Operating Budget
2005- 2007
City of Palo Alto
ADOPTED
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2005- 07 Budget City of Palo Alto i
CITY OF PALO ALTO
2005- 07
City Council
Jim Burch, Mayor
Judy Kleinberg, Vice Mayor
Bern Beecham
Hillary Freeman
Jack Morton
LaDoris Cordell
Yoriko Kishimoto
Dena Mossar
Vic Ojakian
❖
Frank Benest
City Manager
Emily Harrison
Assistant City Manager
Carl Yeats
Director of Administrative Services
Lalo Perez
Assistant Director of Administrative Services
Vic Ojakian
Finance Committee Chair
ii City of Palo Alto 2005- 07 Budget
The City of Palo Alto's Values:
Quality - Superior delivery of service.
Courtesy - Providing service with respect and concern.
Efficiency - Productive, effective use of resources.
Integrity - Straight- forward, honest and fair relations.
Innovation - Excellence in creative thought and implementation.
It’s a Matter of Pride!
The government of
the City of Palo Alto
exists to promote
and sustain
a superior quality
of life in Palo Alto.
In partnership
with the community,
our goal is to deliver
cost- effective services
in a personal, responsive,
and innovative manner.
2005- 07 Budget City of Palo Alto iii
Department Budget Coordinators
Administrative Services Department
Libby Dame
City Attorney's Office
Stacy Lavelle
City Auditor's Office
Patricia Hilaire
City Clerk's Office
Mary Jo Bucchino
City Manager's Office
Chris Mogensen
Community Services Department
Lam Do
Fire Department
Melinda Cook
Human Resources Department
Erica Gindraux
Library Department
Diane Jennings
Planning and Community Environment Department
Jon Abendschein / Heather Shupe
Police Department
Pete Hazarian
Public Works Department
Judy Hejza / Sharon Macway
Utilities Department
Rosemary Ralston
Budget Document Producers
Budget Staff
David Ramberg, Manager
Mary Divinski
Amy Javelosa- Rio
Cherie McFadden
Dale Wong
Dave Yuan
Technical Advisor
Myrna McCaleb, Sr. Business Analyst
Special Contributors
Joe Saccio
Graphic Design, Cover Photo
Cherie McFadden
Printing
Joyce White, Manager
Ty Campbell
John Sanchez
CITY OF PALO ALTO
2005- 07
Budget Acknowledgements
iv City of Palo Alto 2005- 07Budget
Budget Awards
Message
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City of Palo Alto 2005- 07 Budget
May 3, 2005
Honorable City Council
Palo Alto, California
Attention:
Finance Committee Dear Mayor and Council Members:
It is the City Manager's responsibility to present a proposed balanced budget
for your consideration. This is the most difficult two- year budget that I have
ever presented to the Palo Alto City Council. The two- year budget incorporates
a spending reduction plan, building upon actions from prior years, to address
the ongoing structural imbalance outlined in the Long Range Financial Plan
( LRFP). Throughout the recent prolonged recession, the Council has reduced
projected General Fund expenditures by approximately $ 14.5 million and
eliminated approximately 40 positions. The proposed General Fund budget for
2005- 06 overcomes an additional $ 5.2 million deficit.
The City's continuing structural deficit is primarily related to three factors:
• Since 2000- 01, and due to the economic downturn, the level
of annual sales and transient occupancy tax revenues have
declined by nearly $ 12 million.
• Employee related benefit costs have continued to escalate.
In particular, health care and pension costs have increased
by approximately 50 percent or a total of $ 8 million.
• The State continues to " shift" property and other taxes to
solve its considerable budget deficit. From 1992- 93
through 2003- 04 the State has taken $ 31.1 million in
property taxes and vehicle license fees from the City. In
2004- 05 and 2005- 06, the State will take another $ 11.0
million for a cumulative total of $ 42.1 million.
To arrive at a balanced budget, staff engaged in a service
prioritization process, with Council input, to form the basis for proposed
reductions. The list of the proposed service and budget reductions is shown in
the General Fund expenditure section of the document. It shows a decrease in
General Fund ongoing expense of an additional 4.3 percent or an additional
$ 4.2 million. However, despite the cuts, the budget shows an overall cost
Transmittal Letter
Frank Benest, City Manager
viii
City of Palo Alto 2005- 07 Budget
increase of $ 4.5 million due mainly to employee benefits and
negotiated salary increases. The cost increase is offset by an
overall anticipated revenue increase of $ 4.8 million.
Unlike prior years, when cost reductions were achieved
without significant impact to direct services provided to the
community, the effort to close the budget gap in 2005- 07 and
beyond now requires such actions. This, in turn, necessitates
the proposed elimination of staff positions through layoffs.
Layoffs and reductions in service in the City of Palo Alto have
not occurred since the early 1990s when the local economy, similar to that
recently faced by the City, turned significantly downward. In addition to
personnel- related expenditure decreases, this proposed budget includes non-personnel-
related cuts in every General Fund department.
Economic
Overview
From the outset of this budget process it was clear that the economic downturn,
the sharp rise in benefit costs, and the continuing State take- away of local
revenues continue to haunt the City. Although there are indications that the
economy is recovering, it is doing so at a tepid pace with emerging new
obstacles to overcome ( e. g., rising interest rates, sluggish job growth, and
higher oil prices). City revenues, while projected to be up slightly in 2005- 07,
have fallen to 1998 levels and, most importantly, are not increasing at a pace to
cover increases in expense. Some of the economic factors challenging the
City's budget include:
• Job growth, although up slightly in California as whole, has yet to occur in
any notable fashion in the Bay Area.
• Critical, economically sensitive revenue sources such as sales tax and
transient occupancy tax ( TOT) appear to have reached a “ bottom,” but
have not rebounded significantly.
• Rising employee benefits such as pension and health care costs.
• Unsolved State budget deficits that typically result in takeaways from local
revenue sources.
Bryant St. at Hamilton
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2005- 07 Budget City of Palo Alto
That the Peninsula and Bay Area economy is the weak link in the nascent
State and national economic recoveries should come as no surprise.
Economists at the local and State level continue to point to our area as the
last to emerge from the downturn. As Joseph Hard, a former UCLA
economic forecaster said, “ for the Bay Area as a whole, it's mostly
progress, but it's not rapid.”
Budget Strategy
for 2005- 07
The 2005- 07 budget is a two- year budget. It proposes for adoption the
2005- 06 spending plan and an in- concept spending plan for the second
year, 2006- 07. Similar to the last two- year budget process, the City must
now address projected deficits in 2005- 06 and 2006- 07. It is important to
note that the proposed 2003- 05 budget incorporated an ongoing 5 percent
reduction in base expenses. Moreover, the City faced and dealt with an
additional $ 1.5 million shortfall in the 2004- 05 mid- year budget revision.
Even with these major efforts, more budget reductions are
needed to meet a projected $ 5.2 million shortfall in 2005- 06
and a $ 3.9 million deficit in 2006- 07.
The budget reduction strategy of the past several years has
focused mainly on eliminating vacant positions,
restructuring staff functions within departments,
eliminating one- time expenses, selling services to other
cities, and deferring equipment replacements. These actions
were coupled with revenue enhancements where possible.
This pragmatic and gradualist approach, which had
marginal impacts on services to the community, however,
has left minimal flexibility for further alignments without
reducing services and salaries and benefits. The 2005- 07
Proposed Budget reflects this regrettable reality.
To address the inherent difficulties and sensitivities of reducing a budget
sorely tested by prior year reductions, the City engaged in a process to rank
services based on priority. Ranking criteria included, for example, legal
mandates and public safety and health concerns. In January 2005, the
ranking criteria and “ first- cut” ranking of programs were presented to the
City Council for review and comment. This service prioritization then
Baylands
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City of Palo Alto 2005- 07 Budget
formed the basis for the City's department- level budget reduction strategy for
the 2005- 07 budget process. Departments were asked to make
recommendations for cuts based on the prioritized ranking of the services they
provide as well as results from a representative sample of Palo Alto residents
who were asked to rank services as “ more important” or “ less important”.
Based on the rankings and their professional judgments, department directors
were instructed to recommend service and personnel cuts in order to eliminate
3 to 7 percent of their expense base. The ranking structure and the outcome of
the prioritization process are presented in the General Fund expenditure
overview section of this document.
While using the service prioritization matrix, as well as previously conducted
citizen survey, the budget process focused on certain guiding principles:
• Continue with City's “ pay- as- you- go philosophy” - do
not draw on reserves to fund on- going operating
expenses.
• Maintain adequate reserve levels as dictated by Council
policy.
• Maintain commitments to Council's top priorities such
as rebuilding the City's infrastructure (“ City
Works”).
• Preserve essential programs based on the criteria used
to prioritize and rank all city services.
• Continue support to local schools through the $ 6 million payment to Palo
Alto Unified School District ( PAUSD).
Long Range
Financial Plan
( LRFP)
As discussed, the Long Range Financial Plan sets the stage for the 2005- 07
budget process. The LRFP was presented to the Finance Committee in
December, 2004. Updated with actual 2003- 04 financial data and based on
explicit assumptions, the plan identifies revenue and expense trends and
critical short and long- term budget issues. The LRFP forecast projected
deficits from 2004- 05 through 2014- 15 and identified a $ 5.2 million deficit in
2005- 06. A major trend emerging from the LRFP, despite previous budget
Duck Pond
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2005- 07 Budget City of Palo Alto
reduction efforts, is that expense growth ( an average of 3.8 percent) was to
exceed revenue growth over the next ten years ( 3.4 percent). This
protracted gap, primarily caused by benefit costs, is the focus of this budget
proposal.
The LRFP forecast included in the proposed budget has been
updated with figures for 2005- 07. The impact of the 2005- 07
Proposed Budget changes on long- term City finances
indicates that projected future deficits will be eliminated by
implementation of this spending plan.
Revenue and Expense Highlights
Some significant revenue elements of the 2005- 07 Proposed
Budget include:
• Sales tax increase 5 percent ($ 0.9 million) in 2005- 06 and
3 percent ($ 0.7 million) in 2006- 07.
• Property tax increase 5.5 percent ($ 0.9 million) in 2005- 06
and 15.4 percent ($ 2.6 million) in 2006- 07.
• Transient occupancy tax increase 3 percent ($ 0.2 million) in 2005- 06
and 3.7 percent ($ 0.2 million) in 2006- 07.
• Utility users tax increase 13 percent ($ 0.9 million) in 2005- 06 and 8
percent ($ 0.7 million) in 2006- 07.
The following are highlights of the expenditure elements in the 2005- 07
Proposed Budget:
• 4.3 percent net ($ 4.2 million) ongoing expenditure reduction included in
spending plan.
• 29.95 positions eliminated including 14.50 layoffs resulting in $ 3.3
million decrease in salary and benefits costs.
• A $ 5.0 million Capital Fund transfer is included to maintain support for
infrastructure rehabilitation projects.
Children’s Center
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City of Palo Alto 2005- 07 Budget
• Benefit expenses are increasing citywide by an estimated $ 10 million in
2005- 07 with the largest portion of the increase due to rising pension
costs.
Restructuring Efforts and
Service Level Changes
Operational restructuring efforts, as in recent years, remain a critical
component to managing costs in the 2005- 07 budget. In the 2003- 05 budget,
the City eliminated 40 vacant positions and was able to restructure around
those reductions with few service impacts. Since that time, the City continued
the hiring freeze resulting in additional vacant positions. The majority of the
positions eliminated were management or administrative support positions.
However, these cost savings have not been sufficient to close the $ 5.2 million
deficit in 2005- 06. The City is required, therefore, to lay off currently filled
positions in various departments. The eliminated 29.95 positions consist of
14.50 layoffs, 4 retirements, 5 vacancies, 5.25 frozen positions, and 1.20
positions based on reduced hours. Therefore, with these
additional staff reductions, we will have eliminated a total of
approximately 70 positions since the beginning of the recession
in 2001- 02.
Throughout the process City management has had on- going
discussions with the Unions representing our employees
regarding our financial deficit and my budget recommendations
regarding layoffs. The Unions have made some proposals and
may make additional proposals to avoid layoffs. Should city
management be in accord with any of these recommendations
from the Unions, I will bring forward these proposals to the
Council’s Finance Committee during the budget hearings.
The following summarizes for 2005- 07 proposed service changes, position
eliminations, and necessary restructuring throughout the City:
Administration
• Eliminate Executive Assistant position in the Economic Development
program - reduction in business outreach and elimination of economic
forums, broker list, available business data
Avenidas Senior Center
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2005- 07 Budget City of Palo Alto
• Eliminate Deputy Public Communications Officer position - slower
response to citizen complaints, elimination of City Beat cable TV
show and “ CityWorks” hotline
• Eliminate five positions in the IT fund - maintenance of
enterprise applications reduced to a minimal level,
planned enterprise resource planning system expansion
put on hold, restructuring of duties
• Reduce outside legal counsel and contract agency
personnel in City Attorney's Office - slower response
to work requests
• Eliminate Storekeeper position - reduced delivery service
for donated books and mail to fire stations, restructure
of duties
• Reduce employee special events and recognition
activities
Community Services
• Eliminate Golf Maintenance Person position - lower maintenance
standard as a result of less frequent mowing, edging, trimming
• Eliminate Recreation Supervisor position - elimination of existing youth
program, some elements transferred to local non- profit
• Reduce temporary hours in Recreation and Youth Sciences - some
decrease in number of programs offered to the community
• Elimination of Parks Superintendent position - increase in span of
control
• Other reductions: reduce field pest abatement, planting materials at golf
course, and softball and running track maintenance
Planning and Community Environment
• Eliminate Plan Check Engineer position - delay in building permit
processing if development ramps up
Gamble Gardens
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City of Palo Alto 2005- 07 Budget
• Eliminate Coordinator of Transportation System Management ( half- time) -
reduce neighborhood traffic calming programs, focus on school commute
corridors
• Eliminate three hourly Building Inspector positions - delayed inspections
during high- volume periods if more development occurs
Public Works
• Eliminate Building Service Person position - reduce frequency of cleaning
at Civic Center
• Eliminate Program Assistant position in graffiti program ( half- time) -
elimination of graffiti volunteer coordinator; City crews to still respond to
graffiti calls
• Eliminate Supervisor position - workload restructuring within existing staff
• Transfer sidewalks operation from Public Works General Fund to the
sidewalks CIP - extension of work on the sidewalk repair backlog
Public Safety
• Eliminate one Community Service Officer position and one Code
Enforcement Officer position - delayed response time to minor violations
such as parking and noise complaints
• Eliminate Office Specialist position - reduced direct interaction with public
• Eliminate Staff Secretary - reduced response to traffic and parking related
calls
• Eliminate two hourly Clerk positions - delayed data entry and purging of
reports, reduced front counter assistance to the public
• Eliminate one canine in the Patrol Division - possible impact to searching of
suspects by canines ( 3 canine units remain)
• Freeze Chief Officer position in Emergency Medical Services -
restructuring to support basic life support ( BLS) program
xv
2005- 07 Budget City of Palo Alto
• Eliminate Fire Battalion Chief position - position funded by Stanford at
the Sanford Linear Accelerator Center ( SLAC)
A summary list of position eliminations in the General Fund is attached to
this budget transmittal letter.
