May 13, 2024 www.cityofpaloalto.org/budget
FY 2025 PROPOSED
OPERATING AND
CAPITAL BUDGETS
Finance Committee
Update & Council
Discussion
City Council
Item #3
1 BUDGET CONVERSATIONS & CALENDAR
2 MAY 6 MAY 7 & 8 MAY 13 MAY 15 MAY 21 JUNE 17
Finance Committee Budget
Workshops:
Review the proposed
budgets and recommend
amendments
Study Session City Council:
Finance Committee check-in
with the City Council
Community
Budget Listening
Session
Finance Committee Budget Wrap-up:
Based on the input from the May
budget meetings, recommend final
adjustments to proposed budgets for
Council adoption
City Council: FY 2025 Proposed
Budget Overview:
Discuss guidance for Finance
Committee colleagues
City Council Budget
Adoption:
Adopt Operating & Capital
budgets (as amended by
the Finance Committee)
www.cityofpaloalto.org/budget
• Operating budget totals $1.03 billion ($303.5 million in General Fund) • Capital budget totals $359.7 million in FY 2025 and $1.6 billion over the five-year Capital Improvement Program (CIP)
• Two-year balancing strategy using one-time funds to resolve ($6.9M) shortfall in FY 2025. Partially solve projected deficit of ($9.7M) in FY 2026 to bring it to ($5.0M) • Service investments and Council Priorities supported by additional 20 FTEs, all funds • Measure K and L funding continues for critical services
PROPOSED BUDGET OVERVIEW
3 Use of one-time funding
• $9.6M Uncertainty Reserve recommended to:
• Offset shortfall in FY 2025 ($6.9M) and partially offset FY 2026 ($4.7M) • $5.0M deficit remains in FY 2026
• Maintain a 18.8% BSR ($1.0M above 18.5% target), down from 20% in FY 2024 Labor Agreements: terms for wages, benefits, and other terms and conditions of employment, through FY 2025 (Jan. 2025 for SEIU)
Capital Investments: Base transfer to Capital Improvement Fund ($13.7M in FY25) to reach pre-pandemic levels by FY26 ($16.7M) as planned starting with the 2023-27 CIP City's Pension & Other Post-Employment Benefits (OPEB): Proactive funding of long- term liabilities (pension and retiree medical) to accelerate funding target, reduce cost and liability, and enhance fiscal stability.
CITYWIDE BUDGET STRATEGIES
4 SUMMARY OF FINANCE COMMITTEE
REVIEW TO DATE
May 13, 2024 www.cityofpaloalto.org/budget 5
6 “PARKING LOT” OF GENERAL FUND BUDGET
Date Finance Committee Adjustments to Budget*
FY 2025 GF
(cost)/savings
or rev Dept
7-May Beginning Balance $ -
Subtotal Sources (Revenue) -$
Date FY 2025 Council Contingency
7-May Beginning Balance 125,000$
Remaining: 125,000$
Budget Stabilization Reserve FY 2025 est = $55.0M or @ 18.8% target (as of 5/7/24) ($1.0M above the 18.5% target)
Council range is 15% to 20% of Adopted expenses, currently estimated at $292.4M
7 “PARKING LOT” – REVENUE
Parking Lot Items
FY25 Amount
(cost)/source Ongoing Dept
Analyze increasing revenue-generating CSD programming to meet demand (Fee revenues for classes)
0 0 CSD
Explore financial, outreach, and policy processes for adding East Palo Alto to resident rates for golf course
(Potential reduction in fee revenues from lower charges) (30,000) (30,000) CSD
(muni fee)
JMZ increase ticket prices during peak attendance from $10 to $14 300,000 350,000 CSD Analyze Fire Emergency Medical Response Fee Adjustments
(requires study during FY25, changes not expected before FY26)
TBD TBD FIR
Analyze a reduction of Capital Funding (between $500,000 and $1M) 0 0 NON Reduce BSR from 18.8% to 18.5% of FY25 Proposed General Fund Expenses 1,000,000 0 NON Amend Gas Transfer to General Fund in FY25 to 14.5% (from 11.9%) & in FY26 to 18% (previously scheduled in FY27)
~
Estimated FY 2025 Gas Utility Rate change from 9% to 12.5% 2,000,000 900,000 NON
Subtotal Revenue (&/or source of funding) $3.3 M $1.2M
