The budget that the council took up Monday reflects a moderate growth in city revenues and a sharp spike in council members' ambitions. While Shikada had proposed restoring some of the services that were eliminated during the pandemic — his budget included, among other things, additional police staffing and library hours — council members argued that this approach doesn't go far enough.
The Finance Committee had recommended adding an assortment of projects that total about $7.8 million, well exceeding the $2.25-million fund that staff had established for additional expenditures that relate to four council priorities: housing, economic development, sustainability and community health and safety.
The list that the committee endorsed at its May 9 meeting includes
• updating the zoning code
• buying a fire utility task vehicle
• crafting rules to ensure bird-safe building design
• hiring more public safety dispatchers
• expanding planning for car-free streets
• adding staffing to the Public Art Center
• starting a coordinated area plan around San Antonio Road
• contributing $2.5 million to the construction of a shelter for unhoused individuals on San Antonio Road, a project that is spearheaded by the nonprofit organization LifeMoves and that is being funded largely through a state Project Homekey grant
• adding library hours beyond those in Shikada's budget, enabling the Children's Library to be open six days per week (up from five in Shikada's proposal).
"Certainly, this budget is the best situation the city has been in in several years, and that's really the good news," Council member Pat Burt, who chairs the Finance Committee, said during the Monday discussion. "Then the question is: How cautious do we want to be in both restoring some of the remaining services that weren't fully restored yet and other important projects that the council has identified as being really important to the community?"
The council's consensus answer was: Not very cautious. While Council member Greg Tanaka suggested keeping spending down, all six of his colleagues supported going beyond staff proposals. The final compromise, which Council member Ed Lauing crafted and that everyone but Tanaka endorsed, called for reducing the list of the Finance Committee priority items by $1 million. This would include finding an additional $500,000 for work on a downtown housing plan (an effort that last year was bolstered by a $800,000 grant from the Metropolitan Transportation Commission) and identifying $1.5 million in reductions from the council's wish list.
The Finance Committee will identify the cuts later this month before the budget moves to the full council for adoption on June 19.
The document that will return to the council will almost certainly be more expansive and expensive than what Shikada had proposed. Council member Julie Lythcott-Haims, who serves on the Finance Committee, explained her position by pointing to the $40-million surplus that the city experienced last year thanks to a factors that included staff vacancies and strong tax receipts.
"I think many of us on the dais have experienced what it's like to have a massive surplus and have residents of our city asking, 'What the heck?'" Lythcott-Haims said. "We are trying to make a judicious effort to land this plane on time and on budget. This speaks a little to our reluctance to adopt a tremendously conservative approach this year."
Most council members agreed that things like restoration of library services, updating the zoning code and maintaining Cubberley Community Center should remain on the list. Other projects, including new regulations for short-term rentals and trimming of eucalyptus trees, would likely be deferred until later in the fiscal year or further into the future.
Council members were bolstered by recent revisions in staff's estimates for major revenue sources. Budget staff estimated that the city will receive $36.1 million in sales tax revenues in fiscal year 2023, well above the $32.6 million that was estimated in the current city budget. Hotel revenues are also now booming, with staff now projecting $27.3 million in transient-occupancy tax revenues, well exceeding the 2023 budget estimate of $18.2 million.
Given the revenue growth, most members agreed that additional spending is well warranted. Council member Vicki Veenker lauded the list of projects and positions that the Finance Committee had proposed adding, including a further expansion of library hours and the launching of a planning effort for San Antonio Road, an area that the city is targeting for new housing developments. The proposed budget, she said, well reflects the city's values.
"It's not often that you get excited about a budget but this one actually has me really excited because I look at it and anticipate all that we can do, and it's impressive," Veenker said.
As the lone dissenter, Tanaka pointed to the wide disparity between what city staff is recommending and what the Finance Committee had approved. Citing high interest rates, fluctuations in the stock market and recent rounds of layoffs by large Silicon Valley employers, Tanaka warned that tougher times may be coming and said the city should "live within our means."
"There seems to be a lot of, in my mind, wishful thinking here," Tanaka said "I wish to have all these great things in our city as well, but I also want to make sure we don't have a surprise a year from now, because it makes things pretty tough."
Shikada also lobbied for a more conservative approach for reasons having as much to do with staff capacity as with finances. Shikada questioned whether city staff will actually be able to complete all the projects that the council is hoping to launch in the coming months. Just last month, the council adopted a list of "priority objectives" that included about 70 different projects, everything from approving a streetscape plan for University Avenue and reaching an agreement with the Palo Alto Unified School District over Cubberley Community Center to launching a rental registry and helping the nonprofit La Comida find a new home.
"We do think we've reached the tipping point in, organizationally, our ability to execute on these additional priorities over the course of this fiscal year," Shikada said.
'This budget is the best situation the city has been in in several years, and that's really the good news.'
Pat Burt, member, Palo Alto City Council
This story contains 1125 words.
Stories older than 90 days are available only to subscribing members. Please help sustain quality local journalism by becoming a subscribing member today.
If you are already a member, please log in so you can continue to enjoy unlimited access to stories and archives. Membership starts at $12 per month and may be cancelled at any time.
