other residents are saying. Maybe they'll cover Resident Fatigue on Wellness Wednesday.

Posted by resqpro911
a resident of Leland Manor/Garland Drive
on Mar 31, 2021 at 3:03 pm

resqpro911 is a registered user.

Please use the money to fund the fire department and do not close any fire stations.
Please, City manager and Fire Chief, fund public safety.

Posted by mario pagliardi
a resident of Another Palo Alto neighborhood
on Apr 1, 2021 at 10:11 am

mario pagliardi is a registered user.

> Hope they don't use the money for the new Police building!

Or for more cops.

Don't miss out on the discussion!
Sign up to be notified of new comments on this topic.


Post a comment

In order to encourage respectful and thoughtful discussion, commenting on stories is available to those who are registered users. If you are already a registered user and the commenting form is not below, you need to log in. If you are not registered, you can do so here.

Please make sure your comments are truthful, on-topic and do not disrespect another poster. Don't be snarky or belittling. All postings are subject to our TERMS OF USE, and may be deleted if deemed inappropriate by our staff.

See our announcement about requiring registration for commenting.

Get the most important local news stories sent straight to your inbox daily.