Enterprise Fund
Overview
The City of Palo Alto Utility Funds ( CPAU), as well as the activities of the
Refuse, Storm Drainage, Wastewater Treatment, and External Service
Funds are vital components of the services provided to the Palo Alto
community and to surrounding jurisdictions. Rates in the enterprise funds
are proposed to increase in 2005- 06 due to a number of factors:
• Prices for electric and gas commodities remain high
since the 2000- 01 energy crisis
• Termination of the long- standing Western Area Power
Administration contract and related federal subsidies
for energy
• Higher transmission costs due to regulatory changes
• Capital project work on the water system resulting in
increased rates for wholesale water purchases
Based on the above factors, the proposed 2005- 06 utility
rate changes are as follows:
• Gas service rate increase of 15% - due primarily to
anticipated increase in gas commodity costs
• Electric service rate increase of 11.5% - in response to increasing
wholesale power and transmission costs
• Sewer rate increase of 12% - related to increased treatment expense
• Refuse service rate increase of 8% - due to increasing operating expense
The effect of these proposed rate changes would result in a 11.5% increase
in a resident's average monthly utility bill. However, the average monthly
electric utility bill for a residential household in Palo Alto would still be
University Ave
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City of Palo Alto 2005- 07 Budget
32% less than a similar utility bill for a PG& E customer in a surrounding
community.
Acknowledgements
A special thank you goes to the entire City staff team involved in preparing the
2005- 07 Proposed Budget. Carl Yeats, the Director of Administrative Services
and his staff have managed an especially challenging task. Special
acknowledgement goes to the Budget Team and their countless hours of
analysis and creative thought. They include David Ramberg, Budget Manager,
and his staff: Mary Divinski, Amy Javelosa- Rio, Dale Wong, Cherie
McFadden and Dave Yuan. Staff throughout the City, in particular Department
Budget Coordinators ( see acknowledgment page for names), are
acknowledged for their hard work in developing the 2005- 07 Proposed Budget.
Frank Benest
City Manager
Attachment: Summary of Positions Eliminated in the General Fund
xvii
2005- 07 Budget City of Palo Alto
Dept Title FTE Salary & Benefit
ASD Manager, IT ( 1.00) ( 149,488)
CSD Arts & Culture Div Mgr ( 1.00) ( 153,117)
CSD Program Assistant ( 1.00) ( 78,761)
FIR Chief Off- Med Svcs EMT ( 1.00) ( 168,158)
LIB Librarian ( 1.00) ( 81,172)
MGR Office Specialist ( 0.25) ( 23,802)
Freeze Total ( 5.25) ( 654,499)
ATT Sr Asst City Atty ( 0.20) ( 38,428)
PLA Transp. Mgt. Coord ( 0.50) ( 52,368)
POL Code Enforcement Off ( 0.50) ( 50,488)
Reduction Total ( 1.20) ( 141,284)
ASD Sr Buyer ( 1.00) ( 94,284)
CSD Supt Parks ( 1.00) ( 128,373)
MGR Deputy Public Comm Officer ( 1.00) ( 79,263)
PWD Supv Public Works ( 1.00) ( 115,925)
Retirement Total ( 4.00) ( 417,845)
ASD Acct Spec ( 1.00) ( 74,842)
ASD Storekeeper ( 1.00) ( 74,480)
CSD Golf Cor Mt Person ( 1.00) ( 76,199)
FIR Battalion Chief - Reg/ EMT ( 1.00) ( 168,158)
FIR Coord Environ Protec ( 1.00) ( 161,983)
Vacancy Total ( 5.00) ( 555,662)
ASD Manager, IT ( 1.00) ( 149,488)
ASD Sr Technologist ( 4.00) ( 540,000)
CSD Supv Rec Prog ( 1.00) ( 110,376)
CSD Office Specialist ( 1.00) ( 71,406)
MGR Executive Assistant ( 1.00) ( 107,466)
PLA Plans Check Engr ( 1.00) ( 122,829)
POL Code Enforcement Off ( 1.00) ( 100,976)
POL Community Service Off ( 1.00) ( 73,667)
POL Office Specialist ( 1.00) ( 71,406)
POL Staff Secretary ( 1.00) ( 77,586)
PWD Bldg Serviceperson ( 1.00) ( 63,930)
PWD Program Assistant ( 0.50) ( 39,380)
Layoff Total ( 14.50) ( 1,528,512)
2005- 06 Total ( 29.95) ( 3,297,802)
Summary of Positions Eliminated in the General Fund
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City of Palo Alto 2005- 07 Budget
Table of Contents
2005- 07 Budget City of Palo Alto xxi
Item Description Page Number
Table of Contents
Budget Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
Transmittal Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
Table of Contents
City of Palo Alto Organization Chart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Budget Process and Document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
GENERAL FUND
General Fund Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
General Fund Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
General Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
City Council’s Top Five Priorities- Budget Implications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
General Fund Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
General Fund Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
General Fund Revenues by Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
General Fund Expenditures by Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
General Fund Long Range Financial Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2005- 06 Projected Operating Fund Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2006- 07 Projected Operating Fund Balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Total Citywide Revenues by Category. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Total Citywide Expenditures by Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
City Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
City Auditor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
City Clerk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
City Council . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
City Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Administrative Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Community Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Fire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Human Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157
Library . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Planning and Community Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183
Police . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199
Public Works . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221
xxii City of Palo Alto 2005- 07 Budget
Page Number
Table of Contents
Item Description
ENTERPRISE FUNDS
Enterprise Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235
2005- 06 Enterprise Funds Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 243
2006- 07 Enterprise Funds Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 244
Enterprise Fund Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245
Enterprise Fund Revenues by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
Enterprise Fund Expenditures by Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
Average Residential Monthly Utility Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
Electric Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
Gas Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
Wastewater Collection Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
Water Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
Refuse Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307
Storm Drainage Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Wastewater Treatment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 327
CPA External Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335
CROSS DEPARTMENTAL PROGRAMS
Cross- Departmental Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 341
Cubberley Community Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343
Development Center Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
Parking Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
Special Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Traffic Management and Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350
Youth Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 352
Emergency Preparedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354
OTHER FUNDS
Special Revenue Funds
Special Revenue Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 361
2005- 06 Special Revenue Funds Summary by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363
2006- 07 Special Revenue Funds Summary by Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 365
Consolidated Special Revenue Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367
2005- 06 Community Development Block Grant Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 369
2005- 07 Budget City of Palo Alto xxiii
Item Description Page Number
Table of Contents
Debt Service Funds
Debt Service Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 373
General Debt Service Fund Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 376
Special Assessment Debt Service Fund Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377
Internal Service Funds
Internal Service Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381
2005- 06 Internal Service Fund Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383
2006- 07 Internal Service Fund Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384
2005- 07 Internal Service Funds — Unrestricted Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 385
Vehicle Replacement Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386
Technology Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391
Printing and Mailing Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
General Benefits and Insurance Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403
Retiree Health Benefit Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 404
STAFFING
2005- 07 Summary of Position Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 407
2005- 07 Table of Organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 411
MISCELLANEOUS
Reserve Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 433
Palo Alto: The City. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436
Demographic Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437
2005- 06 Estimated Appropriations Limitation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439
Budget Adoption Ordinance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 443
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 446
Americans with Disabilities Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449
xxiv City of Palo Alto 2005- 07 Budget
Page Number
Table of Contents
Item Description
This page is intentionally left blank.
Community Services Department
Richard James, Director
Assistant City Manager
Emily Harrison
Fire Department
Nick Marinaro, Chief
Public Works Department
Glenn Roberts, Director
Administrative Services Department
Carl Yeats, Director
CITY CLERK
Donna Rogers
CITY MANAGER
Frank Benest
CITY AUDITOR
Sharon Winslow Erickson
City Council
Human Resources Department
Russ Carlsen, Director
Police Department
Lynne Johnson, Chief
Planning and Community
Environment Department
Steve Emslie, Director
Utilities Department
John Ulrich, Director
Library Department
Paula Simpson, Director
CITY ATTORNEY
Gary Baum
Palo Alto Residents
CITY OF PALO ALTO
Organization Chart
2005- 07 Budget City of Palo Alto 1
Organization Chart
continued
2 City of Palo Alto 2005- 07 Budget
2005- 07 Budget City of Palo Alto 3
The Budget Process and Document
An Overview he budget is a spending management plan for the City's financial
resources. Through the use of these resources, services are provided to
meet the needs and desires of Palo Alto's residents and businesses. The
budget is also at the heart of the political process, where resources are
allocated based on City Council priorities. The review of the proposed budget is
structured around public hearings by the Finance Committee, which further
incorporates public opinion into the process. The budget is therefore the vehicle
for responding to the community's wishes, as well as an instrument for balancing
inflows and outflows ( revenues and expenditures) of revenues.
City Council Top Five Priorities
At the start of the City's budget process, the City Council determines its main
focus for the following two- year period. Through an open Council dialogue, the
priorities guide both budget development and department priority- setting. The
public has the opportunity to provide input into this process as well as during the
budget review by the Finance Committee. The following are the top five City
Council priorities for 2005- 07:
• Affordable Housing
• Alternative Transportation / Traffic Calming
• City Finances
• Infrastructure
• Land- Use Planning
Operating Budget
Process
Budget Preparation
The City's annual budget process begins in November and concludes in June. The
operating and capital budgets are developed by the City Manager, in consultation
with senior management and the Director of Administrative Services, utilizing
four main sources of information:
• Community input
• City Council Top Five Priorities
• Findings from the City's Long Range Financial Plan which is updated annually and
presented to the Finance Committee prior to the budget process
• Service level prioritization
T
The Budget Process and Document
continued
4 City of Palo Alto 2005- 07 Budget
• Comprehensive Plan which contains the City's official policies on land use and
community design, transportation, housing, natural environment, business and
economics, and community services.
This information is used to develop the budget request guidelines, which provide
direction to City departments as they prepare their budget requests.
Operating Budget Calendar
November: Operating budget preparation begins with determination of the base
budget for the following year, which excludes one- time revenue and expenses
from the prior year. Input from the Long Range Financial Plan ( LRFP) determines
the broad financial picture facing City operations in the upcoming period. Budget
guidelines and instructions are finalized and distributed. Municipal Fee Schedule
change parameters are also provided.
December: Critical to their planning process for the upcoming year, departments
are allowed to reallocate staffing and non- salary resources to meet the changing
demands placed on service delivery. This step results in no net change to the
amount of resources allocated to the department overall.
January: Changes to the base budget are submitted to the Budget Division for
analysis, and may include requests for additional funding to meet program needs
for the upcoming year. Textual elements of the budget document, including
benchmarking measures and Municipal Fee Schedule changes are also finalized.
February: Recommendations on the base budget requests are made by Budget
Division staff to the Director of Administrative Services, both in terms of their
conformance to budget guidelines as well as their individual merits. Internal
budget hearings are held to discuss Budget Division analysis of department
funding requests, along with alternative funding options to meet the department's
needs. Cost- benefit analysis is performed on both base operations as well as new
funding requests.
March/ April: Final decisions are made by the City Manager on the proposed
operating budget requests, along with the general message to the City Council. The
proposed budget document is compiled, edited, and forwarded to the Council
members. The Office of the City Attorney reviews proposed changes to the
Municipal Fee Schedule.
The Budget Process and Document
continued
2005- 07 Budget City of Palo Alto 5
May/ June: The City Manager formally presents the proposed budget to the
Finance Committee in a series of public hearings. The Finance Committee
prepares its recommendation to the City Council. Final adoption occurs at a final
public hearing in June. All changes made during the public process are
incorporated into the adopted budget document, which is distributed to City
libraries as well as posted on the City's website.
City of Palo Alto
BUDGET HEARINGS SCHEDULE
with Finance Committee
For 2005- 07 Budget
DATE DESCRIPTION DEPARTMENTS ATTENDING
Tuesday,
April 5 Finance Committee HSRAP / CDBG
Tuesday,
May 3
Finance Committee
BUDGET KICK-OFF
Transmittal of 2005- 07 General Fund budget – CAOs,
Council, Human Resources, ASD, Internal Service Funds
Thursday,
May 5
Finance Committee
Special Meeting Fire & Police
Tuesday,
May 10
Finance Committee
Special Meeting
Community Services, Library
Planning
Thursday,
May 12
Finance Committee
Special Meeting Public Works, General Fund Capital Improvement Projects
Tuesday,
May 17 Finance Committee
Public Works Internal Service Funds, Enterprise Funds,
including CIP – Storm Drain, Refuse, Waste Water Treatment;
Refuse Rate Schedule Revisions, External Services Fund
Thursday,
May 19
Finance Committee
Special Meeting
Utilities ( excluding Electric Fund) & CIP; Contracts Greater
than $ 85,000
Thursday,
May 26
Finance Committee
Special Meeting Utilities Electric Fund
Tuesday,
May 31
Finance Committee
Special Meeting Municipal Fee Schedule; Wrap Up
Monday,
June 20
City Council
BUDGET
ADOPTION
BUDGET ADOPTION
The Budget Process and Document
continued
6 City of Palo Alto 2005- 07 Budget
Level of Control and Changes to the Adopted Budget
Budgetary control, the level at which expenditures cannot legally exceed the
appropriated amount, is exercised at the fund level, the department level, and the
capital project level. Administrative policies provide guidelines on budget
transfers, the authorization necessary to implement transfers, and appropriations
after the budget is adopted. Generally there are two types of budget transfers:
Budget Adjustment: Budgetary control, the level at which expenditures cannot
legally exceed the appropriated amount, is exercised at the fund level, the
department level, and the capital project level.
