September 8, 2025 www.paloalto.gov
Discuss and Approve
FY2026 Budget Amendments to
Reduce General Fund
Appropriations by
Approx. $6.2 Million,
As recommended by Finance Committee
Item #18
FY 2026 BUDGET AMENDMENT OVERVIEW
Review and discuss the FY 2026 budget amendments to
reduce specific appropriations by $6.2 million.
• Budget Background / Calendar
• Executive Summary
• Review General Fund recommendations
• Review Capital Improvement Fund recommendations
• Finance Committee Recommendation – Aug 19th
GOAL: Recommend the City Council approve the
budget amendments.
2 BUDGET CONVERSATIONS & CALENDAR
3 MAY 5 MAY 6 & 7 MAY 12 MAY 20 JUNE 4 JUNE 16
Finance Committee
Budget Workshops:
Review the
proposed budgets
and recommend
amendment(s)
Study Session City
Council:
Finance Committee
check-in with the
City Council
Finance Committee:
Review and
recommend $6.2M
budget
appropriation
reduction actions
City Council: FY
2026 Proposed
Budget Overview:
Discuss guidance
for Finance
Committee
colleagues
City Council Budget
Adoption:
Adopt Operating &
Capital budgets (as
amended by the
Finance Committee)
Finance Committee Budget
Wrap-up:
Based on the input from the
May budget meetings,
recommend final
adjustment(s) to proposed
budgets for Council adoption
AUG 19 SEPT 8
Non-Profit Workplan Phase I:
May 9 - Proposal deadline
May 28 & June 4 – Policy &
Services review & recommend
awards
City Council:
Adopt $6.2M
budget
appropriation
reduction actions
• Council Direction: Retain reserves, reduce budget
gap, prepare for economic uncertainty.
• Reduce General Fund budget by $6 million, with
$2+ million on-going.
• Recommendation: $6.2 million in savings (2% of
General Fund budget) – $3.4M ongoing and $2.8M
one-time
• Prioritize core services and changes contained in the adopted FY26 budget while balancing impacts to the
extent possible largely through vacant positions
Executive Summary
4 • Capital Project savings are achieved through reducing annual base transfer from General Fund to Capital
Improvement Fund while balancing capital project delays and exacerbating costs and acknowledging ongoing expense and schedules may vary associated with construction.
• Continue to evolve service approaches such as freezing vacancies, while limiting contracts to annual appropriations with expense controls for IT, planning and transportation consultants.
• Any true-up would be included with FY26 Mid-Year.
Executive Summary
5 6
Appropriation Reductions - Recommendation
Fund
FY 2026
Total
FY 2026
On-Going
FY 2026
One-time FY 2027 FY 2028
General Fund $3.0M $2.4M $0.6M $2.4M $2.4M
Capital Improvement Fund $3.2M $1.0M $2.2M $1.0M $1.0M
Total $6.2M $3.4M $2.8M $3.4M $3.4M
Council Direction: General Fund budget reduction of $6 million. At least $2 million on-going and $4 million one-time.
