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Mayor warns residents about city finances

Original post made by Bill D'Agostino, Palo Alto Weekly reporter, on Jun 13, 2006

Shortly after the Palo Alto City Council adopted a budget with a $1.4 million projected surplus, Mayor Judy Kleinberg issued a dire warning.

The city is facing threats to its fiscal health, she said, citing risks such as the huge cost of paying for its aging infrastructure and for its retirees’ lifelong medical benefits.

“The future scenario is not a good one,” Kleinberg said. Next year alone, she predicted, the city will need an additional $7 million to face such challenges.

To that end, Kleinberg asked the council to consider forming a new subcommittee, which she will appoint, to study “revenue creation and enhancement.”

The council unanimously voted to consider that request at its next meeting, on June 19. If the council approves the idea, as expected, the ad hoc committee will return with a report in October or November with a plan of action.

Part of the need for such a new subcommittee arises because half of the council’s four-member Finance Committee cannot address issues related to Stanford University. Councilwoman Dena Mossar’s husband and Councilman Larry Klein’s wife both work for Stanford.

The city is considering ideas to increase revenue that relate to the university, such as allowing the Stanford Shopping Center to expand, thereby increasing sales and sales-tax revenue.

Earlier in the evening, the council unanimously approved a $127.5 million general fund budget for in 2006-07, which includes the projected $1.4 million surplus.

The new spending plan will eliminate funding for the summer Brown Bag concerts and impose utility rate increases on residents and businesses, but will make relatively few other noticeable changes.

“In the four years that I’ve been on (the council), it was the easiest budget to review,” Vice Mayor Yoriko Kishimoto said.

Most of the projected surplus -- the result of previous years’ cuts and an improving local economy -- will go into a reserve fund to help the city maintain its aging streets, sidewalks, parks, buildings and other infrastructure.

But City Manager Frank Benest said that at the rate the city is spending down that reserve it will run out of money in 2011.

“We have serious structural issues that we will continue to have to address,” Kishimoto said.

In other related business, the council voted to staff a fire station in the Palo Alto foothills for the entire summer this year. Last summer, the city only staffed Fire Station 8 on high fire alert days, saving the city approximately $100,000.

But this summer, as in other previous years, the city will staff the station all 120 days, using three firefighters working overtime. The change came at the behest of neighbors living in the hills, who felt the city was taking a risk by only staffing the station on certain days.

“If we don’t do this, we are gambling,” Kleinberg said.

The council voted 7-2 to make the change, at the request of Council members Larry Klein and Peter Drekmeier. Council members Kishimoto and Bern Beecham opposed, hoping to save the money.

The council also asked Benest to meet with the firefighters’ union to explore cheaper ways to staff the fire station in future summers.

(Posted on Palo Alto Online 6/13/06)

Comments (1)

Like this comment
Posted by Very Tas
a resident of Evergreen Park
on Jun 13, 2006 at 7:55 pm

One of the things we need to look into - among other things - is the possibility of sharing service provision with neighboring municipalities.

Fire, police, libraries, street cleaning, park maintenance, etc. etc. fall under this category. Most communities on the Peninsula - like Palo Alto - are challenged to keep revenue up, while controlling costs.

Why not try some cooperative municipal ventures? This will require courage, reaching out, and authentically informing the public and other stakeholders (city staff, etc.) of the consequences, and opportunities.

Why not look into combining our fire and police service, as Sunnyvale does? It's a change that could be phased in, slowly. The same goes for other city institutions.

Another thing we need to be doing is looking for ways to dramatically increase the economic vitality of our REGION, from which Palo Alto will benefit directly.

We are connected to neighboring municipalities in ways that absolutely compel the kind of cooperative diligence that I'm suggesting here. We _must_ get these efforts going.

For instance, when WalMart builds a store in Mountin View, it has ripple effects in neighboring communities. We need to begin to build bridges.

That said, we might look into bringing in someone(s) who understands how to effectively discover and execute these opportunities.

Is this a job for a municipal 'development' team? That's a hard question, especially when one considers that inter-municipal ventures will mean occasional _reductions_ in staff, or structural change within some institutions.

Perhaps this is something best left to an "in-between" player who understands how to discover, uncover, negotiate and execute opporunity.

We also need to do a better job at not only retaining retail, but increasing the _diversity_ of retail. Palo Alto is in danger of becoming far too one dimensional in its retail offerings.

Lastly, we need to do a far better job of being _proactive_about our relationship with Stanford University. Our resepective communities have a lot to offer each other; we have to learnn to maximize and leverage those opportunties in ways that have escaped us in the past.

Sorry, but further commenting on this topic has been closed.

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