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Budget Balancing Strategy Approved & Business Recovery Underway

Service Restorations to Open Spaces and Parks Maintenance, Teen Programs, College Terrace Library, Police Services and More

Learn more about the City’s budget process: what’s in and what’s next

The City Council approved a budget balancing strategy earlier this week to address a $39 million deficit next year, due to the pandemic we continue to respond to. This blog provides a summary of this week’s budget actions, including several service level restorations to teen programs, open space, library and police services, information about business recovery support efforts underway (including exploring shared spaces pilot concepts like closing streets and parklets) and details on what to expect next.

Thank you to the community for sticking with us through days of budget discussions with the City Council as they grappled with difficult conversations and decision on service levels. The community input received through email, the online survey, and by those who attended the budget hearings this week, was greatly appreciated. Based on your input, a number of budget adjustments were approved by the City Council during these public meetings to address the $39 million deficit resulting from the public health emergency.

While adjustments were made, the balancing strategy reflects a nearly 20% reduction from the FY 2021 Proposed Budget (released on April 20) and 15% reduction compared to the FY 2020 Adopted Operating Budget. These reductions include the elimination of 74 full-time and 26 FTE part-time positions. There are many efforts underway to further refine the budget including continuing meet and confer discussions with our bargaining groups which could help save City services and reduce personnel impacts associated with current service level reductions. Although reductions in service levels continue to be recommended, these changes also consider the limitations of service delivery as a result of the current health pandemic.

Service Level Restorations Approved

There was over an hour of community input, with comments ranging from library restorations, history museum requests, and several teens and parents sharing concerns with teen programming impacts, and arts and children’s theatre reductions. The City Council took this feedback into consideration and actions to restore some service levels were approved.

A summary of these restorations address concerns raised by the community and respond to key service level changes including:

  • Resources to successfully transition from ‘shelter in place’ to recovery, with regard to City operations and local business support
  • Focus on maintaining outdoor recreation and open space preserves providing the highest value to the community
  • Increase cost recovery through new participation and membership fees and donations. Services continuing include: Teen Advisory Board, Palo Alto Youth Council, Recreation Counselor in Training (CIT) Program, MakeX, Art Center Teen Leadership Group, Teen Arts Council, Think Fund, and re-opening The Drop teen center after December 2020.
  • Sworn police officers will focus on patrol duties, through restoration of civilian staffing
  • College Terrace library closure is now restored, with all five libraries to remain open on reduced schedules — three of the five libraries will operate as “neighborhood” libraries (open 3 days a week) and two libraries will operate as “full-service” libraries (open 6 days a week)
  • Building inspection resources added to ensure the development center is equipped to assist business needs during the recovery period
  • Restore some programming at the art center, open space rangers, and Children’s Theater activities.

For a summary of the budget strategy, watch the first part of the meeting here. To learn about all of the budget actions, review the staff report here.

Capital Investments to Continue at Lower Levels

The approved balancing strategy also includes revisions to the City’s capital infrastructure projects and investments, reflecting a 56 percent reduction in General Fund support or $18.4 million in FY 2021 alone. These reductions maximize the availability of operating funds to retain services by reducing the General Fund Transfer and the General Capital Infrastructure Fund has been balanced to approximately $1 million in fund balance over the five-year period. Since the May 11–13 budget hearings, the City Manager and Director of Public Works have reviewed all General Fund projects in the proposed CIP, and confirmed that with the reduced Transfer, the remaining funding levels reflect investment in essential infrastructure. Based on this review, the revised CIP provides a minimal while responsible investment in the City’s essential infrastructure.

Examples of projects planned include:

  • “Keep up” through citywide annual recurring projects: Building Systems Improvements, Facility Interior Finishes, City Facility Parking Lot Maintenance, Athletic Courts Resurfacing, Street Maintenance, Sidewalk Repairs
  • “Keep up” and “Catch up” at specific facilities and parks: City Hall Electrical Upgrade, MSC Roof Replacement, Boulware Park Improvements, Magical Bridge Playground Rubber and Synthetic Turf Reduction
  • “New” buildings or significant improvements to existing infrastructure: Birch Park Improvements, Animal Shelter Renovation, Downtown Automated Parking Guidance Systems, Rail Grade Separation Planning, Fire Station 4, Public Safety Building

Business Support as a Critical City Focus

Getting business back up and running drives our community and directly ties to our City’s budget and the ability for the community to recover quickly from the current public health emergency.