Budget Amendment: This is an adjustment to the total appropriated amount
within a fund or department, which was not included in the original adopted
budget. These supplemental appropriations are presented to City Council in an
agenda report and require for approval, the passage by two- thirds vote of the City
Council. Unexpended appropriations automatically lapse at the end of the fiscal
year and are included in the ending fund balance calculations within each fund.
Reasons for initiating a Budget Amendment Ordinance ( BAO) include:
• Recognizing unanticipated revenue, which was not projected in the budget, and to
appropriate associated expenditure in the year received
• Appropriating additional funds from reserves
• Transferring dollars from the operating budget to the capital budget or vice versa
• Transferring between funds, departments or projects
• Amending the official “ Table of Organization” ( staffing changes) during the year
• Amending the Municipal Fee Schedule during the year
Understanding the
Document Layout
Changes to the layout in 2005- 07
Benchmarks: Benchmarks have been included in the budget document and replace
impact measures that were formerly in the budget document. Benchmarks are
shown for each department and, where applicable, at the division level in each
department. The benchmarks show input, output, efficiency, and effectiveness
measures. Where possible they are related to the City Auditor's Service Efforts and
The Budget Process and Document
continued
2005- 07 Budget City of Palo Alto 7
Accomplishments report. Benchmark data is not shown where prior year data is
not available. Benchmark data is shown for the 2005- 06 budget year.
Department Structure: The 2005- 07 budget represents the first two- year budget
built entirely around the City's new chart of accounts. A new financial hierarchy
has replaced the former structure of functional areas and major activities within
each department. Each department is now divided into divisions and sub- divisions.
The department financial tables in the 2005- 07 budget document have been
revised to reflect this change. Department financial information is now presented
at the department level and the division level. Since major activity detail no longer
exists further financial information is not presented beyond the division level.
Where further program cost detail is needed it is provided in a separate area on the
division page of the department.
Document Organization The budget document contains the General Fund, Enterprise Funds, Internal
Service Funds, Debt Service Funds, and Special Revenue Funds.
Funds: Local government budgets are made up of funds, which help to organize
and account for restricted resources. Each fund is considered a separate accounting
entity. Enterprise Funds are set up as self- supporting units similar to a business.
They account for the operation and maintenance of facilities and services that are
entirely paid by rates charged to residents or, in the case of Internal Service Funds,
to City departments. The City of Palo Alto owns and operates its own utilities with
the exception of refuse hauling and collection, which is contracted with an outside
firm. The budget document is divided into fund and department sections, which
contain the following components:
• Fund/ Department Overview - identifies key goals to be achieved during period
• New Program Update - reports on accomplishments with any new program/ activity
undertaken during the past two years
• Financial Summaries - revenues and expenditures by functional area and expense
category
• Council Priority Implementation - specifically cites activities related to City
Council's top five priorities
• Resource Level Changes - identifies major resource changes from the base budget
• Service Level Changes - describes changes to service delivery in the upcoming
period
• Comprehensive Plan Overview - incorporates the 1998- 2010 Comprehensive Plan
Implementation Plan into budget submissions
The Budget Process and Document
continued
8 City of Palo Alto 2005- 07 Budget
Financial and narrative information is provided in each of these areas. This format
allows the reader to review a fund budget at different levels of detail ranging from
an overview of the fund as a whole, to specific department program funding
requests.
Positions: Specific information related to the number of positions within a
particular department or fund, can be found on the Full Time Equivalent ( FTE)
line of each financial summary. Historical information on how these numbers have
changed is detailed under the Staffing Tab and within the Table of Organization. At
the fund and department levels, the number of personnel in each functional area is
shown. A detailed listing of regular, permanent positions and total cost is shown at
the beginning of each department/ fund, with the specific classifications noted in
the Table of Organization at the end of this document.
Understanding the
Details
Financial Summaries
Reflected in this document are actual revenues and expenditures for 2003- 04; the
2004- 05 Adjusted Budget; the 2005- 06 Adopted Budget; and the 2006- 07
Adopted- In- Concept Budget. The main focus of this discussion along with the
dollar amounts in the “ Budget Change” column, compares the 2004- 05 Adjusted
Budget with the 2005- 06 Adopted Budget. The 2005- 06 column is then compared
to the 2006- 07 Adopted- In- Concept column. This describes the changes from the
prior year's numbers and is the recommended method of showing budgetary
change by the Government Accounting Standards Board ( GASB).
Revenues: Total revenues are displayed for each department and fund. In each
department, revenues are shown as either internal or external depending on their
source. Revenues include fees collected for cost- recovery purposes by the
department or fund for specific services to the public ( external revenues), as well
as revenues received from other funds ( internal revenues). An example of internal
revenue includes the Electric Fund reimbursing the Attorney's Office for legal
services. The principal sources of external revenues are described in the Resource
Level narratives within each department.
Expenditures: Expenditures are displayed at the fund summary as well as the
department summary level. For example, the budget shows funding dedicated to
the Building Division in the Planning and Community Environment Department.
Basis of Accounting: The City's Governmental Fund ( General Fund, Special
Revenue Fund and Capital Project Fund) and Proprietary Fund Budgets
The Budget Process and Document
continued
2005- 07 Budget City of Palo Alto 9
( Enterprise Fund and Internal Service Fund) are developed using a modified
accrual basis of accounting. While the Governmental Fund is accounted for using
the modified accrual basis, the Proprietary Fund is accounted for using the full
accrual basis of accounting. Both of these bases are generally accepted accounting
principles ( GAAP).
Modified accrual basis of accounting recognize revenues when measurable and
available and records expenses when incurred while the full accrual basis of
accounting, records revenues when earned and recognize expenses when incurred,
regardless of when the related cash flows take place.
Fund/ Department Administration: The budget document includes an
administration function within each department- level financial summary. Typical
administration expense includes core staff who work on department- wide
priorities, as well as allocated costs from internal service funds.
Rates and Reserves
The General Fund ( GF) has two main reserves - the Budget Stabilization Reserve
( BSR) and the Infrastructure Reserve ( IR). City Reserve Policy has placed a cap of
18.5 percent of GF Expenditures on the BSR, with any excess going to the IR.
Financial Policy allows flexibility in determining the BSR cap amount within a
range of between 15 and 20 percent of expense.
In the Enterprise Funds, rates are the charges to customers for services provided,
such as electric and gas services. The total revenue generated by the rates covers
expenditures on an ongoing basis. Utility rate increases or decreases are typically
staggered to minimize volatility from one year to the next. When budgeted
revenues are not sufficient to cover budgeted expenditures in years between
planned rate increases, or in the case of emergencies or unforeseen changes in
either revenues or expenses, reserves are used to cover the difference. Council has
adopted a policy specifying the appropriate levels of reserves in each Enterprise
Fund. Typically, the budget will reflect either increasing or decreasing the reserves
to within Council- approved ranges. A reserves summary table is located at the
beginning of the Enterprise Funds section and within each individual fund
summary.
The Budget Process and Document
continued
10 City of Palo Alto 2005- 07 Budget
Special Revenue Funds
Special Revenue Funds account for revenues with certain restrictions on their
usage. These funds include gas tax funds from the State, in- lieu housing fees
assessed for the City's Below Market Rate housing projects, and transportation
mitigation fees paid by developers. Other funds in this category include:
assessments for parking lot bond payments, parking permit revenues, and
Community Development Block Grants ( CDBG) from the Federal Government.
Also included are development impact fees related to libraries, parks, and
community centers.
Internal Service Funds
Internal Service Funds provide printing and mailing, vehicle replacement and
maintenance, technology, and general benefits administration services to City
departments. These services are rendered on a cost recovery basis through user
charges. The Vehicle Replacement and Maintenance Fund manages citywide
maintenance and replacement of vehicles and equipment. The Printing and
Mailing Services fund accounts for central duplicating, and the printing/ mailing
services while the General Benefits and Insurance Fund accounts for the
administration of employee benefits, the City's self- insured worker's
compensation, payroll, and general liability programs.
The Technology Fund includes such activities as personal computer desktop,
software application, and technology infrastructure replacement and maintenance.
The Budget Process and Document
continued
2005- 07 Budget City of Palo Alto 11
Key Budget
Terms
Adjusted Budget:
Represents the adopted budget including changes made during the fiscal year.
Adopted Budget:
Annual City budget approved by the City Council on or before June 30.
Benchmarking Measures:
Benchmarks are included in the budget document and replace the former impact
measures. Benchmarks are shown for each department and where available at the
division level in each department. The benchmarks show input, output, efficiency,
and effectiveness measures. Where possible they are related to the City Auditor's
Service Efforts and Accomplishments report.
Capital Improvement Program ( CIP):
Accounts for projects related to the acquisition, expansion, or rehabilitation of the
City's buildings, equipment, parks, streets, and other public infrastructure.
Cross- Departmental Programs:
Programs or capital projects in which multiple departments participate.
Divisions:
Groupings of services performed under each functional area.
Funds:
Used by Local government budgets to organize and account for restricted
resources. Each fund is considered a separate accounting entity.
Infrastructure Management Plan ( IMP):
Subset of the capital improvement program with the focus of rehabilitating the
City's infrastructure on a continuing basis.
Proposed Budget:
The budget that is sent to the Finance Committee by the City Manager. The
proposed budget including changes made by the Finance Committee during their
review is approved by the Council and then becomes the adopted budget.
The Budget Process and Document
continued
12 City of Palo Alto 2005- 07 Budget
General Fund
This page is intentionally left blank.
2005- 07 Budget City of Palo Alto 15
General Fund Revenues
An Overview The City's “ Long Range Financial Plan ( LRFP): Forecast 2005- 2015,”
was presented to the Finance Committee in December 2004
( CMR: 492: 04) and to the full Council in January 2005 ( CMR: 139: 05).
The LRFP, and its ten- year revenue and expense forecast, is the foundation
upon which this adopted two- year budget is constructed. Projected deficits in the
forecast have been eliminated through a variety of revenue enhancements and
expenditure reductions identified in this budget.
The condition of the local and State economy has not changed significantly since
delivery of the LRFP. According to a recent observation by Joseph Hurd, a former
UCLA forecaster, “ for the Bay Area as a whole, it's mostly progress, but it's not
rapid.” While economic conditions have stabilized and trended slowly upward,
there are numerous factors that recommend caution in forecasting future revenue
streams. These include anemic local job creation, rising interest rates and oil
prices, increasing consumer debt, and State and Federal gridlock in solving severe
budget deficits. Reinforcement for this perspective is provided in a March 15,
2005 UCLA Anderson Forecast which stated “ that the current expansion in the
national economy is nearer its end than its beginning…[ and the Forecast sees] no
growth spurt on the horizon that will extend it much further.” Although the City
has seen a mild uptick in revenue sources such as sales and transient occupancy
taxes ( TOT), a fragile economy could easily constrain or reverse this growth.
Overall, City revenues are expected to increase by $ 4.8 million ( 4.2 percent) in
2005- 06 compared to the 2004- 05 adjusted budget. In 2006- 07 revenues are
expected to also increase by $ 5.0 million. The following sections discuss the City's
major revenue sources and their projected levels for 2005- 06 and 2006- 07.
Sales Tax
Sales tax revenues are expected to reach $ 19.0 million in 2005- 06. This represents
a $ 0.9 million or 4.0 percent increase over the 2004- 05 adjusted budget of $ 18.1
million. For 2006- 07, this revenue source is projected to grow to $ 19.8 million or
3.8 percent over 2005- 06 levels. In the second and third calendar quarters of
calendar year 2004, revenues increased over prior year quarters by 3.0 and 4.3
percent, respectively, demonstrating a mild turnaround from a long series of
quarterly declines. Since 2001 sales tax revenues have declined by $ 8.1 million.
Segments recently showing strength are department stores and restaurants while
sectors showing weakness include automotive and electric equipment sales.
Heavily dependent on Bay Area job growth and consumer spending, sales tax
performance is closely tied to the local economy. Although staff anticipates
T
General Fund
General Fund Revenues
continued
16 City of Palo Alto 2005- 07 Budget
moderate growth in revenues over the next few years, it is especially concerned
about potential auto dealership departures, steady competition from surrounding
malls and “ big- box” stores, and demonstrated community reluctance to develop
new sales tax revenue generators within City boundaries.
Property Tax
For 2005- 06, property tax revenues are anticipated to reach $ 17.0 million. This is a
$ 0.9 million or 5.5 percent increase over the 2004- 05 adjusted budget. Because of
sustained strength in residential property values, revenues from property taxes
have increased in the past several years. This trend is both welcome and somewhat
worrisome. It is welcome in that these revenue gains have offset steep declines in
other sources. It is worrisome in that the sharp rise in residential prices limits the
pool of buyers and could lead to a housing “ bubble” that results in a decrease in
assessed values. Since a “ bubble” appears unlikely at this time, property taxes are
anticipated to increase further in 2006- 07.
As described in the LRFP, property tax receipts now include the “ triple- flip”
quarter- cent sales tax ( sales tax kept by State to repay deficit bonds and repaid to
local jurisdictions via property tax remittances) and the “ in- lieu Vehicle License
Fee” payments. These payments, as well as the State takeaway of $ 1.5 million in
taxes, have been included in the 2004- 05 adjusted and the 2005- 06 adopted
budgets. In 2006- 07, the State is committed to reversing its current takeaway.
Between this and a projected $ 2.6 million increase in property taxes, property tax
revenues in 2006- 07 are projected to be $ 19.6 million, or 15.4 percent over 2005-
06 levels.