7 Finance Committee – Recommendations & Considerations
• Indicate vacant/filled and include vacancy date (see Table 2) • Summarize historical positions & vacancies by dept (see Attachment B) • For CIP Bayland Levee, modify to retain $50k for FY26 budget for permitting effort • JMZ Program Assistant (1 FTE) – review revenue recovery potential, alternative staffing • Police Reserve Officer (0.12 FTE) – review overtime impact, consider retaining position • Consultant – use and/or savings to be discussed with Council (Oct/Nov) • CSD Enjoy Catalogue – review revenue impacts of reducing publications, consider deferring transition to postcards
General Fund Reductions by Dept
$3.0M total: $2.4M on-going, $0.6M one-time
8 Dept
FY 2026
% of GF
Budget
Proposed
Reduction On-Going One-Time Description
ASD 1.4% $161,663 $161,633 Division Manager (1 FTE) 60% GF ATTY 0.5% $25,000 $25,000 General Expenses
AUDITOR 3.5% $25,000 $25,000 General Expenses
CLERK 1.6% $25,000 $25,000 General Expenses
CMO 3.3% $176,081 $176,081 Senior Mgt Analyst (1 FTE)
CSD 0.8% $332,328 $332,328 JMZ Prog Asst (1 FTE), JMZ Access Coord. (0.48 FTE), Elim printing
contracts, reduce gen expenses
General Fund Reductions by Dept
$3.0M total: $2.4M on-going, $0.6M one-time
9 Dept
FY 2026
% of GF
Budget
Proposed
Reduction On-Going One-Time Description
Fire 0.5% $324,609 $324,690 Fire Fighter Trainees (2 FTE) HR 2.3% $133,640 $133,640 HR Technician (1 FTE)
Benefit
Fund
$182,801 $182,801 Shifts HR positions (2 FTE) to
Employee Benefit Fund (ISF)
IT 1.2% $151,402 $151,402 IT Manager (1 FTE) 50% GF
Library 1.4% $175,587 $175,587 Library Associate (operations) (1 FTE) reduce general expenses
OES 1.4% $25,000 $25,000 General Expenses
OOT 1.7% $66,754 $66,754 Use Measure B funding for Planner (1 FTE) for SRTS program 40% GF
General Fund Reductions by Dept
$3.0M total: $2.4M on-going, $0.6M one-time
10 Dept
FY 2026
% of GF
Budget
Proposed
Reduction On-Going One-Time Description
PDS 1.3% $325,428 $166,886 $158,542 Planners (2 FTE) (1 ongoing, 1 one-time)
Police 0.4% $254,654 $254,654 Reserve Officer (0.12 FTE), eliminate hire ahead, and reduce
general expenses
Public
Works
0.5% $138,110 $138,110 CIP Staff (1 FTE, CIP Fund 471), Tree Trimmer (1 FTE)
Vehicle
Fund
$460,000 $460,000 Shift from electric hybrid to
diesel fire engine
TOTAL $2,983,056 $2,364,514 $618,542
Capital Project Reductions/Deferrals
11 CIP Projects
Proposed Modifications FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 ADA Compliance – reduce funding, focus on
active projects & path-of-travel
($150,000)
Baylands Levee Repair – defer to FY 2028 ($288,000) $288,000 Athletic Court Resurfacing – delay full court
resurfacing, focus on user safety
($50,000)
Benches, Signage… & Site Amenities –
reduce appropriation, focus on critical projects &
essential maintenance
($50,000)
Foothills Nature Preserve Restroom –
defer replacement from FY27 to FY28, focus on
safety & function
($300,000) ($900,000) $100,000 $600,000
Capital Project Reductions/Deferrals
12 CIP Projects
Proposed Modifications FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Off-Road Pathway Repair – reduce
appropriation, focus on degraded section & safety
($75,000)
Johnson Park – defer to FY28, monitor safety and
accessibility (ADA compliance project funding)
($250,000) ($1,400,000) $1,700,000
Werry Park Playground – defer to FY28, remains
serviceable and safe for use.
($350,000) $350,000
Streetlight Condition Assessment – defer
comprehensive assessment to FY28, retain funding for
repairs & improvements.
($220,000) $220,000
Bike & Ped Plan Implementation vs
Churchill Ave (bike/ped) – use Measure B
($2,400,000)
TOTAL Reductions/Deferrals ($3,833,000) ($1,700,000) $1,658,000 $100,000 $600,000 Revised Ending Capital Impr Fund Bal. $2,428,380 $4,801,793 $6,742,188 $7,125,119 $11,925,871 Recommendation
13 The Finance Committee and Staff recommend the City Council review, discuss and approve amendments to the Fiscal Year 2026 Budget Appropriation for various funds and various capital projects, as identified in Attachment A, Exhibit 1 and 2.