The Council invested $500,000 for a small grant recovery program to help our small business during the current public health emergency and we are encouraging our businesses to submit a pre-application. Our first lottery was held this week, and we are working through the verification process. Businesses interested in applying can still do that, by going to www.cityofpaloalto.org/businessgrant for more.

Community members looking to support our local businesses can do so in several ways including considering a tax-deductible donation to leverage the City’s Small Business Recovery Grant program which will leverage the City Council’s investment and ensure additional grants can be awarded. In addition, the community can order takeout and purchase gift cards from your favorite retail stores. For restaurants currently offering takeout, go to www.cityofpaloalto.org/supportlocal.

In response to the recent Santa Clara County Public Health Order easing restrictions to allow for curbside pickup and delivery, the City’s Public Works teams delivered and installed over 15 signs in the California Avenue and Downtown core business districts to businesses that let the public know they are reopening for curbside pickup and delivery. Businesses interested in the City installing curbside signs, share your business plans, and let us know if you’d like signage available now to help guide your customers and share you are open for business.

Outdoor dining is still not allowed in our County, so while we are working towards new ideas about shared spaces supporting outdoor dining options in the future, we must follow our County’s guidance and be ready when restrictions ease. The City is in discussions with our local restaurants and retail stores, exploring full and part-time street closures and other options, such as expanding outdoor seating through parklets and temporary closures of parking lots, and offering business signage so customers know they are open for business and much more.

Additional Adjustments Underway

Cubberley Lease: This week the Palo Alto Unified School District Board of Education approved new lease terms for the portion of the Cubberley Community Center that the City leases from the school district. The lease terms were developed through collaborative discussions between City and school district staff and as a result of the City’s continued budget challenges and the school district’s need for additional space. In the new agreement, the City will continue to lease the athletic fields, gyms, pavilion, and theatre from the school district. The school district has a need to take back the remaining buildings on their property and have requested that the City and its tenants vacate these spaces. This will impact community groups with leases on spaces owned by the school district. City staff are working diligently to find alternate space on the City-owned side of Cubberley for those tenants impacted. We are in this together, and staff is working with current tenants to accommodate as many community partners as possible. Staff expects an opportunity for the City Council to discuss the new lease terms this June.

New Public Safety Retirement Program: As part of the City Council meeting on Monday, June 1, staff is recommending the implementation of a Public Safety Retirement program for sworn Police and Fire personnel. This program is fully supported by the City’s Fire and Police union leadership. This retirement program will help avoid layoffs of our most recently hired Police Officers and Fire Fighters.

Other Referrals: The City Council also put several referrals in motion, which will be completed by staff at a later time, including to review the public art program and bring back an ordinance to suspend the 1% for public art for two years; to explore changing the service delivery from a dominant fire-oriented model to a dominant medical oriented model; and to report on the Junior Museum & Zoo 6 months after it opens and what it would look like to eliminate the General Fund subsidy and make it full cost recovery.

Next Steps and Ways to Provide Input

Staff is working to develop the necessary budget documents for Council consideration and action on June 22. The community can watch the June 22 City Council meeting and provide input as a meeting participant and email the City Council with their thoughts at city.council@cityofpaloalto.org. The meeting will be broadcast on Cable TV Channel 26, live on YouTube, and live on the Midpen Media Center website. For instructions to participate in the meeting, go here. Budget materials will be posted in advance of the June 22 meeting here.

Online Resources to Learn More

Learn more at www.cityofpaloalto.org/budget

Sign-up for City updates here.

Watch the budget summary from the May 26 Council meeting here.

View the latest Coronavirus Daily Report here.

For the City’s Coronavirus website, go here.

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City of Palo Alto

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