Transient Occupancy Tax ( TOT)
Another economically sensitive revenue source, TOT receipts are projected to
grow by $ 0.2 million or 2.8 percent in 2005- 06 ( for a total of $ 6.2 million) and by
another $ 0.2 million or 3.2 percent in 2006- 07 ( for a total of $ 6.4 million). During
the past several months, occupancy and daily rates have showed increases over
prior year performance. In high volume months, occupancy rates have risen from
55 to 58 percent to slightly above 60 percent. Similarly, average daily rates have
risen by around $ 10 per day. This trend is being replicated in the San Jose and
Peninsula areas.
Once again, while this a positive trend, there is reason for caution given hotel
competition on the City's southern and eastern borders. Stanford's recent
announcement of a high- end hotel on Sand Hill Road also may have an impact on
the City's future receipts. Staff has included the closing of Hyatt Rickey's into its
TOT projections.
General Fund Revenues
continued
2005- 07 Budget City of Palo Alto 17
Utility Users Tax ( UUT)
UUT revenues are anticipated to increase to $ 8.3 million, a $ 0.9 million or 12.8
percent increase over the 2004- 05 adjusted budget. Approximately $ 0.6 million of
this increase is due to projected utility rate increases. The remainder results from
the assumption that Verizon Wireless will begin collecting and paying utility user
taxes as required by City ordinance. This assumption derives from a recent court
ruling against Verizon's claim that it did not have to remit UUT revenues. Should
there be further court action and a delay in payment, a midyear adjustment in
2005- 06 may be necessary.
In 2006- 07, staff expects UUT revenue to rise to $ 9.0 million, a 8.1 percent
increase over 2005- 06. The UUT projections are based on Utilities Department
revenue forecasts and reflect rate levels in the adopted budget.
Other Taxes and Fines
This revenue category is comprised of motor vehicle in- lieu fees, documentary
transfer taxes, and fines and penalties.
As explained in the LRFP, as a line item, motor vehicle in- lieu fee revenue is
decreasing dramatically to $ 0.3 million in 2004- 05 and thereafter. This is a
consequence of a budget agreement between local jurisdictions and the State, in
which foregone VLF revenues will be backfilled by increased property taxes and
will reach their full level by 2006- 07 ( see Property Tax explanation above).
Like property taxes, documentary transfer taxes have remained steady in 2004- 05.
Staff anticipates that transfer taxes will rise from $ 3.7 million in 2004- 05 to $ 4.0
million in 2005- 06 and $ 4.4 million in 2006- 07. Rising residential and commercial
transactions have fueled the robust performance in this category. Projecting
transfer taxes is somewhat difficult in that the mix, volume and size of
transactions, which drive revenues, can change from year to year. Still, staff
believes that recent historical performance and the vitality of the property market
point to consistent revenue levels.
Revenue derived from parking fines is expected to increase by $ 0.1 million to $ 2
million in 2005- 06 due to an increase in the parking fine.
Charges for Services
This category is mainly comprised of external reimbursements and fee- for- service
payments generated by General Fund service departments such as Stanford
University payments for fire protection services ($ 6.5 million), paramedic fees
($ 1.5 million), and plan checking fees ($ 1.6 million). As compared to the 2004- 05
General Fund Revenues
continued
18 City of Palo Alto 2005- 07 Budget
adjusted budget, this category is projected to increase $ 0.7 million mainly due to a
$ 0.1 million increase in the Stanford fire agreement and increased fees to make the
individual review program cost recovery.
Fees, Permits and Licenses
Revenues in this category are decreasing $ 0.3 million from prior year adjusted
figures mainly due to a downward revision for street cuts fee revenue. The
reduction reflects lower street cut activity due to reduced development activity.
Return on Investment
During 2004- 05, the City's portfolio yield has declined to around 4.2 percent. As a
consequence of the maturity of investments having yields in the 5.0 to 6.0 percent
range and low interest instruments purchased in the past three years, staff projects
interest income of $ 2.2 million in 2005- 06 compared to the 2004- 05 adjusted
budget of $ 2.3 million. The Federal Reserve Board's recent spate of rate increases
is not expected to result in higher portfolio yields until 2006- 07.
Rental Income
The primary source for this reserve is the Enterprise Fund usage of City land for
their operations. This revenue is increasing $ 0.5 million ( 4 percent) to $ 12.3
million in 2005- 06.
Charges to Other Funds
This revenue category shows the reimbursement for General Fund services, such
as legal, human resources, public works, general administrative, and financial
services. This revenue is derived mainly from the Enterprise Funds and other
funds, and is based upon a mutually agreed reimbursement allocation. It represents
the estimated amount of expense associated with the services delivered.
Operating Transfers- In
Transfers in this category include equity transfers from the Enterprise Funds,
which represents a return on initial investment the City made when the Utility
Department was created more than 100 years ago. The equity transfers total $ 13.8
million, a stable 3 percent ($ 0.4 million) increase for 2005- 06, increasing by 3
percent again in 2006- 07.
2005- 07 Budget City of Palo Alto 19
General Fund Expenditures
An Overview otal General Fund ( GF) expense is projected to be $ 120.7 million in
2005- 06, a $ 4.7 million increase from prior year adjusted figures. In
2006- 07 General Fund expense is increasing $ 4.4 million. The main
elements of these changes include:
• $ 4.2 million ( 4.3 percent) reduction in ongoing General Fund base expense from
the eliminations of positions and department budget cuts
• $ 4.5 million ( 5.7 percent) million increase due to negotiated salary increases and
rising health care and pension costs
• $ 5 million transfer to the Capital Improvement Fund for infrastructure
To address the need for increased spending in certain areas as a result of shifting
priorities, departments were given the opportunity to reallocate resources.
Ongoing Cost Reductions ($ 4.2 million GF reduction)
The deficit addressed in the 2003- 05 budget resulted in a 5 percent reduction in the
General Fund expense base. This reduction was intended to eliminate the deficit in
those years as well as help towards eliminating the deficit in future years.
However, the
update to the Long
Range Financial
Plan, presented to
the City Council in
December 2004,
depicted a
continuing weak
economic condition
that would produce
even larger deficits
in future years than
originally
projected. The
LRFP projected
deficits of $ 5.2
million in 2005- 06
and $ 3.9 in 2006-
07. The 2005- 07
Adopted Budget
includes cuts that
will close these
T
2003- 05 Cut % 2005- 06 Base*
2005- 07
Ongoing Cuts
2005- 07 Cut
%
ATT - 10.30% 2,224 - 116 - 5.20%
AUD - 5.30% 783 - 13 - 1.66%
CLK - 2.30% 764 - 6 - 0.79%
COU - 1.60% 148 0 0.00%
MGR - 6.30% 1,776 - 181 - 10.19%
ASD - 6.90% 6,676 - 536 - 8.03%
HRD - 9.90% 2,310 - 149 - 6.47%
Total Admin. Depts. - 7.10% 14,681 - 1,001 - 6.82%
CSD - 5.50% 17,709 - 851 - 4.81%
FIR - 3.80% 18,806 - 439 - 2.33%
LIB - 4,869 - 169 - 3.47%
PLA - 5.10% 8,601 - 631 - 7.34%
POL - 4.50% 22,233 - 432 - 1.94%
PWD - 3.80% 11,236 - 701 - 6.24%
Total Line Dept. - 4.60% 83,454 - 3,223 - 3.86%
Total General Fund - 5.10% 98,135 - 4,224 - 4.30%
2005- 07 Proposed Department Reductions
* One- t ime it ems h av e been rem o ved from 2 0 0 4 - 0 5 ado pt ed budget . T h e base
budge t do es n o t in clude 2 0 0 5 - 0 6 sa lary an d be n e f it in c rea ses
General Fund Expenditures
continued
20 City of Palo Alto 2005- 07 Budget
Summary of Positions Eliminated in the General Fund
Dept Title FTE Salary & Benefit
ASD Manager, IT ( 1.00) ( 149,488)
CSD Arts & Culture Div Mgr ( 1.00) ( 153,117)
CSD Program Assistant ( 1.00) ( 78,761)
FIR Chief Off- Med Svcs EMT ( 1.00) ( 168,158)
LIB Librarian ( 1.00) ( 81,172)
MGR Office Specialist ( 0.25) ( 23,802)
Freeze Total ( 5.25) ( 654,499)
ATT Sr Asst City Atty ( 0.20) ( 38,428)
PLA Transp. Mgt. Coord ( 0.50) ( 52,368)
POL Code Enforcement Off ( 0.50) ( 50,488)
Reduction Total ( 1.20) ( 141,284)
ASD Sr Buyer ( 1.00) ( 94,284)
CSD Supt Parks ( 1.00) ( 128,373)
MGR Deputy Public Comm Officer ( 1.00) ( 79,263)
PWD Supv Public Works ( 1.00) ( 115,925)
Retirement Total ( 4.00) ( 417,845)
ASD Acct Spec ( 1.00) ( 74,842)
ASD Storekeeper ( 1.00) ( 74,480)
CSD Golf Cor Mt Person ( 1.00) ( 76,199)
FIR Battalion Chief - Reg/ EMT ( 1.00) ( 168,158)
FIR Coord Environ Protec ( 1.00) ( 161,983)
Vacancy Total ( 5.00) ( 555,662)
ASD Manager, IT ( 1.00) ( 149,488)
ASD Sr Technologist ( 4.00) ( 540,000)
CSD Supv Rec Prog ( 1.00) ( 110,376)
CSD Office Specialist ( 1.00) ( 71,406)
MGR Executive Assistant ( 1.00) ( 107,466)
PLA Plans Check Engr ( 1.00) ( 122,829)
POL Code Enforcement Off ( 1.00) ( 100,976)
POL Community Service Off ( 1.00) ( 73,667)
POL Office Specialist ( 1.00) ( 71,406)
POL Staff Secretary ( 1.00) ( 77,586)
PWD Bldg Serviceperson ( 1.00) ( 63,930)
PWD Program Assistant ( 0.50) ( 39,380)
Layoff Total ( 14.50) ( 1,528,512)
2005- 06 Total ( 29.95) ( 3,297,802)
projected deficits in each fiscal year. As
first indicated in the 2004- 05 Adopted
Budget further cuts will impact service-delivery
to the community. The table
below summarizes the cuts over the 2003-
05 period and the 2005- 07 period:
The cuts in 2005- 06 include further
elimination of vacant positions in
addition to the laying- off of currently
filled positions. The positions listed in the
chart to the left are due for elimination in
the 2005- 06 budget:
The elimination of these positions
represent a 3 percent reduction in General
Fund authorized staffing levels, and a 4
percent reduction in salary and benefit
expense. In addition, three positions that
were frozen in the 2004- 05 budget remain
frozen in the 2005- 07 budget.
Increasing Employee Salary and Benefit
Expense ($ 4.5 million GF increase)
The 2005- 07 Adopted Budget contains
funding for previously negotiated salary
increases and for increasing benefit costs:
• International Association of Fire
Fighters ( IAFF) employees increase -
($ 0.3 million). An average 3.5
percent increase for employees for the
fiscal year. The IAFF contract expires
6/ 30/ 06.
• Palo Alto Peace Officers' Association
( PAPOA) cost- of- living adjustment -
($ 0.3 million) A 3.0 percent increase
for employees for the fiscal year. The
PAPOA contract expires 6/ 30/ 07
• Service Employees International Union
( SEIU) employees increase - ($ 1.4 million) An average 3.5 percent increase for
employees for the fiscal year. The SEIU contract expires 4/ 30/ 06.
General Fund Expenditures
continued
2005- 07 Budget City of Palo Alto 21
• Pension Contribution Increase - ( Citywide $ 4.6 million increase, 29 percent) The
2005- 07 Adopted Budget includes a third year of increased pension costs. These
percent- of- pay rates become effective 7/ 1/ 05: Miscellaneous - 12 percent; Fire
Safety - 27 percent; Police Safety - 27 percent. In addition, the employee
contribution adds another 7 - 9 percent to these costs.
• Health care Premiums - ( Citywide $ 0.5 million increase, 5 percent) Health care
premiums have increased 50 percent over the past four years.
Internal Service Fund Allocation Increased Allocation ($ 1.0 million GF
increase)
Intended as a one- time budget reduction strategy in 2004- 05 the GF contribution to
the Technology Fund was reduced $ 3.5 million. This reduced the Technology Fund
reserve balance to approximately $ 8 million. The 2005- 04 Adopted Budget
indicated that the GF contribution to the fund would resume in 2005- 06. The GF
will increase its contribution by $ 1.0 million in 2005- 06 and $ 1.0 million in 2006-
07 and is expected to return to a full contribution by 2007- 08. The Technology
Fund reserve balance is projected to be $ 5.4 million in 2005- 06 and $ 5.7 million in
2007- 08. The reserve balance will be monitored and adjusted based on the needs of
the fund.
Non- Departmental Expenditures
Payments to PAUSD:
This category includes two types of expense. The first type involves costs not
associated with a particular department such as the direct support of the Palo Alto
School District ( PAUSD) of $ 6.0 million as part of the lease and covenant not to
develop the Cubberley Community Center.
Contingency Spending:
The second type is budget dollars eventually transferred to another department in
order to fund unexpected expense. This includes City Manager and City Council
contingency spending as well as compensation increases to be allocated to
department budgets later in the year.
Operating Transfers- Out
The GF maintains obligations to other funds such as the Storm Drainage Fund,
Capital Fund and Debt Service Funds. Operating transfers are a means of moving
resources between funds and are not considered an expense. Operating transfers-out
are projected to be $ 6.6 million and $ 6.8 million in 2005- 06 and 2006- 07
respectively. Some of the larger transfers include $ 5.0 million to the Capital Fund
and $ 0.6 million to the Storm Drainage Fund.
General Fund Expenditures
continued
22 City of Palo Alto 2005- 07 Budget
Reserves
The Budget Stabilization Reserve ( BSR) is projected to remain at stable levels just
below its 18.5 percent of expenditures cap of $ 21.5 million over the next two
years. This is within the 15 to 20 percent reserve policy.
Long Range Financial Plan ( LRFP)
As presented to the Finance Committee in December 2004, the LRFP played a
critical role in the development of much of the fundamental analysis in this budget
presentation. The model is included in this document, with the 2005- 07 years
updated with adopted budget figures. While a continuing a careful balance
between projected revenues and expenditures, the model continues to indicate GF
stability for the next several years. As updated with the 2005- 07 Adopted Budget
the LRFP indicates that projected future deficits will be eliminated by
implementation of the 2005- 07 spending plan. The complete LRFP document is
available on the City's website.
