This week, the City issued its Fiscal Year 2018 City Manager Proposed Operating and Capital budgets. The FY 2018 Proposed budget totals $661.8 million, a 3.1 percent increase from Fiscal Year 2017 (General Fund $210.0 million). This budget reflects a strong local economy that has led to stable revenues which support the wide array of programs and initiatives this organization provides to the residents of Palo Alto. The proposed budget strives to maintain the high quality of services and facilities the community values, and address the priorities identified by the City Council. In addition, it maintains competitive wages for City employees through approved labor agreements, as part of an overall strategy to attract and retain a well-qualified workforce within the boundaries of fiscal prudency.
As a result of Palo Alto's economic vitality, the City is experiencing many challenges associated with the appeal of Silicon Valley. These include increased traffic and congestion, expensive housing, more demand for services, and variant views about the nature and pace of change. Over a year ago, staff identified an anticipated gap in available funds in the General Fund during the FY 2017 budget process. This budget permanently addresses this gap while maintaining the General Fund Budget Stabilization Reserves at the Council approved level of 18.5 percent of expenditures. The structural fixes recommended in this proposed budget also position the City to address future needs expected to occur in FY 2019 and beyond.
In support of the City Council’s adopted priorities, the City will need to make key decisions on a number of transportation and infrastructure projects over the coming year that will have lasting impact on future revenues and expenses, such as parking, Caltrain Grade Separation, and the City's Infrastructure Plan. The Infrastructure Plan is currently funded at $170 million; however, based on updated estimates and the most recent decisions made by the Council, the emergent gap in necessary resources is anticipated to grow to $196 million in capital costs. Construction costs continue to rise and, as the saying goes, "time is money." The Proposed Budgets recommend moderate utility rate adjustments reflecting an approximately 2.5% increase in the average monthly bill are included in this budget ensuring maintenance and management of services and infrastructure to the community.
These proposed budgets not only balance the FY 2018 budget but they also strategically position the City’s General Fund to address growing costs for activities such as increases in pension costs and new labor agreement negotiations, while highlighting the need to address the future year costs to complete the Infrastructure Plan.
The Finance Committee will take up budget hearings during the month of May, beginning May 2 through May 23 with the final budget adoption by the City Council is tentatively scheduled for June 19.
Click here for the Proposed FY 2018 Operating Budget. Click here for the Proposed FY 2018 Capital Budget. To see the schedule of budget hearings, click here.