November 14, 2023
Memorandum
Office of the City Attorney
City of Palo Alto
This memorandum responds to a request by the authors of the above Colleagues Memo for a description of the law regarding Council Member compensation and Council’s options for increasing that compensation.
Current Law. The Charter provides that Council may receive compensation in amounts not to exceed those provided in state law. (Charter, Art. III, Sec. 17.) The Palo Alto Municipal Code (PAMC) sets compensation at $1,000/month. (PAMC 2.04.360). The last update to council compensation was effective January 1, 2017. (Ord. 5304.) State law authorizes a maximum base monthly council member salary based on city population and authorizes annual increases according to a defined methodology. (See Gov. Code §36516.) In 2023, the state legislature adopted SB 329, which increased maximum authorized salary levels and created a second optional methodology for local city councils to increase salaries over time. Under the updated statute, a city of Palo Alto’s size may provide council members a monthly salary of $1,600/month, effective January 1, 2024. Thereafter, annual increases may be made in amounts not to exceed the greater of: (a) 5% of the existing salary for each calendar year since the Council last set council member salaries (noncompounded, see (89 Ops. Cal. Atty Gen. 159 (2006)); or (b) an amount equal to inflation since January 1, 2024 (CPI) but not to exceed 10 percent annually. (Gov. Code §36516.) Each increase must be made by ordinance, with findings demonstrating the need for the increase. Automatic increases are not allowed.
Under state law, a salary increase may only come into effect at the beginning of at least one member’s new term. (Gov. Code section 36516.5) In Palo Alto, new Council terms begin on January 1st of every odd-numbered year. (See Charter, Art. III, Sec. 2.) Compensation can be (and typically is) adjusted for all members of a council serving staggered terms whenever at least one member begins a new term of office.
State law also provides that council members may receive benefits from the city. Benefits are not counted towards the maximum allowable salary, provided that the same benefits are paid for and available to city employees. (Gov. Code § 36516 (d).)
Options for Increasing Compensation. Council has two options to increase council member compensation. Option 2 is available to Palo Alto because Palo Alto is a charter city, and council compensation is a municipal affair.
Council could choose one or the other of these options, or, could use option 1 followed by option 2.
November 14, 2023
Option 1: Amend PAMC 2.04.360 to increase council member salary, currently $1,000/month, to an amount up to $1,600/month plus inflation from January 1, 2024 to the date of adoption (capped at 10%), with an effective date of January 1, 2025 at the earliest.
Option 2: Place a Charter amendment on the November 2024 ballot to delete the existing language that limits council member salary to amounts provided in state law and replace it with a local provision. Upon voter approval, amend PAMC 2.04.360 to increase salary according to the terms of the newly-amended Charter.