Palo Alto has a budget of nearly $1 billion (that’s a “B”) slated for the upcoming 2022-23 fiscal year. That in itself is incredible for a city of over 62,000 people. And I’m very concerned about the increase in dollars the city says it needs to operate.
As City Manager Ed Shikada recently wrote to City Council, “The long-term financial health of the city requires sustainable additional revenue to meet community service priorities. . . sustainability is not achieved with existing sources of income alone.
Will this “need” for dollars ever diminish? I haven’t seen this happen in years. And now the city wants to impose a business tax that, if passed by residents, will bring in between $10.9 million and $43 million a year (depending on the square foot rate charged by the city).
About 10 years ago, this city had a general fund of $140 million (not adjusted for inflation). For the coming year, the expenditure budget for this fund is $247.8 million. So as I sit and think about these sums, I wonder what improvements have I seen in this city over the years? Buildings like the Mitchell Park Library and the Junior Museum were created, in part, through numerous community contributions. Great places! The new $23 million pedestrian-bicycle bridge over Highway 101, which took more than 10 years to plan and build, is an expensive asset, but it came at a price.
Let’s talk about why our city spends nearly a billion dollars a year; I’ll start with salaries. They have certainly skyrocketed over the past decade. And almost every year, employees keep getting raises – for doing the same job. The cost of living has experienced an average inflation rate of 3.15% per year between 2016 and today. City wages, in general, have gone up more than that every year, especially if you include the raises.
Last year, the city’s payroll was $124 million; the number of City Hall employees earning more than $300,000 rose to seven, the highest on record. City employees also received an additional $17.7 million in benefits, such as medical, dental and vision benefits. In addition, the city paid some $49.2 million in employee pensions.
I don’t know about you, but to me, that’s a lot of money and dumpsters.
According to the Daily Post, city manager Ed Shikada was the top earner, taking in $385,896 in 2021 (the US president got $400,000). Shikada has a lot of help in his job – his support staff (e.g. Deputy City Manager, Deputy City Manager, some assistants) number around nine or ten positions. The second highest was fire captain Mark von Appen who received $331,293. This includes $168,381 in overtime. And City Attorney Molly Stump took third place, earning $328,847 in total salary. She has several assistant prosecutors in her team.
The total salary may include vacation payments, car allowances, etc. But it does not include health benefits, which all employees receive.
Be patient, as the numbers can be boring to read, but it’s an important thing for residents to understand, as our city of 62,000 spends huge amounts of money and the appetite for more money hasn’t changed a lot over the years.
Palo Alto’s operating budget will increase by nearly a third this year, compared to last year, according to the Weekly. The planned operating budget for 2022-2023 is $934.2 million, up 32.8% (!) from the current year. This includes the $237.8 million in the general operating fund, which is dedicated to general business expenses, including employee salaries. The capital budget funds major improvements to city facilities and infrastructure.
During last year’s deficit phase, the city downsized; payroll only decreased by 1.6% (approximately $2 million). Strange, since more than 100 posts have been temporarily removed. And now, Shikada wants to restore 39 full-time employee positions to catch up with previous levels. That would bring the city’s total to 1,015 positions.
Shikada’s budget proposal for 39 employees (and I hope I understood his numbers) includes three trainee firefighters, four new firefighter positions, including an administrator, four additional police officers, two police dispatchers and a management analyst in the office of Shikada who would serve as the city’s “equity and inclusion officer” (?). Within the Utilities Department, four new positions would be hired to help residents transition to “advanced metering infrastructure” – “smart meters”, which will be installed on residents’ homes.
Earlier this month, to my surprise, Shikada said he wanted to add 23 more positions, which would cost $3.7 million for the 2022-023 fiscal year, presumably reaching 1,038 employees. Much of that money would come from the city’s proposed business tax — if passed. Shikada assumes that will be the case, but given the inflation in this country, I’m not sure people are even prepared to tax corporations more.
These 23 proposed hires include detectives and offices for the psychiatric emergency response team, a ranger for the Baylands, zoological assistants at the Junior Museum to care for the animals there (two pigs- porcupines, three lemurs, seven meerkats and 10 birds). In addition, a downtown planner and assistants for libraries, community centers, etc. are on the hiring list. These are not all full-time positions.
The question I ask is are theyeverything necessary?
Phew. I guess I could throw all these raises and spending in the air and say, well, it’s just money, and if our city wants to spend it, why not.
But the puritan in me says wait, all of this spending needs a lot more scrutiny. We will pay them – and we include local businesses, who will pass on the business taxes to their customers – us.
The way the city works, the city manager can ask for more staff and more money, and there’s no downside to him asking. It’s up to the city council to control the budget, and sometimes that’s hard to do because they all want to ‘get along’, which means there are few checks and balances.
So what’s the incentive for the manager not to ask or the board to reduce their requests? And what makes the board disagree with his demands?
Maybe it’s the resident pressure. It may be up to us, together with the board. I realize that members already spend a lot of time on city business, but managing the budget is an important and important part of their job – or should be. Perhaps we should let the board know that we are concerned.
Obviously, I am.