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City Council
Staff Report
From: City Manager
Report Type: STUDY SESSION
Lead Department: Administrative Services
Meeting Date: May 11, 2026
Report #:2512-5685
TITLE
FY 2027 Proposed Operating and Capital Budget - Finance Committee Update and Council Budget Discussion. CEQA Status – Not a project
RECOMMENDATION
This study session is intended to facilitate next steps in the FY 2027 Budget process. I The study session also provides an opportunity for the Finance Committee to discuss with the City Council the status of FY 2027 budget review in preparation for the Committee’s budget wrap-up work on May 19, 2026.
Staff recommends that the City Council:
Review the current proposed budget adjustments to the Fiscal Year 2027 Proposed Operating and Capital Budgets and Municipal Fee Schedule in alignment with the work completed by the Finance Committee on May 5, 2026 and May 6, 2026; Review the areas of focus for the City Council as identified by the Finance Committee and staff; and
Provide feedback to the Finance Committee on any areas of focus or additional deliberations to review as part of the Budget Wrap-up Meeting scheduled for May 19, 2026.
ANALYSIS
Finance Committee reviewed the FY 2027 Proposed Operating and Capital Budgets and Municipal Fee Schedule at the Finance Committee Meeting on May 5, 2026 and May 6, 2026.
This report supports the discussion on the Finance Committee proposed adjustments to the FY 2027 budgets and/or Municipal Fee schedule.
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FY 2027 Budget documents are referenced below:
FY 2027 City Manager Proposed Budget Transmittal Letter1 FY 2027 Proposed Operating Budget2
FY 2027 Proposed CIP Budget3
Budget Transmittal to City Council ( May 4, 20264) - Agenda Report Finance Committee Review of Proposed Budgets ( May 55 and May 6, 20266) Agenda Report
Finance Committee Review of Proposed Municipal Fee ( May 6, 2026) Agenda Report As new materials are released during the Finance Committee review, all materials can be found on https://www.paloalto.gov/budget
FISCAL/RESOURCE IMPACT
This report is a study session for the City Council to review the Finance Committee’s analysis and tentatively recommended changes to the FY 2027 Proposed Budget. No financial impacts will occur as a result of this report; however, recommendations from this study session will inform the Finance Committee’s final recommendations for adjustments to the FY 2027 Proposed Budgets to the City Council for adoption on June 15, 2026.
STAKEHOLDER ENGAGEMENT
Community members are encouraged to review budget publications available online and engage throughout the budget process with City Council and Finance Committee to inform priorities and service needs.
ENVIRONMENTAL REVIEW
This item is not a project under California Environmental Quality Act (CEQA) as defined in CEQA Guidelines, section 15378, because Council consideration of the FY 2027 Budget is fiscal activity which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. CEQA Guidelines section 15378(b)(4).
1 https://www.paloalto.gov/files/assets/public/v/1/administrative-services/city-budgets/fy-2027-city- budget/proposed/fy-2027-proposed-transmittal-letter_online.pdf 2 https://www.paloalto.gov/files/assets/public/v/1/administrative-services/city-budgets/fy-2027-city- budget/proposed/fy-2027-proposed-operating-budget_revised.pdf 3 https://www.paloalto.gov/files/assets/public/v/1/administrative-services/city-budgets/fy-2027-city- budget/proposed/fy-2027-proposed-capital-budget-book_online.pdf 4 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=18709 5 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=18568 6 https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=18574 8 9
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ATTACHMENTS
Attachment A: Nonprofit Funding Levels Options for Consideration Attachment B: CIP – KPIs: track delays, cost increases, & deferred spending by program area Attachment C: Public Tree Maintenance Objectives
APPROVED BY:
Lauren Lai, Administrative Services Director