Citywide Operating Fund Balances Statement
An organization- wide operating fund statement is included in the financial
summaries that follow this discussion. Internal service fund activities are not listed
separately as the expenses surrounding these activities have been allocated to all
funds receiving the service, thus are included as expense within those funds.
Capital fund activities are captured as a net transfer of fund balance and also are
not included on this operating statement. Here are the highlights from the 2005- 07
summary:
• Total City revenues are projected to be $ 348 million in 2005- 06 and $ 368 million in
2006- 07
• Total City expenditures are projected to be $ 363 million in 2005- 06 and $ 370
million in 2006- 07
• Total fund balances are projected to be $ 265 million in 2005- 06 and $ 262 million in
2006- 07
2005- 07 Budget City of Palo Alto 23
General Fund
Service Level Changes
An Overview he 2005- 07 adopted General Fund ( GF) budget includes a $ 4.2 million
ongoing reduction in the expense base. This reduction includes the
elimination of 30 positions among other department reductions. The
reductions are based on the service prioritization process that ranked
services based on the following criteria: 1) legally mandated, health and public
safety; 2) Council top 5 priority/ milestone, revenue generating/ self supporting/
allocated cost, necessary for proper organizational management; 3) enhances
productivity/ customer service, program targets at- risk children/ teens/ seniors; 4)
other. The prioritization process identified services to reduce in order to achieve
cost reductions. The criteria and initial service prioritization was review by the
City Council in January 2005 ( CMR: 144: 05). Combined with the service
prioritization ranking, and included below where relevant, is the result of a citizen
survey where respondents where asked to rank services as more important or less
important.
Below is a summary of the major service reductions that are a result of the cost
reductions included in this budget. Included in the description of each reduction
listed is the prioritization criteria used to rank the service as well as the citizen
survey ranking. Additional detail on service reductions is included in the
department sections within the budget document.
City Manager: ($ 0.2 million reduction, 10 percent)
• Elimination of Executive Assistant position: will require the Economic
Development staff to prioritize economic development duties. A number of
business outreach activities will be eliminated such as: the Quarterly Economic
Forum, the maintenance of a broker contact list, and the maintenance of the
available business sites list as well as commercial vacancy data. ( Prioritization
Criteria # 2)
• Elimination of Deputy Public Communications Officer position ( February 2006):
will mean slower response to citizens complaints to Council, reduced ability to
respond personally and in detail to individual resident concerns, elimination of
City's cable television show - City Beat, and elimination of the City Works hot
line. ( Prioritization Criteria # 3; Citizen Survey Less Important)
T
General Fund
continued
24 City of Palo Alto 2005- 07 Budget
City Attorney: ($ 0.1 million reduction, 5 percent)
• Elimination of 0.20 FTE Senior Assistant Attorney position: the impact of this
reduction is unknown at this time, but it is anticipated that response times on
work requests may be adversely affected. ( Prioritization Criteria # 2)
• Reduction in Outside Counsel funding: may adversely affect response times and
specialized outside counsel may be unavailable for staff or council requests.
• Elimination of Contract Agency funding: department will be unable to obtain
temporary clerical support to cover the clerical support staff when they are on
vacations or leave. This may slightly increase the workload for existing support
staff.
Administrative Services Department: ($ 0.5 million reduction, 8 percent)
• Elimination of 1.0 FTE Storekeeper: necessitating the service level reductions in
delivery operations to allow the Warehouse to cover core functions. Services
targeted for reduction are: the delivery of donated books from the City's libraries
to the Friends of the Library operations at Cubberley; the delivery of mail and
other items among fire stations; and deliveries that can be performed directly by
vendors that staff has negotiated. ( Prioritization Criteria # 2)
• Reduction in contract services: may reduce response times and service levels across
the department, especially when divisions are not fully staffed.
• Due to the elimination of four Senior Technologists, one IT Manager, and other
budget reductions, service levels will be impacted in the following areas:
- Loss of one Senior Technologist: SAP BASIS administration and database
administration will need to be transitioned to an existing back- up support staff
position ( a Senior Technologist). This will result in an increased workload for this
staff position. Because the existing back- up position is relatively inexperienced in
a primary support role for BASIS administration and database administration,
temporary contract support services may need to be acquired periodically.
- Loss of one Senior Technologist: SAP BASIS administration back- up will need
to be transitioned to an un- trained staff position. Training will need to be provided
for this staff position. Library system support will be transitioned to a
combination of Client Services and an existing staff position ( a Senior
Technologist). This will result in an increased workload for these staff positions.
- Loss of one Senior Technologist: SAP ABAP development will need to be
transitioned to other SAP ABAP trained staff. CORE support and IFAS support
will need to be temporarily contracted until existing staff can obtain the
knowledge. IFAS support should be limited with the migration of accounting
services to SAP but CORE support will be ongoing. This will result in an
increased workload for these staff positions.
General Fund
continued
2005- 07 Budget City of Palo Alto 25
- Loss of one Senior Technologist: BANNER CIS support will need to be
transitioned to an existing back- up support staff position ( a Senior Technologist).
Because the existing back- up position is relatively inexperienced in a primary
support role for BANNER CIS, temporary contract support services may need to
be acquired periodically. The evaluation of migrating BANNER CIS
functionality to SAP will need to be postponed. This will result in an increased
workload for this staff position.
- Loss of one IT Manager: due to the significant reduction of Senior
Technologists, the requirement for IT managers has been reduced. Existing
responsibilities will be distributed among other IT management staff. This will
result in an increased workload for these staff positions.
- The bottom- line effect of the above reductions will be additional workload for
staff being transitioned from back- up to primary support as well as for staff who
will be taking on new back- up responsibilities. The effect on management will be
an increase in direct reports and additional project management responsibilities.
Due to the staff reductions, it will be necessary to contract for consulting services
for any enterprise application upgrades. There will potentially be increases in
service delivery times until staff is sufficiently trained in their new roles and
become accustomed to the increased workload.
- Factoring- in the cuts in the department’s technology fund increases the total cut
for the Administrative Services Department to over 12 percent.
Community Services: ($ 0.9 million reduction; 5 percent)
• Freeze Arts & Culture Division Manager position. ( Prioritization Criteria # 2)
• Elimination of Parks Superintendent position effective January 1, 2006: will defer
park planning, reduce contract oversight and increase workload and span of
control for two park supervisors and division manager. ( Prioritization Criteria # 1)
• Eliminate Golf Maintenance Person position: will result in lower maintenance
standard. Less coverage for mowing, edging, trimming and clean up during staff
injury. ( Prioritization Criteria # 2)
• Eliminate Recreation Supervisor position: will eliminate existing youth program;
some program elements could be transferred to local nonprofit agencies.
( Prioritization Criteria # 2)
• Eliminate Office Specialist: will eliminate staff responsible for program
registration in one location. Centralized location for north and south of Palo Alto
will be a possible scenario.
• Reduce temporary salaries by $ 0.3 million department- wide: will decrease number
of programs offered to the community
• Eliminate facility and security maintenance contract at Parks and Golf:
maintenance will have to be done in- house ( Prioritization Criteria # 2)
General Fund
continued
26 City of Palo Alto 2005- 07 Budget
• Reduce landscape pesticide contract at Parks and Golf: might increase gopher and
squirrel population; might decrease playable area.
• Reduce planting materials at Parks and Golf: will reduce sand, seed and fertilizer
resulting in deterioration of turf; will reduce tree planting and sod repair.
• Reduce softball and running track maintenance to every two years ( Prioritization
Criteria # 3)
Human Resources Department: ($ 0.2 million reduction, 6 percent)
• Reduction in the special event program: possibly fewer employee recognition
events. ( Prioritization Criteria # 4)
• Reduction in program and project consultants and contract services: may reduce the
additional level of service provided to other departments.
• Reduction in advertising: may have the effect of drawing fewer highly qualified
candidates.
Planning and Community Environment ($ 0.6 million reduction, 7 percent)
• Elimination of three hourly building inspectors and one hourly inspection
scheduler: the Building Division will be unable to provide timely inspections to
all customers during high- volume times of the year. In addition, the loss of
administrative support will mean the Development Center will be closed during
the noon hour, when customer volume is lowest, and permits will no longer be
issued by fax. ( Prioritization Criteria # 2)
• Elimination of the Neighborhood Traffic Calming Program: rather than spot
treatment of traffic calming, Transportation staff would focus on improvement of
school commute corridors such as Charleston/ Arastradero. ( Prioritization Criteria
# 2)
• Elimination of 0.5 FTE Transportation Management Coordinator dedicated to the
administration of the Neighborhood Traffic Calming Program. ( Prioritization
Criteria # 2)
• Elimination of 1.0 FTE Plan Check Engineer: it will take longer for customers to
obtain a building permit. ( Prioritization Criteria # 2)
Public Works Department ($ 0.7 million reduction, 6 percent)
Engineering
• Elimination of 2 temporary engineering positions may result in deferral or delay of
some future IMP projects.
General Fund
continued
2005- 07 Budget City of Palo Alto 27
Facilities Management
• Elimination of 1.0 FTE Building Serviceperson for custodial services: will reduce
the frequency of cleaning at the Civic Center. ( Prioritization Criteria # 1)
Operations
• Transfer of sidewalks operations to sidewalks CIP: will extend the backlog of
sidewalks projects, however the sidwalks CIP funding will remain at $ 2 million.
( Prioritization Criteria # 1)
• Elimination of 0.5 FTE Program Assistant position for the graffiti program: will
result in a longer response time for various graffiti removal requests.
( Prioritization Criteria # 1)
• Elimination of 1.0 FTE Supervisor- Public Works: will result in a restructuring and
redistribution of workload among existing management staff. ( Prioritization
Criteria # 1)
Fire Department ($ 0.4 million reduction, 2 percent)
• Elimination of Environmental Coordinator ( 1.0 FTE): reduces the staffing level in
the Fire Prevention Bureau to six personnel. This may increase the period
between inspections for some hazardous materials facilities and will impact
oversight and management of the Fire Prevention Bureau by increasing the work
responsibilities of the Fire Marshal. ( Prioritization Criteria # 2)
• Elimination of Battalion Chief, SLAC ( 1.0 FTE): eliminates immediate and direct
liaison/ coordination with Stanford Linear Accelerator Center ( SLAC)
representatives; attendance and participation in SLAC Safety and other important
meetings will be delegated to the Station # 7 Captain or on- duty shift Battalion
Chief resulting in loss of continuity; reduces staff by 20 percent available to
respond to workday and after- hours emergencies; eliminates availability for
covering shift Battalion Chief absences during the day which may result in
additional overtime costs; coordination for scheduling department public demos
and station tours will be impacted; elimination of coordination and participation
in recruitment/ selection processes for the department
• Freeze Chief Officer position: Emergency Medical Services ( 1.0 FTE): reduces
work day and after- hour staff availability by additional 20 percent for response to
emergencies; eliminates availability for covering shift Battalion Chief absences
resulting in additional overtime costs; reduces Chief Officer oversight for the
Emergency Medical Services Division; increases workload for EMS Coordinator
and EMS Office Specialist ( Prioritization Criteria # 1; Citizen Survey More
Important)
General Fund
continued
28 City of Palo Alto 2005- 07 Budget
Police Department ($ 0.4 million reduction, 2 percent)
• Reduction of 0.5 FTE Code Enforcement Officer: delays processing and issuances
of applications associated with taxis, massage practitioners, pushcart vendors,
and door- to- door vendors; eliminates joint code enforcement efforts with
Planning and Public Works Departments ( Prioritization Criteria # 3)
• Elimination of 1.0 FTE Community Service Officer and 0.75 FTE Code
Enforcement Officer: delays response time to minor violations such as lost and
found property, parking complaints, noise complaints, and other Municipal code
violations;
• Elimination of 1.0 FTE Office Specialist: reduces the amount of direct answering
of phones in the Investigation division; increases workload for Property and
Evidence Technicians ( Prioritization Criteria # 1)
• Elimination of 1.0 FTE Staff Secretary: reduces the amount of direct answering for
traffic and parking related calls; a majority of the calls will be forwarded to
voicemail
• Reduction of 2.0 FTE hourly Clerks: delays data entry and purging of police
reports; delays front counter assistance to the public; requires creation of new pay
codes and training for Police Officers and Dispatchers
• Removal of funding of one canine in the Patrol division: results in less effective
searching of suspects; possible increase in suspect and officer injuries due to
violent encounters; reduces participation in public relation events; Patrol division
will seek funding from an alternative source ( Prioritization Criteria # 3)
2005- 07 Budget City of Palo Alto 29
City Council’s Top Five Priorities-
Budget Implications
An Overview epartment budget sections include a list of specific programs and/ or
services that further the Council's top- five priorities. The following is a
summary of these services, programs and activities included in the
2005- 07 Adopted Budget. Along with these items are estimates of budget dollars
dedicated to delivery of the service or the performance of the activity. These
estimates are based on the cost of department divisions from which services are
delivered in combination with capital project costs where applicable. Divisions
may provide multiple services and the costs for individual services may not be
delineated, therefore the costs below are estimates.
Affordable Housing
$ 1,825,000 Administrative Services Department ( Real Estate division) - $ 15,000
• Administration of land acquisition for below- market- rate ( BMR) housing
• Review of BMR housing units for resale by the Palo Alto
Housing Corporation
Planning and Community Environment - $ 1,665,000
• Complete the Below Market Rate Program Update
• Develop a site plan and prepare the Alma Substation site
for an affordable housing project ( to be done in
conjunction with Utilities and Real Estate)
• Work with Real Estate to identify and acquire an additional
site for an affordable housing project
Other Department Activities
• City Manager's Office staff time - $ 20,000
• City Attorney's Office staff time - $ 125,000
Infrastructure
$ 47,964,000 Public Works
Buildings and Facilities - $ 24,332,000
$ 13,007,000 Operating expenses
D
SOFA / Channing St.
