The City Council adopted the FY 2018 budget on June 27 that reflects its priority of tackling transportation while maintaining city service levels, all with an eye toward future challenges including unfunded pension liability and retiree health benefits.
The $210 General Fund budget represents a six percent growth in revenue (or $12 million) primarily from property, sales and hotel tax funds. On the expense side, the adopted budget represents a year-over-year increase of eight percent (or $16.3 million) primarily driven by salary and benefit costs. The City will draw $3.37 million from the Budget Stabilization Reserve to balance this year's budget, which will leave the BSR at the target level of 18.5 percent (of total General Fund expenses) as adopted by Council. In addition, staff identified several "drivers" contributing to the General Fund gap including Project Safety Net and Track Watch ($1.7 million); City streetlights and traffic signal electricity costs ($2.3 million) and Stanford negotiations for fire service ($2 million).
As part of the FY 2018 budget, Council approved a series of parking permit fee increases that will generate $1.4 million to invest in transportation and parking initiatives, including $480,000 for the Transportation Management Association. The TMA is a nonprofit organization assisting employers in the downtown area with employee commute options to reduce solo driving. The decision to increase parking permits followed a parking study that showed Palo Alto rates substantially lower than most cities in the region.
Under the adopted budget, Utility rate changes are expected to increase 2.5% across utilities, with a total monthly bill estimated to increase $6.79 per month to $278.39 per month.
Staff will be returning to the Finance Committee in the fall to work on developing alternatives to address unfunded pension and retiree health costs.