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City Manager Outlines FY20 Budget

City Manager Outlines FY20 Budget

City Manager Ed Shikada provided an overview of the proposed Fiscal Year 2020 budget at the City Council’s April 22 meeting that reflects the Council’s direction to proactively fund Palo Alto’s long-term pension obligations and adjust services as needed. The proposed FY 2020 Operating budget totals $688.5 million and balances immediate needs with positioning services for long-term benefits. On a parallel track, the City will also be releasing its first services inventory as a platform for discussion about the value provided by investment across programs citywide.

The proposed budget includes an additional $3.8 million to be added to the Pension Trust Fund from the General Fund with an additional $2.4 million contributed from other funds. A “catch up” payment of $2.3 million is also included in the proposed budget. This brings total contributions of $22 million to the City’s Pension Trust Fund since its creation in January 2017.

Reductions have occurred across the organization over the past several years, and this budget also includes several one-time cost containing actions while departments continue to assess service delivery options. These actions are happening with a net reduction of 8.5 full time equivalent positions for a total workforce of about 1,032, significantly less than the peak levels of 1,076 employees a decade ago.

On the capital side, the proposed FY 2020 budget (which includes Capital Improvement Funds, Enterprise Funds and Internal Service Funds), is $172.8 million, a decrease of $48.4 million or almost 22% from last year. The overall 2020-2024 Capital Improvement Plan is $730.6 million.

Both the operating and capital budgets reflect continued support of the Council’s priorities of climate change/sustainability and climate action plan, grade separations, transportation and traffic and fiscal sustainability. Shikada outlined several highlights from the FY 2020 proposed budget including:

  • Establishing an Office of Transportation: This budget establishes an Office of Transportation to address the growing complexity and demands of parking, traffic and decisions on grade separation. The budget allocates additional resources and consolidates operations of parking functions and transportation infrastructure projects into a new office.
  • Continued contribution to City’s Pension Trust Fund: This budget incorporates Council direction to budget pension costs more conservatively using a lower discount rate. This will better position the City to adjust to changes in pension costs without service delivery crowd-out.
  • Workforce recruitment and retention initiative: The region continues to experience robust economic growth with rising housing costs and longer employee commutes. This budget includes $750,000 in General Fund for recruitment and retention initiatives.

The Council’s Finance Committee is scheduled to hold budget hearings starting on May 15. To read the proposed Operating budget, click here. To read the proposed Capital budget, click here.

Last Updated: April 23, 2019