City Council’s Top Five Priorities- Budget Implications
continued
30 City of Palo Alto 2005- 07 Budget
$ 11,325,000 CIP expenses
• Americans With Disabilities Act Compliance
• Animal Shelter Expansion & Renovation
• Art Center Electrical & Mechanical Upgrades
• Baylands Interpretive Center Improvements
• Building Systems Improvements
• Cambridge Parking Structure Improvements
• Civic Center Infrastructure Improvements
• Cubberley Community Center Campus Fire Alarm
System
• Cubberley Mechanical & Electrical Upgrades
• Cubberley Restroom Upgrades
• Cubberley Wing I Elevator Upgrade
• Fire Station Improvements
• Foothills Park Interpretive Center Improvements
• General Buildings Study
• Facility Interior Finishes Replacement
• College Terrace Library Improvements
• Mitchell Park Library & Community Center Improvements
• Municipal Service Center Renovation
• Roofing Replacement
• Ventura Buildings Improvements
• San Antonio Bridge Structural Repairs and Maintenance
• Alma Street Landscape Improvements
• Boulware Park Improvements
• Bowden Park Improvements
• California Avenue Fountain Repair
• Cogswell Plaza Improvements
• Cubberley Landscaping
• Cubberley Turf Renovation
• Hoover Park Improvements
Page Mill Rd.
City Council’s Top Five Priorities- Budget Implications
continued
2005- 07 Budget City of Palo Alto 31
• Hopkins Park Improvements
• Johnson Park Improvements
• Mitchell Park Facilities Improvements
• Ramos Park Improvements
• San Antonio Medians
Streets and Sidewalks - $ 13,686,000
$ 5,353,000 Operating expenses
$ 8,333,000 CIP expenses
• Sidewalk Repairs
• Street Maintenance
Community Services Department
Parks and Open Spaces - $ 6,817,000
$ 634,000 Operating expenses
$ 6,183,000 CIP expenses
• Park trails
• Open Spaces, Lakes, and Ponds
• Baylands Park Improvements
• Park Facilities Improvements
Traffic and Transportation - $ 171,000
$ 15,000 Operating expenses
$ 156,000 CIP expenses
Other Department Activities:
City Manager's Office staff time - $ 100,000
City Attorney's Office staff time - $ 98,000
Jerry Bowden Park
City Council’s Top Five Priorities- Budget Implications
continued
32 City of Palo Alto 2005- 07 Budget
Land- Use Planning
$ 4,225,000
Planning and Community Environment - $ 3,630,000
• Complete Zoning Ordinance Update sections:
• Single Family ( R- 1) Residential District
• Low Density Residential Districts
• Multi- Family Residential Districts ( RM15, - 30, and - 40)
• Village Residential Districts ( R- 1 and RM15 subdistricts)
• Commercial Districts and Mixed Use ( CN, CS, CD)
• Parking Chapter
• Pedestrian/ Transit Oriented Development
• Planned Community Special Purpose District
• Community Services Department
• Support the field- task force in finding additional playing fields for Palo Alto’s
youth.
Other Department Activities:
City Manager's Office staff time - $ 20,000
City Attorney's Office staff time - $ 35,000
Public Works Operational expenditures - $ 540,000
Alternative
Transportation and
Traffic Calming
$ 5,858,000 Police Department - $ 3,190,000
• Continue to focus on speed reduction, red light violations, and bicycle and
pedestrian safety.
• Participate in “ You Drink, You Drive, You Lose” and under- age drinking decoy
operations with the goal of reducing the number of victims killed and injured in
alcohol- related motor vehicle accidents.
Planning and Community Environment - $ 2,615,000
• Implement Maybell/ Donald Bicycle Boulevard, as described in the Palo Alto
Bicycle Transportation Plan
• Implement College Terrace Traffic Calming Plan Trial
City Council’s Top Five Priorities- Budget Implications
continued
2005- 07 Budget City of Palo Alto 33
• Complete Transportation Performance Indicators, as described in the
Transportation Strategic Plan
• Implement Park Boulevard Bicycle Boulevard, as described in the Palo Alto
Bicycle Transportation Plan
• Implement Charleston- Arastradero Corridor Plan Trial
Other Department Activities:
City Manager's Office staff time - $ 20,000
City Attorney's Office staff time - $ 33,000
City Finances
$ 234,000 Administrative Services Department - $ 65,000
• Complete analysis of proposed revenue enhancements ( Administrative Services)
• Update and presentation of Long Range Financial Plan ( Administrative Services)
• Oversee reduction in staffing and related services in General Fund to address long-range
financial restructuring. Work with council and community on revenue
retention/ generation options. ( City Manager)
• Provide extensive support to Human Resources Department for issues relating to
reduction in staff. ( City Attorney)
• Continue to ensure the accuracy of financial information through the annual
external financial audit ( City Auditor)
• Continue to provide independent, impartial assessment of City government
performance through the Service Efforts and Accomplishments report ( City
Auditor)
Traffic Calming
City Council’s Top Five Priorities- Budget Implications
continued
34 City of Palo Alto 2005- 07 Budget
• Conduct on- going audits of sales, property, documentary transfer, and utility user's
taxes ( City Auditor)
• Conduct performance audits ( City Auditor)
Community Services Department - $ 55,000
• Propose to increase municipal fees for various programs and classes. Propose
increase will generate approximately $ 0.6 million annually.
Police Department - $ 50,000
• Enhance regionalized communication with other public safety agencies through the
training and implementation of the new countywide inter operability system
• Pursue alternative funding sources to maintain authorized number of canines in
Patrol division
• Raise funds for innovative programs, equipment, and facilities through the newly
established non- profit Palo Alto Police Foundation
Other Department Activities:
• City Attorney's Office staff time: $ 64,000
Overall, the annual estimated 2005- 07 Adopted Budget impact related to Council
top priorities is:
Affordable Housing $ 1.8 million
Infrastructure $ 48.0 million
Land- Use Planning $ 4.2 million
Alternative Transportation $ 5.9million
City Finances $ 0.2 million
TOTAL: $ 60.1 million
Summary The 2005- 07 Adopted Budget has directed $ 60.1 million annually towards the
Council Top 5 Priorities, which is above the $ 34.0 million identified in 2003- 05.
Additional annual spending includes: $ 0.3 million increase on Affordable
Housing; $ 26.1 million increase on Infrastructure projects; $ 0.3 million decrease
on Land- Use Planning; $ 0.5 million increase in Alternative Transportation; and
$ 0.5 million decrease on City Finances in the Administrative Services Department.
2005- 07 Budget City of Palo Alto 35
GENERAL FUND SUMMARY
($ 000)
2003- 04
Actual
2004- 05
Adopted
Budget
2004- 05
Adjusted
Budget
2005- 06
Adopted
Budget
2005- 06
Budget
Change
2006- 07
Adopted- in-
Concept
Budget
2006- 07
Budget
Change
REVENUES
Sales Tax 18,151 18,335 18,100 19,036 936 19,751 715
Property Tax 13,740 13,600 16,093 16,986 893 19,613 2,627
Transient Occupancy Tax 5,489 5,800 6,000 6,173 173 6,401 228
Utility Users Tax 7,156 7,392 7,392 8,341 949 9,016 675
Other Taxes and Fines 11,295 9,526 6,382 6,845 464 7,308 463
Charges for Services 15,985 18,296 18,079 18,760 681 19,022 262
Permits and Licenses 2,940 4,397 4,127 4,084 ( 42) 4,136 51
Return on Investment ( 123) 2,360 2,300 2,215 ( 85) 2,215 0
Rental Income 11,545 11,776 11,845 12,332 487 12,332 0
From other agencies 430 61 317 204 ( 112) 81 ( 123)
Charges to Other Funds 8,957 9,309 9,309 8,924 ( 385) 8,979 55
Other Revenue 1,497 1,322 1,317 1,721 404 1,272 ( 449)
Total Revenues $ 97,062 $ 102,173 $ 101,260 $ 105,621 $ 4,362 $ 110,125 $ 4,504
Operating Transfers- In 17,888 14,619 14,632 15,108 476 15,584 477
TOTAL SOURCE OF
FUNDS $ 114,950 $ 116,792 $ 115,891 $ 120,729 $ 4,838 $ 125,709 $ 4,980
General Fund Summary continued
36 City of Palo Alto 2005- 07 Budget
EXPENSES
City Attorney 2,376 2,545 2,850 2,743 ( 107) 2,805 62
City Auditor 699 803 833 839 5 872 33
City Clerk 895 782 802 923 121 854 ( 69)
City Council 269 148 158 164 6 164 0
City Manager 1,731 1,799 1,958 1,751 ( 208) 1,769 18
Administrative Services 6,667 6,736 6,754 6,344 ( 409) 6,850 505
Community Services 19,677 19,618 19,661 19,635 ( 27) 19,571 ( 63)
Fire 18,798 18,837 19,098 20,160 1,062 20,726 565
Human Resources 2,303 2,409 2,461 2,355 ( 106) 2,465 110
Library 4,794 5,251 5,182 5,633 451 5,802 168
Planning and Community 8,516 8,839 8,944 8,766 ( 178) 9,001 236
Police 21,966 22,422 22,460 24,314 1,854 25,360 1,045
Public Works 10,574 11,262 11,358 11,451 92 11,839 389
Non- Departmental 5,957 8,063 6,520 9,043 2,522 10,232 1,190
Total Expenses $ 105,221 $ 109,513 $ 109,040 $ 114,120 $ 5,080 $ 118,310 $ 4,190
Operating Transfers Out 9,187 6,502 6,928 6,572 ( 356) 6,765 192
TOTAL USE OF FUNDS $ 114,408 $ 116,015 $ 115,968 $ 120,692 $ 4,724 $ 125,074 $ 4,382
Net Surplus ( Deficit) $ 542 $ 777 $( 77) $ 37 $ 114 $ 635 $ 598
EXPENDITURES BY CATEGORY
2003- 04
ACTUALS
2004- 05
ADJUSTED
BUDGET
2005- 06
ADOPTED
BUDGET
2005- 06
BUDGET
CHANGE
2006- 07
ADOPTED- IN-CONCEPT
BUDGET
2006- 07
BUDGET
CHANGE
Salaries and Benefits 72,316,341 77,106,289 81,572,572 4,466,283 82,693,638 1,121,066
Contract Services 9,110,355 10,149,367 9,340,938 ( 808,429) 9,360,438 19,500
Supplies and Materials 2,968,144 3,231,714 3,130,478 ( 101,236) 3,133,978 3,500
General Expense 8,487,430 8,826,086 8,971,745 145,659 9,035,245 63,500
Rents and Leases 712,672 589,234 597,189 7,955 597,189 0
Facilities and Equipment Purchases 360,607 568,368 500,304 ( 68,064) 484,504 ( 15,800)
Allocated Charges 11,265,790 8,569,093 10,006,793 1,437,700 13,004,688 2,997,895
Operating Transfers Out 9,187,075 6,928,200 6,572,356 ( 355,844) 6,764,573 192,217
TOTAL EXPENDITURES $ 114,408,414 $ 115,968,351 $ 120,692,375 $ 4,724,024 $ 125,074,253 $ 4,381,878
($ 000)
2003- 04
Actual
2004- 05
Adopted
Budget
2004- 05
Adjusted
Budget
2005- 06
Adopted
Budget
2005- 06
Budget
Change
2006- 07
Adopted- in-
Concept
Budget
2006- 07
Budget
Change
2005- 07 Budget City of Palo Alto 37
GENERAL FUND RESERVES
($ 000)
2003- 04
Actual
2004- 05
Adopted
Changes
2004- 05
BAO’s
Projected
06/ 30/ 05
2005- 06
Projected
Changes
Projected
06/ 30/ 06
2006- 07
Projected
Changes
Projected
06/ 30/ 07
RESERVES
Budget Stabilization Reserve ( BSR) Activity:
BSR 21,467 777 ( 854) 21,390 37 21,427 635 22,062
BSR Transfer to Infrastructure
Reserve in Capital Fund due to
18.5% cap
Infrastructure Reserve ( IR) Activity: *
Infrastructure 35,881 ( 32,635) ( 3,246) 0 0 0 0 0
Transfer from BSR due to cap
Other Reserve Activity:
Encumbrance & Reappropriation 3,374 3,374 3,374 3,374
Equity Transfer Stabilization 2,338 2,338 2,338 2,338
Inventory of Materials & Supplies 2,506 2,506 2,506 2,506
Notes Receivable 1,256 1,256 1,256 1,256
TOTAL RESERVES $ 66,822 $( 31,858) $( 4,100) $ 30,864 $ 37 $ 30,901 $ 635 $ 31,536
* IR was transferred to the Capital
Fund in 2004- 05.
