Revenues
Department FTE Adjustment Adjustment
GENERAL FUND (102)
Non-Departmental Technical Adjust: Projected Sales Tax Revenue Update This action reduces General Fund revenue by $9 million to align with updated sales tax forecast for $5 million ongoing reduction and $4 million contingent one-time prior year adjustment. Primarily due to leasing and auto sales sector. - (9,000,000)$ -$
Non-Departmental Technical Adjust: Projected Property Tax Revenue Update This action reduces General Fund revenue to align with updated county and market forecasts for property ($1.3 million reduction) taxes. Property tax growth is expected to be lower than the original 6.1% projection, and sales tax estimates have been adjusted down based on recent quarterly reports.
- (1,300,000)$ -$
Non-Departmental Technical Adjust: Eliminate Uncertainty Reserve This action eliminates $6.0 million from the Uncertainty Reserve and returns these funds to the Budget Stabilization Reserve (BSR). This serves as a strategic bridge to mitigate projected revenue declines anticipated in Fiscal Years 2026 and 2027. - -$ (6,000,000)$
Non-Departmental Technical Adjust: California Ave. Event Series (formerly Third Thursday Series) This action formalizes the grant award of $40,000 in FY 2026 to the Palo Alto Recreation Foundation, previously awarded to the Chamber of Commerce as the fiscal sponsor of the former Third Thursday event series. As previously announced, the grant previously awarded through the Non-Profit Phase I grant process, is being evaluated for rebranding to better support the future vision of California Avenue activations with PARF.
- -$ -$
Utilities Technical Adjust: FY 2025 Year-End Cleanup for the Electric Equity Transfer This action adjusts the electric transfer to the General Fund following the release of the FY 2025 ACFR. This update accounts for changes to PG&E’s return on equity rates effective January 1, 2026, ensuring accurate financial alignment. - 157,000$ -$
Fire Technical Adjust: Revenue from Stanford/Fire Response Services Agreement This action recognizes $109,665 in the estimate for Charges for Services revenue from the FY 2025 reconciliation process with Stanford University, which showed a
1.1% variance above the adopted budget. These funds have been billed per the terms of the agreement.
- 109,665$ -$
Fire Technical Adjust: Salaries and Overtime Adjustment This net-neutral action reallocates $1.25 million in projected salary savings to the overtime budget. The department carried ten vacancies during the first half of the fiscal year, necessitating overtime to maintain minimum staffing levels. - -$ -$
Fire Technical Adjust: Revenue from Other Agencies/Overtime for Strike Teams This action recognizes $489,382 in reimbursement revenue for participation in eight strike teams. The request increases overtime and equipment budgets to align with state-reimbursed costs for personnel and essential tools. - 489,382$ 489,382$
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2026 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
Revenues
Department FTE Adjustment Adjustment
GENERAL FUND (102)
CITY OF PALO ALTO
RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2026 BUDGET Expenses
ATTACHMENT A, EXHIBIT 1
Fire Technical Adjust: Revenue from Other Agencies/Overtime for Fire Station 8 This action recognizes $229,660 in revenue under an agreement to staff Fire Station
8. An offsetting overtime expense is included to account for personnel costs associated with this service contract.
- 229,660$ 229,660$
Library Technical Adjust: Grant Revenue/Library Programs This action recognizes $13,195 in grant revenue from the Pacific Library Partnership and the Howard Hughes Medical Institute. Funds support the Vintage Media Lab and participation in the Northern California Digital Library Consortium. - 13,195$ 13,195$
Planning & Dev.
Services
Technical Adjust: Development Services Bank Card Fees/Permits and Licenses This action increases the budget for bank card fees by $120,000 due to increased credit card usage by applicants. The expense is offset by revenue from plan check and permit fees.
120,000$ 120,000$
Planning & Dev.
Services
Technical Adjust: Permits and Licenses Revenue/Gas Water Heater Subsidy This action reflects a $50,000 reduction in anticipated revenue from Permits and Licenses to incorporate the gas water heater permit fee subsidy, authorized by Council resolution to support environmental goals.
(50,000)$
Fund Balance Adjustment to Fund Balance
This action adjusts the fund balance as a result of actions recommended in this report and decreases the Budget Stabilization Reserve (BSR) projected for June 30, 2026 to $54.7 million or 17.8%. **If the $4 million prior year sales tax adjustment does not occur, then the revenue reduction may be $6.3 million in FY 2026, resulting in projected BSR of $58.7 million or 19.1% at FY 2026 year-end. - -$ (4,083,335)$
GENERAL FUND (102) SUBTOTAL - (9,231,098)$ (9,231,098)$