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City Manager Outlines FY 19 Budget

City Manager Outlines FY 19 Budget

City Manager James Keene provided an overview of the proposed Fiscal Year 2019 budget for the Council at their April 30 meeting that reflects a modest increase in overall spending coupled with a reduction in the number of full time employees. The proposed FY 2019 budget of $704.5 million represents a $32.3 million increase or 4.8 percent growth. The primary driver for the increase is the Capital Improvement Fund with significant investment in the Council’s 2014 adopted infrastructure plan. The proposed budget actually includes a reduction of 6.60 full-time positions, and when combined with the 11 positions already reduced in the Fire Department, citywide staffing will decrease 17.60 positions or 1.7 percent from FY 2018. No new positions are proposed for FY 2019.

Keene noted the budget reflects the strong local economy, stable revenues and Palo Alto’s place in the global economy. With that, come the accompanying challenges of traffic, expensive housing and more demand for services. 

The proposed budget reflects support for the Council’s priorities of transportation, housing, budget and finance, as well as grade separation.  Keene outlined both a number of near term challenges that include:

  • Infrastructure funding: As a result of increasing construction costs and modifications to projects, there is an estimated $76 million gap in needed funding to complete the Council’s adopted infrastructure plan.  This does not include projects such as the Animal Shelter that are not part of the infrastructure plan. Anticipated revenues from new hotels coming on line (not included in the budget) could fill half of the gap. An increase in the Transfer Occupancy Tax via the ballot box could bridge the gap.
  • Transportation: Completing the bike and pedestrian improvements, Charleston-Arastradero corridor, funding the Transportation Management Association and maintaining adequate funding for parking needs will be continuous challenges.
  • Competitive workforce:  Retaining and recruiting a quality workforce is increasingly more difficult with longer commutes and expensive housing.  All five labor groups will be in negotiations throughout FY 2019.

“Without a quality staff, we would not be able to provide the quality of services that contribute to the community’s quality of life,” said Keene. “Our ability to attract and maintain the workforce our community requires is a genuine concern.”

  • Pension costs: City is already aware of increases in annual pension costs and working to address.
  • Housing: The City has larger goals and housing needs than the pool of municipal funding could meet. 

Among the long term challenges identified in the proposed budget:

  • Grade separation: Probably the largest infrastructure project the City will face in the decades ahead. Will require the City to plan, fund and build grade separation improvements along the rail corridor.  Budget estimates go from hundreds of millions to billions.
  • Sustainable pensions and health care: The liabilities and risks to the CalPers system are well known and Council will need to continue to take steps to address the issue.
  • Competitive and quality workforce: This will also be a large financial driver in City budgets in the years ahead.

The Council’s Finance Committee will hold all day budget hearing meetings May 15, 16 and 23 and the full Council is slated to hold a budget adoption hearing on June 18. 

To read the proposed budget, click here.

 

 

Last Updated: May 1, 2018