38 City of Palo Alto 2005- 07 Budget
GENERAL FUND REVENUES BY TYPE
$ 120.7 Million / Adopted 2005- 06
Charges to other
Funds
7%
Return on
Investment
2%
From other
Agencies
Less than 1%
Utility Users
Tax
7%
Other Taxes
and Fines
6%
Transient
Occupancy
Tax
5%
Property
Tax
14%
Rental
Income
10%
Permits &
Licenses
3%
Charges
for Services
16%
Other
Revenue
1%
Operating
Transfers- In
13% Sales Tax
16%
3 Year Trend - Revenues ($ Millions)
$ 0
$ 5
$ 10
$ 15
$ 20
$ 25
$ 30
Sales Tax
Property Tax
Transient Occupancy Tax
Utility Users Tax
Other Taxes and Fines
Charges for Services
Permits & Licenses
Return on Investment
Rental Income
From other Agencies
Charges to other Funds
Other Revenue
Operating Transfers- In
2004- 05 Adjusted
2005- 06 Adopted
2006- 07 In Concept
2005- 07 Budget City of Palo Alto 39
GENERAL FUND EXPENDITURES BY TYPE
$ 120.7 Million / Adopted 2005- 06
Non- Departmental
7%
Operating
Transfers- Out
5%
Police
20%
Community
Services
16%
Administration
13%
Public Works
10%
Planning &
Community
Environment
7%
Library
5%
Fire
17%
3 Year Trend - Expenditures ($ Millions)
$ 0
$ 5
$ 10
$ 15
$ 20
$ 25
$ 30
Administration
Community
Services
Fire
Library
Planning
Police
Public Works
Non-
Departmental
Operating
Transfers- Out
2004- 05 Adjusted
2005- 06 Adopted
2006- 07 In Concept
40 City of Palo Alto 2005- 07 Budget
GENERAL FUND LONG RANGE FINANCIAL
PLAN
($ 000) 2003- 04 2004- 05 2005- 06 2006- 07 2007- 08 2008- 09 2009- 10 2010- 11 2011- 12 2012- 13 2013- 14 2014- 15
REVENUES
Sales Taxes 18,151 18,100 19,036 19,751 20,603 21,391 22,101 21,731 20,713 21,194 21,897 22,735
Property Taxes 13,740 16,093 16,986 19,613 20,866 22,302 24,061 23,793 23,766 25,165 26,897 29,018
Utility User Tax 7,156 7,392 8,341 9,016 9,604 9,699 9,836 9,914 10,464 10,589 10,714 11,058
Transient Occupancy Tax 5,489 6,000 6,173 6,401 6,831 7,527 8,032 7,889 7,670 8,185 8,775 9,409
Other Taxes, Fines & Penalties 11,295 6,382 6,845 7,308 7,897 8,590 9,302 9,306 9,171 9,458 10,130 10,936
Subtotal: Taxes $ 55,831 $ 53,967 $ 57,381 $ 62,089 $ 65,801 $ 69,509 $ 73,333 $ 72,633 $ 71,784 $ 74,591 $ 78,413 $ 83,156
Service Fees & Permits 12,915 15,484 16,257 16,499 16,995 17,504 18,029 18,570 19,127 19,701 20,292 20,901
Joint Service Agreements 6,010 6,722 6,587 6,659 6,948 7,208 7,490 7,725 7,841 7,972 8,257 8,588
( Stanford University)
Interest Earnings 3,477 2,300 2,215 2,215 2,339 2,480 2,640 2,604 2,567 2,712 2,891 3,083
Other revenues 9,872 13,478 14,257 13,684 14,095 14,518 14,881 15,179 15,558 16,025 15,294 12,425
Reimbursements from Other Funds 8,957 9,309 8,924 8,979 9,368 9,719 10,099 10,416 10,572 10,750 11,133 11,579
Total Revenues $ 97,062 $ 101,260 $ 105,621 $ 110,125 $ 115,544 $ 120,938 $ 126,473 $ 127,127 $ 127,449 $ 131,751 $ 136,281 $ 139,732
Transfers from Other Funds 17,888 14,632 15,108 15,584 16,259 16,869 17,527 18,078 18,349 18,657 19,322 20,098
TOTAL SOURCE OF FUNDS $ 114,950 $ 115,891 $ 120,729 $ 125,709 $ 131,803 $ 137,807 $ 144,000 $ 145,205 $ 145,798 $ 150,408 $ 155,603 $ 159,830
EXPENDITURES
Salaries & Benefits 72,316 77,024 81,573 82,694 85,440 89,027 92,880 96,233 97,892 100,291 104,648 109,550
Contract Services 9,110 10,160 9,341 9,360 9,669 9,984 10,333 10,565 10,618 10,671 10,831 11,135
Supplies & Materials 2,968 3,223 3,130 3,134 3,238 3,343 3,460 3,538 3,556 3,573 3,627 3,729
General Expense 8,487 8,831 8,972 9,035 9,315 9,600 9,905 10,193 10,455 10,664 10,895 11,151
Rents, Leases, & Equipment 1,073 1,156 1,097 1,082 1,117 1,153 1,194 1,221 1,227 1,233 1,251 1,287
Allocated Expenses 11,266 8,569 10,007 13,005 15,197 15,692 16,241 16,606 16,689 16,773 17,192 17,708
Total Expenditures $ 105,220 $ 108,963 $ 114,120 $ 118,310 $ 123,976 $ 128,800 $ 134,013 $ 138,356 $ 140,437 $ 143,206 $ 148,446 $ 154,559
Transfers to Other Funds
GF transfer for non- IMP capital 1,000 1,573 1,260 1,302 1,348 1,390 1,433 1,471 1,507 1,544 1,590 1,645
GF transfer for IMP capital projects 5,551 3,148 3,678 3,775 3,775 3,775 3,775 3,775 3,775 3,775 3,775 3,775
Debt Service 983 1,166 1,068 1,076 1,172 1,171 1,177 1,170 929 750 747 752
Other 1,656 1,041 566 612 629 646 664 682 701 720 740 761
TOTAL USE OF FUNDS $ 114,410 $ 115,891 $ 120,692 $ 125,074 $ 130,901 $ 135,782 $ 141,062 $ 145,454 $ 147,349 $ 149,995 $ 155,298 $ 161,491
Net Operating Surplus/( Deficit) $ 540 $ 0 $ 37 $ 635 $ 903 $ 2,025 $ 2,938 $( 250) $( 1,551) $ 413 $ 304 $( 1,661)
Transfer to Infrastructure Reserve* 0 0 0 ( 1,000) ( 1,000) ( 1,000) ( 1,000) ( 1,000) ( 1,000) ( 1,000) ( 1,000) ( 1,000)
Net of Reserve Transfer $ 540 $ 0 $ 37 $( 365) $( 97) $ 1,025 $ 1,938 $( 1,250) $( 2,551) $( 587) $( 696) $( 2,661)
* Zero represents no transfer to Infrastructure Reserve
2005- 07 Budget City of Palo Alto 41
2005- 06 PROJECTED OPERATING FUND
BALANCES
($ 000)
Projected
Ending Balance
06/ 30/ 05
Estimated
Revenues
Net Fund
Transfers
Estimated
Expenditures
Projected
Ending Balance
06/ 30/ 06
GENERAL FUND $ 30,864 $ 105,621 $ 8,536 $ 114,120 $ 30,901
CAPITAL FUND $ 30,088 $ 2,530 $ 7,152 $ 15,715 $ 24,055
DEBT SERVICE
Golf Course Debt 696 40 516 556 696
Civic Center Debt 287 2 420 422 287
Parking 2002 COPS ( Taxable) Debt 326 2 232 234 326
Special Assessment Debt 692 121 0 121 692
Subtotal $ 2,001 $ 164 $ 1,168 $ 1,332 $ 2,001
ENTERPRISE
Electric Fund 128,157 97,902 ( 8,975) 106,250 110,834
Gas Fund 8,683 37,111 ( 3,116) 32,867 9,811
Wastewater Collection Fund 5,847 14,893 ( 53) 14,248 6,439
Water Fund 7,867 24,515 ( 3,333) 18,559 10,490
Refuse Fund 9,650 26,691 ( 215) 26,631 9,495
Storm Drain Fund 373 5,496 ( 5) 5,517 347
Wastewater Treatment Fund 6,462 26,228 ( 23) 25,225 7,442
External Services Fund 27 1,181 ( 25) 1,134 49
Subtotal $ 167,066 $ 234,017 $( 15,746) $ 230,432 $ 154,905
INTERNAL SERVICE
General Benefits and Insurance Fund 3,802 * 0 * 3,802
Retiree Health Benefit Fund 18,178 * 0 * 18,178
Printing and Mailing Fund 721 * ( 47) * 674
Technology Fund 7,330 * ( 1,980) * 5,350
Vehicle Replacement and Maintenance
Fund
1,987 * ( 8) * 1,979
Subtotal $ 32,018 $ 0 $( 2,035) $ 0 $ 29,983
SPECIAL REVENUE
2005- 06 Projected Operating Fund Balances
continued
42 City of Palo Alto 2005- 07 Budget
Community Development Fund 1,668 586 ( 312) 0 1,942
Street Improvement Fund 1,897 1,126 ( 1,462) 0 1,561
Federal and State Revenue Funds 2,564 836 ( 35) 916 2,449
Housing In- Lieu and Public Benefit Fund 11,194 937 0 569 11,562
Special Districts Fund 1,415 1,072 ( 1,400) 0 1,086
Traffic Mitigation & Parking In- Lieu Fund 4,151 583 0 0 4,733
Downtown Business Improvement District 0 158 0 154 4
Subtotal $ 22,888 $ 5,297 $( 3,210) $ 1,640 $ 23,336
TOTAL OPERATING FUNDS $ 284,925 $ 347,630 $( 4,135) $ 363,239 $ 265,181
* allocation to/ from other funds
($ 000)
Projected
Ending Balance
06/ 30/ 05
Estimated
Revenues
Net Fund
Transfers
Estimated
Expenditures
Projected
Ending Balance
06/ 30/ 06
2005- 07 Budget City of Palo Alto 43
2006- 07 PROJECTED OPERATING FUND
BALANCES
($ 000)
Projected
Ending Balance
06/ 30/ 06
Estimated
Revenues
Net Fund
Transfers
Estimated
Expenditures
Projected
Ending Balance
06/ 30/ 07
GENERAL FUND $ 30,901 $ 110,125 $ 8,819 $ 118,310 $ 31,536
CAPITAL FUND $ 24,055 $ 2,239 $ 7,179 $ 16,676 $ 16,797
DEBT SERVICE
Golf Course Debt 696 40 518 558 696
Civic Center Debt 287 2 420 422 287
Parking 2002 COPS ( Taxable) Debt 326 2 233 235 326
Special Assessment Debt 692 123 0 123 692
Subtotal $ 2,001 $ 167 $ 1,172 $ 1,338 $ 2,001
ENTERPRISE
Electric Fund 110,833 111,806 ( 9,209) 106,674 106,757
Gas Fund 9,811 41,714 ( 3,113) 35,547 12,866
Wastewater Collection Fund 6,439 15,622 ( 50) 14,571 7,439
Water Fund 10,490 24,524 ( 2,625) 19,640 12,749
Refuse Fund 9,495 26,691 ( 249) 26,367 9,570
Storm Drain Fund 347 6,156 ( 11) 6,141 351
Wastewater Treatment Fund 7,442 22,521 ( 22) 21,605 8,336
External Services Fund 49 1,181 ( 25) 1,139 66
Subtotal $ 154,905 $ 250,216 $( 15,304) $ 231,683 $ 158,134
INTERNAL SERVICE
General Benefits and Insurance Fund 3,802 * 0 * 3,802
Retiree Health Benefit Fund 18,178 * 0 * 18,178
Printing and Mailing Fund 674 * ( 10) * 664
Technology Fund 5,350 * ( 495) * 4,855
Vehicle Replacement and Maintenance
Fund
1,979 * ( 43) * 1,936
Subtotal $ 29,983 $ 0 $( 548) $ 0 $ 29,435
SPECIAL REVENUE
2006- 07 Projected Operating Fund Balances
continued
44 City of Palo Alto 2005- 07 Budget
Community Development Fund 1,942 586 ( 100) 0 2,427
Street Improvement Fund 1,561 1,126 ( 1,462) 0 1,225
Federal and State Revenue Funds 2,449 878 ( 35) 877 2,416
Housing In- Lieu and Public Benefit Fund 11,562 747 0 519 11,789
Special Districts Fund 1,086 1,072 ( 1,563) 0 594
Traffic Mitigation & Parking In- Lieu Fund 4,733 583 0 0 5,316
Downtown Business Improvement District 4 158 0 154 8
Subtotal $ 23,336 $ 5,149 $( 3,161) $ 1,550 $ 23,775
TOTAL OPERATING FUNDS $ 265,181 $ 367,895 $( 1,843) $ 369,557 $ 261,676
* allocation to/ from other funds
($ 000)
Projected
Ending Balance
06/ 30/ 06
Estimated
Revenues
Net Fund
Transfers
Estimated
Expenditures
Projected
Ending Balance
06/ 30/ 07
2005- 07 Budget City of Palo Alto 45
TOTAL CITYWIDE REVENUES BY CATEGORY
The revenue table above shows total City revenues from all City funds as follows: general fund, enterprise
funds, capital fund, internal service funds, debt service, and special revenue funds.
2003- 04
ACTUALS
2004- 05
ADJUSTED
BUDGET
2005- 06
ADOPTED
BUDGET
2005- 06
BUDGET
CHANGE
2006- 07
ADOPTED- IN-CONCEPT
BUDGET
2006- 07
BUDGET
CHANGE
Net Sales 172,549,640 177,093,501 194,723,832 17,630,331 213,103,942 18,380,110
Sales Taxes 18,150,659 18,100,000 19,036,000 936,000 19,751,000 715,000
Property Taxes 13,935,778 16,369,828 17,260,539 890,711 19,889,664 2,629,125
Transient Occupancy Tax 5,488,911 6,000,000 6,173,000 173,000 6,401,000 228,000
Utility Users Tax 7,155,698 7,392,000 8,341,000 949,000 9,016,000 675,000
Other Taxes and Fines 11,334,547 6,391,500 6,855,000 463,500 7,318,000 463,000
Charges for Services 16,347,135 19,319,237 19,982,256 663,019 21,494,179 1,511,923
Permits and Licenses 3,699,195 4,969,807 5,094,809 125,002 5,145,991 51,182
Return on Investments 244,749 13,320,300 12,586,700 ( 733,600) 12,586,700 0
Rental Income 11,553,730 11,853,169 12,340,440 487,271 12,340,440 0
From Other Agencies 4,421,692 2,575,188 2,914,019 338,831 2,244,903 ( 669,116)
Charges to Other Funds 19,922,462 21,529,272 22,111,894 582,622 22,967,934 856,040
Other Revenue 15,325,000 16,195,405 20,211,008 4,015,603 15,635,619 ( 4,575,389)
Total Revenues $ 300,129,196 $ 321,109,207 $ 347,630,497 $ 26,521,290 $ 367,895,372 $ 20,264,875
46 City of Palo Alto 2005- 07 Budget
TOTAL CITYWIDE EXPENDITURES BY
CATEGORY
The expense table above shows total City expenditures from all City funds as follows: general fund, enter-prise
funds, capital fund, internal service funds, debt service, and special revenue funds. The line above
labeled " To/( From) Reserves" shows funding from reserves that is used primarily for rate stabilization in the
enterprise funds as well as for capital improvement program ( CIP) funding.