$000’s = placeholder,
further analysis is needed
Parking Lot Items
FY25 Amount
(cost)/source Ongoing Dept
JMZ new staffing, contracts, and new ticketing system adds (613,000) (946,000) CSD Environmental Volunteers Foothills Nature Preserve Program* (11,000) (11,000) CSD Analyze increased flexibility for revenue-generating CSD programming 0 0 CSD Fire Emergency Medical Response;
Supplemental resources via contract for services
(500,000) (550,000) FIR
Upstaff Fire Engine 62 with 3 Sworn Staff instead of Overtime (60,000) (75,000) FIR Establish Organizational Development and Safety Division (1.0 position) (78,000) (78,000) HRD Active Recruitment Digital Marketing Services (contract services) (50,000) (50,000) HRD Expansion of Library Teen Services (1.0 position) (135,000) (135,000) LIB Palo Alto Transportation Mgmt. Assoc. (PATMA) increase to $400,000 (200,000) (200,000) OOT Review an alternative service approach for PA Link with reduced costs (proposed budget funds $900,000 in FY25)
450,000 580,000 OOT
Public Services Streets 311 Requests to support catch-up and keep-up (100,000) (100,000) PWD Sustainability Program Customer Service Support (1.0 position Electric Fund) 0 0 UTL “PARKING LOT” – EXPENSES
$000’s = placeholder, further analysis is needed* = ask from outside agency, FY25 contribution TBD 8
Parking Lot Items
FY25 Amount
(cost)/source Ongoing Dept
Ability Path Matching Gift * (250,000) 0 NON
Establish a Citywide Special Events & Programming ($230k total program) * [Requested UNAFF $45k, 3rd Thursdays $40k,
Neighbors Abroad $30k, Magical Bridge $150k, cultural events] (200,000) (200,000) NON
Additional funding for Roth Building Rehabilitation (PF-23001) (revise terms and conditions of the tenant work letter) (1,000,000) 0 CIP-PWD
California Avenue Interim Improvements (450,000) 0 CIP-PWD Car-free Streetscape Design for Ramona Street (200,000) 0 CIP-PWD Study of artificial turf replacement with grass at up to 4 fields (recommend use of current CIP to fund a study)
0 0 CIP-CSD
Review parks restroom prioritization (specifically Pardee Park) 0 0 CIP-CSD Subtotal Expense (&/or use of funding) ($3.4 M) ($1.8M) Potential Funds Remaining surplus / (deficit) ($0.1 M) ($0.5 M) “PARKING LOT” – EXPENSES (CONT’D.)
9$000’s = placeholder, further analysis is needed* = ask from outside agency, FY25 contribution TBD
10 GENERAL FUND BUDGET BALANCING
WITH ‘PARKING LOT’ ITEMS
($ in millions) Proposed FY 2025 Parking Lot
Increase/
(Decrease)
Revenues
Use of Reserves
303.5
$7.6
306.8
$8.6
$3.3
$1.0
Expenditures 303.5 306.9 $3.4
Surplus / (Deficit) $0 ($0.1) ($0.1)
Status of General Fund Reserves
Uncertainty Reserve for FY 2026 $4.7 $4.7 $0
Budget Stabilization Reserve $
Budget Stabilization Reserve %
$55.0
18.8%
$54.0
18.3%
($1.0)
(0.5%)
BSR at 18.5% target level requires $0.7M of additional funding
The community is encouraged to join the budget
conversations:
• Finance Committee Budget Hearings:
May 7 at 9:00 A.M.
May 8 at 9:00 A.M.
May 21 at 1:00 P .M. – Wrap-up
• Community Informational Session:
Learn about the City’s proposed budget
May 15 at 6:00 P .M.
• City Council Budget Adoption:
June 17 at 5:30 P .M.
All meeting details listed at www.cityofpaloalto.org/budget
JOIN THE BUDGET CONVERSATION
11 • Receive update on the detailed work
reviewing the budget documents
• Clarify understanding of current status
and policy decision the Committee seeks
feedback on
• Provide guidance to Finance Committee
colleagues for their final recommended
adjustments scheduled on May 21. City
Council FY 2025 Budget Adoption
scheduled on June 17th
• Budget and meeting details listed at
www.cityofpaloalto.org/budget
COUNCIL DISCUSSION
12