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Emboldened by a brightening economic outlook, the Palo Alto City Council signaled on Monday its desire to further expand library hours, electrify the city’s vehicle fleet and fund area plans for downtown and San Antonio Road.
These proposals are among the roughly 25 projects that the council’s Finance Committee recommended adding to the budget that City Manager Ed Shikada proposed last month, which includes $975 million in expenses, a 1% growth from the prior year. While the list will be pared down somewhat in the coming weeks, most council members agreed that they would like to see a more aggressive spending plan than the one proposed by city staff.
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?”
‘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
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.
Wait a second. On May 9, Gennady Sheyner wrote an article titled “Ballot measure could overturn Palo Alto’s new business tax”. The proposed measure is called the Taxpayer Protection and Government Accountability Act. Per Kiely Nose “it would impact potentially everything from community services, development center charges for permits to impact fees and our two new revenues that are critical to maintaining the current stability.”
Now may not be the time to be “emboldened by a brightening economic outlook”. How much does the budget rely on revenue from the new tax and the utility transfer? One of the public speakers, John Kelley, mentioned the economic uncertainty that the nation is facing and was starting to comment on Palo Alto budget provisions for City salaries when he was (rudely, I think) cut off by the clerk b/c he was out of time. Another few seconds might well have given CC some valuable points for consideration.
I think Tanaka was right to suggest keeping spending down and think it makes sense to take a conservative approach to the budget at least until the outcome of the ballot measure is known.
I am pleased to see that our City finances appear to be so healthy.
I would like to see serious money invested in our electrical power infrastructure. We have too many outages to make it reliable and spare utilities money should be going on improving our supply rathr than being put into the general fund. Can we get some indication as to which area is presently getting its powerlines underground? Is there a calendar published annually for this and can we ask when our own area will be done?
“Maintain” Cubberley?… as though the city has EVER done that? How about fixing it? The city has neglected Cubberley for so long, it is blighted, depressing, literally no longer secure from water intrusion, rats, mold, and other blight. The gyms have been closed for so long, I’ve lost track. Ugly prefab portable buildings proliferate. Fix it! The city built a new Junior Museum, added a history museum in north PA, renovated every single one of the north Palo Alto’s community service facilities, and used Cubberley for construction storage while you did it, leaving behind a mess. Cubberley continues to ROT. It is as though the city is deliberately thumbing their noses at this part of town. We are not your dumping ground.
The grade separation options for south PA are awful–across the board, and south PA still has ZERO existing grade separations, compared to the existing FIVE in north Palo Alto. We need TWO dedicated, grade sep bike/ped crossings in south Palo Alto in addition to multi-modal crossings at Charleston and Meadow before we put more in north Palo Alto. Recognize and address existing inequity. Don’t make it worse. The city always spends in north PA first and then has no money left for south PA. (Excellent example of this: Undergrounding electrical lines started in north PA and never made it to south PA. )
All of this, while south PA gets the lion’s share of new higher density, mandated housing. Does that sound like good planning (or fair distribution of resources) to you?
Create fair and balanced distribution of resources. Prioritize Cubberley. Give us a fair share of grade separations and fix San Antonio Road to make it livable as you add thousands of new residents to this part of town. Is anyone looking at the big picture?
“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.”
Really? Booming? All the articles I’ve read about hotel revenue for San Francisco, Silicon Valley and maybe San Jose talk about a 50% decline in business business travel in part because of the number of remote workers, in part because of the tanking high tech industry that reduce business travel and in part because of the trend for high tech to continue holding more meetings and product demonstrations via Zoom.
And, anecdotally, an acquaintance at the Stanford Garden Hotel on ECR reports a huge decline in the number of visitors.
Whoa…step back and wait…and even challenge those revenue sources. You can spend it when you get/have it…but not before. Drinking champagne on what might be better labeled as a beer budget is fraught with risks.
Since we have funds, I would love to see the city take on and operate the animal shelter again.
On Mother’s Day my son and I drove down El Camino. We debated who should be fixing it. If we pay a tax on gas at the station that tax is suppose to be devoted to improving the roads. He believes that the county is responsible for fixing El Camino, as it is in good shape in other locations.
So that is just a part of the bigger picture – we have paid in for fixes that just aren’t happening. Is it a county job or state job? I am very serious about this – I don’t want to buy a new car and drive it down our horrible streets. WE have to dig into who is responsible for common sense fixes and start pushing to make it happen. How does a person ride a bike down that street?
When there is a budget surplus, doesn’t the City of Palo Alto and its city council members ever think of saving money by reducing frivolous expenditures or is it merely viewed as just another opportunity to spend (aka waste) taxpayer money?
El Camino Real is a STATE highway, controlled by Caltrans, a STATE agency that citizens fund with STATE tax revenues. Repaving planning is slated to get underway (I have seen the plans), and will get underway this year.
Repaving is the STATE’s responsibility, not the city’s. Write to Senator Becker and Assembly Member Berman and Governor Newsom to complain. Caltrans only listens to electeds who control their purse strings. Any messages you send to their customer contact address goes into a black hole, as far as I can tell.
“Write to Senator Becker and Assembly Member Berman and Governor Newsom to complain. Caltrans only listens to electeds who control their purse strings. Any messages you send to their customer contact address goes into a black hole, as far as I can tell.”
Indeed the messages do go into a black hole. A bunch of us tried to get answers from them and failed but we finally did get an answer from Joe Simitian which is that ECR repaying will start in Milpitas maybe around December and start moving north with an ETA for PA TBD.
As they said during their housing “listening sessions” they were still trying to “wrap their minds around the issues” which prompted a local wit to quip that we should send them turbans.
This is in part a tax issue. WE pay taxes at the pump to get road issues resolved. We need the state auditor go in and follow the money from the tax paid in to WHO? Who is the WHO and what are they doing with our money? We need names and titles. WE are being taken to the cleaners in this state and it has to stop. That money is going somewhere and we need to know where it is going.
I refer all readers to the article about the recent violence in a classroom at JLS. The reporting makes clear that, like it or not, spending priority for both the City and the PAUSD needs to be on resources that establish and maintain a safe environment at every school in the district.
What good does it do to have safe routes TO school if students and teachers are not safe AT school?
@resident 1-Adobe meadows. “ This is in part a tax issue. WE pay taxes at the pump to get road issues resolved. We need the state auditor go in and follow the money from the tax paid in to WHO? Who is the WHO and what are they doing with our money?” First. Take a breath here. Two: Prop 13 locked up in a Cali induced debtors prison much of our infrastructure. And it’s crumbling as we post. A tax here, a bind there… yet an overall tax would supply the plenty. A few now have the beauty of a minimum property tax while the many are dealing w an infrastructure melt-down. The first to go in the way back machine were library funding then immediately following was public school sports & art— I mean like overnight . The pump tax came way later. Of course since unlucky 13 it’s been a pay as we go tax system. Which is very bad for everyone. Gas Tax, Cigarette tax, soda tax, sales tax, business tax, transient tax… instead we got a draconian property tax that’s robbing our cities, towns, regions of anything forward !!! Believe you me, I was one child who was caught in a mid ‘70’s property tax based snare economy. Where a property here was taxed higher for here and then over there it was less and consequently — all of my 10 years of age could fathom was that here was 100’s of thousands of dollars in additional costs per year and not mortgage percentage points of 5% or less. And I rank snd file moved to crisis mode. Two years later. No art, or music and my city library? It was a county entity. My reading went way down because my age could not grasp a city to county rank and file staffing. reorganization.