2003- 04
ACTUALS
2004- 05
ADJUSTED
BUDGET
2005- 06
ADOPTED
BUDGET
2005- 06
BUDGET
CHANGE
2006- 07
ADOPTED- IN-CONCEPT
BUDGET
2006- 07
BUDGET
CHANGE
Utility Purchases and Charges 78,431,918 85,781,295 105,246,568 19,465,273 101,951,820 ( 3,294,748)
Salaries and Benefits 99,001,254 108,350,529 114,565,179 6,214,650 115,969,365 1,404,186
Contract Services 17,631,543 43,021,820 20,005,307 ( 23,016,513) 19,686,329 ( 318,978)
Supplies and Materials 5,746,291 7,898,030 5,879,534 ( 2,018,496) 5,883,534 4,000
Facilities and Equipment Purchases 936,446 1,159,519 1,045,755 ( 113,764) 979,955 ( 65,800)
General Expense 13,215,738 14,215,893 14,574,333 358,440 14,924,517 350,184
Rents and Leases 10,004,585 10,068,015 10,357,347 289,332 10,335,107 ( 22,240)
Allocated Charges 31,212,169 30,991,938 31,160,045 168,107 33,903,346 2,743,301
Debt Service 8,857,951 11,754,659 14,046,405 2,291,746 14,141,662 95,257
Capital Improvement Program 42,253,377 43,950,522 46,358,198 2,407,676 51,781,536 5,423,338
Transfers Out 3,464,109 2,721,309 4,135,401 1,414,092 1,843,363 ( 2,292,038)
To/( From) Reserves ( 10,626,185) ( 38,804,322) ( 19,743,575) 19,060,747 ( 3,505,162) 16,238,413
Total Expenditures $ 300,129,196 $ 321,109,207 $ 347,630,497 $ 26,521,290 $ 367,895,372 $ 20,264,875
City Attorney’s Office
CITY ATTORNEY
Gary Baum
4.55- Senior Asst City Attorney
1.0- Legal Administrator
3.0- Legal Secretary
Fiscal Year 2005- 06 Position Totals: 12.55 Full- time
0.51 Hourly
1.0- Claims Investigator/ Paralegal
City Attorney’s Office
Organizational Chart
1.0- Sr. Deputy City Attorney
1.0- Deputy City Attorney
2005- 07 Budget City of Palo Alto 49
City Attorney
To serve Palo Alto and its policy makers by providing legal representation of the highest quality.
OVERVIEW
In 2005- 07, the City Attorney's Office will continue to focus on enhancing City Attorney's Office productivity by
completing more assignments while reducing turnaround time. The focus of the department will be on customer
service. The department will enhance our conflicts analysis team and will continue to monitor outside counsel costs in
an effort to reduce costs for utilities- related legal work. The Office of the City Attorney will also concentrate its efforts
on the Utility User's Tax recovery process and lawsuit to maximize City recovery. Also the department will work to
enhance the level of services to the Police Department by direct City Attorney involvement.
Contract streamlining will be a key focus of the department in 2005- 06. The department, working in conjunction with
the Administrative Services Department and the Department of Public Works, will continue to train staff on the newly
revised purchasing ordinance and will complete revision and standardization of contract forms and bidding documents
in an effort to expedite the contracting process.
In 2005- 06, the Office of the City Attorney will complete analysis of its role in the Code Enforcement process to
determine the best approach for legal support to this area.
COUNCIL PRIORITY IMPLEMENTATION
In 2005- 07, the City Attorney's Office will continue to support implementation of the following City Council's top five
priorities:
Infrastructure
• Continue implementation of contract streamlining process by revising contract forms and focusing on staff
training on new processes
• Continuing review of all public works contracts
• Assist with contract negotiations when necessary
City Finances
• Provide extensive support to Human Resources Department for issues relating to reduction in staff
Land Use Planning
• Continue to provide extensive legal support to Planning and Community Environment, Planning and
Transportation Commission and the City Council on land use and planning issues
Housing
• Providing in- house legal support as well as economic outside legal counsel for housing projects
City Attorney continued
50 City of Palo Alto 2005- 07 Budget
DEPARTMENT SUMMARY
2003- 04
ACTUALS
2004- 05
ADJUSTED
BUDGET
2005- 06
ADOPTED
BUDGET
2005- 06
BUDGET
CHANGE
%
CHG
2006- 07
ADOPTED- IN-CONCEPT
BUDGET
2006- 07
BUDGET
CHANGE
%
CHG
Administration 292,561 228,412 159,945 ( 68,467) ( 30%) 218,523 58,578 37%
Consultation and Advisory 1,554,357 1,938,362 1,867,729 ( 70,633) ( 4%) 1,870,106 2,377 0%
Litigation and Dispute Resolution 266,484 360,355 382,324 21,969 6% 382,868 544 0%
Official and Administration Duties 262,765 322,690 332,880 10,190 3% 333,418 538 0%
TOTAL EXPENDITURES $ 2,376,167 $ 2,849,819 $ 2,742,878 $( 106,941) ( 4%) $ 2,804,915 $ 62,037 2%
TOTAL REVENUES $ 892,475 $ 956,364 $ 1,154,891 $ 198,527 21% $ 1,154,891 $ 0 0%
INTERNAL REVENUES 850,166 852,364 1,104,891 252,527 30% 1,104,891 0 0%
EXTERNAL REVENUES 42,309 104,000 50,000 ( 54,000) ( 52%) 50,000 0 0%
City Attorney continued
2005- 07 Budget City of Palo Alto 51
BENCHMARKING MEASURES
INPUTS
2003- 04
ACTUALS
2004- 05
ADJUSTED
BUDGET
2005- 06
ADOPTED
BUDGET
2006- 07
ADOPTED- IN-CONCEPT
BUDGET
Salaries and Benefits 1,688,298 1,982,702 2,106,860 2,110,405
Contract Services 552,266 730,680 514,030 514,030
Supplies and Materials 34,879 46,000 38,000 38,000
Facilities and Equipment Purchases 0 7,850 2,000 2,000
General Expense 14,526 26,980 26,980 26,980
Rents and Leases 1,440 6,000 3,500 3,500
Allocated Charges 84,758 49,607 51,508 110,000
Total Expenditures $ 2,376,167 $ 2,849,819 $ 2,742,878 $ 2,804,915
Total Revenues $ 892,475 $ 956,364 $ 1,154,891 $ 1,154,891
Total Full Time Positions 11.75 12.75 12.55 12.55
Total Temporary Positions 1.32 1.32 0.51 0.51
2003- 04
ACTUALS
2004- 05
ADJUSTED
BUDGET
2005- 06
ADOPTED
BUDGET
Workload Outputs:
1. Number of work requests processed ( New) 1,284 1,348 1,412
2. Number of claims opened and handled ( SEA) 155 159 159
3. Number of code enforcement matters referred to City Attorney
( New) 20 18 18
Annual Number of Assignments
0 200 400 600 800 1000 1200 1400
FY01- 02
FY02- 03
FY03- 04
City Attorney continued
52 City of Palo Alto 2005- 07 Budget
Efficiency:
1. Ratio of work requests per attorney ( New) 190 200 210
2. Percent of claims investigations commenced within 7 days of
receipt of claim by department ( New) 75% 85%
3. Percent of requests for code enforcement legal support
responded to within 10 working days ( New) 85% 90% 90%
Effectiveness:
1. Percent of work requests completed within established time
frames - time frame varies based on type of work request ( New) 96% 96% 97%
2. Percent of claims resolved within 9 months ( New) 75% 85%
3. Number of code enforcement matters closed within 6 months of
referral ( New) 11 15 16
2003- 04
ACTUALS
2004- 05
ADJUSTED
BUDGET
2005- 06
ADOPTED
BUDGET
City Attorney continued
2005- 07 Budget City of Palo Alto 53
RESOURCE LEVEL CHANGES
RESOURCE LEVEL NOTES
Note 1: Adjustments include prior one- time revenues and expenditure items that did not carry forward into the Adopted
Budget. Other changes are the result of one- time items that were included in the 2004- 05 mid- year adjustment.
Note 2: Personnel benefits costs have escalated mainly due to health care increases and increased pension costs.
Note 3: Allocated charges are increasing primarily due to a resumption of Technology Fund operational charge- backs.
2005- 06
ONGOING
2005- 06
ONE- TIME
2005- 06
TOTAL
2006- 07
ONGOING
2006- 07
ONE- TIME
2006- 07
TOTAL
REVENUE CHANGES
Allocated Revenues- Internal 252,527 252,527
Certificate of Compliance Muni Fee 24,000 24,000
Code Enforcement Revenue ( 104,000) ( 104,000)
Legal Fees -- Complex Projects 26,000 26,000
TOTAL REVENUE CHANGES $ 198,527 $ 0 $ 198,527 $ 0 $ 0 $ 0
EXPENDITURE CHANGES
Salary and Benefits
Reduce Hourly Staff ( 0.51 FTE) ( 1,096) ( 1,096)
Eliminate Sr. Asst. City Attorney
( 0.20 FTE)
( 38,427) ( 38,427)
Reclass Sr. Asst. City Attorney to
Sr. Deputy ( 1.0 FTE)
( 50,203) ( 50,203)
Total Salary and Benefits Increase $( 89,726) $ 0 $( 89,726) $ 0 $ 0 $ 0
Personnel Benefit Costs ( Note 2) 147,568 147,568 3,545 3,545
Adjustments ( Note 1) ( 37,000) ( 37,000)
Total Net Salary and Benefits Changes $ 161,158 $( 37,000) $ 124,158 $ 3,545 $ 0 $ 3,545
Non- Salary
Legal Contract Assistance ( 15,000) 270,000 255,000 270,000 270,000
Reduce Contract Agency Personnel ( 12,000) ( 12,000)
Allocated Charges ( Note 3) 1,901 1,901 58,492 58,492
Total Non- Salary Changes $( 25,099) $ 270,000 $ 244,901 $ 58,492 $ 270,000 $ 328,492
TOTAL EXPENDITURE CHANGES $ 136,059 $ 233,000 $ 369,059 $ 62,037 $ 270,000 $ 332,037
Adjustments ( Note 1) ( 476,000) ( 476,000) ( 270,000) ( 270,000)
NET EXPENDITURE CHANGES $ 136,059 $( 243,000) $( 106,941) $ 62,037 $ 0 $ 62,037
City Attorney continued
54 City of Palo Alto 2005- 07 Budget
SERVICE LEVEL CHANGES
Service Level Increases:
A 1.0 FTE Sr. Deputy City Attorney position was added in December 2004 to provide additional legal support to the
Utilities Department. The position is fully funded by the enterprise funds and is expected to reduce outside counsel
expenses for utilities matters.
Budget Reductions:
Reclass of a vacant Sr. Assistant City Attorney position to a Sr. Deputy City Attorney. The purpose of the reclass is to
provide growth opportunity within the department while at the same time creating a budget savings.
Reduction of a 1.0 FTE Senior Assistant City Attorney position to a 0.8 FTE. The impact of this reduction is unknown
at this time but it is anticipated that turn around times on work requests may be adversely affected.
Reduction in Outside Counsel base budget by $ 15,000. The impact of this reduction may mean that turn around times
on work requests may be adversely affected and specialized outside counsel may be unavailable for staff or council
requests.
Elimination of Contract Agency funding within department budget. The impact of elimination of this funding is that
department will be unable to obtain temporary clerical support to cover vacations or other leave and may result in
slower turnaround time on work requests. The workload for existing support staff may increase slightly.
COMPREHENSIVE PLAN OVERVIEW
The 2005- 07 City Attorney's Office Adopted Budget does not request specific resources devoted to implementation of
the Comprehensive Plan. Implementation of the Zoning Ordinance Update will be a major activity funded through the
Department of Planning and Community Environment.
City Attorney continued
2005- 07 Budget City of Palo Alto 55
CONSULTATION AND ADVISORY
To provide legal advice to the City Council, boards, commissions, and City officers and employees acting in their
official capacities.
INPUTS
2003- 04
ACTUALS
2004- 05
ADJUSTED
BUDGET
2005- 06
ADOPTED
BUDGET
2006- 07
ADOPTED- IN-CONCEPT
BUDGET
Salaries and Benefits 982,111 1,241,188 1,395,701 1,398,024
Contract Services 537,036 640,978 424,628 424,628
Supplies and Materials 29,003 39,500 34,600 34,600
General Expense 4,087 7,500 7,500 7,500
Rents and Leases 1,067 6,000 3,500 3,500
Allocated Charges 1,053 3,196 1,800 1,854
Total Expenditures $ 1,554,357 $ 1,938,362 $ 1,867,729 $ 1,870,106
Total Revenues $ 0 $ 0 $ 0 $ 0
Total Full Time Positions 6.40 8.26 7.99 7.99
Total Temporary Positions 1.18 1.18 0.51 0.51
City Attorney continued
56 City of Palo Alto 2005- 07 Budget
LITIGATION AND DISPUTE RESOLUTION
To provide civil and administrative representation on pending litigation, disputes and claims for the City, City Council,
boards, commissions, and City officers and employees acting in their official capacities.
INPUTS
2003- 04
ACTUALS
2004- 05
ADJUSTED
BUDGET
2005- 06
ADOPTED
BUDGET
2006- 07
ADOPTED- IN-CONCEPT
BUDGET
Salaries and Benefits 261,473 285,958 310,222 310,754
Contract Services 442 67,622 67,622 67,622
Supplies and Materials 4,289 4,900 3,400 3,400
General Expense 280 680 680 680
Allocated Charges 0 1,195 400 412
Total Expenditures $ 266,484 $ 360,355 $ 382,324 $ 382,868
Total Revenues $ 0 $ 0 $ 0 $ 0
Total Full Time Positions 2.26 2.14 2.18 2.18
Total Temporary Positions 0.14 0.14 0.00 0.00
City Attorney continued
2005- 07 Budget City of Palo Alto 57
OFFICIAL AND ADMINISTRATION DUTIES
To fulfill the independent official and administrative duties of the Office of the City Attorney on behalf of the City.
INPUTS
2003- 04
ACTUALS
2004- 05
ADJUSTED
BUDGET
2005- 06
ADOPTED