The COVID emergency is forcing our city government to face its toughest financial challenges in decades. The services that define our community are proposed to be cut severely: our police and fire departments, parks and open space, libraries, community centers, transportation, and youth services. Less visible, but vital, functions like code enforcement, parking management, and development oversight are also on the chopping block.
By only modestly reducing investments in big capital projects, re-bidding projects, and curtailing salaries and raises, we can eliminate the most severe cuts to employees and the services that we rely on. The city can also ensure it has adequate reserves to meet essential needs if the economy worsens in the coming months.
Guiding Principles
Tough decisions are best made when based on clear principles. The city needs to lay out transparently their economic assumptions and the implications of what they’re proposing. For example, which cuts are already vacant positions? Which are for services that can’t be provided currently due to COVID restrictions? How does state law limit the city’s ability to modify existing labor contracts? Which capital projects are truly urgent and essential?
Big Budget Impacts of Capital Investments
When I served on council ten years ago, we appointed an Infrastructure Blue Ribbon Committee (IBRC) that recommended a three-part solution to our decades-long need for infrastructure investments. We soon addressed the first two tiers: “keeping up” and “catching up” on infrastructure maintenance. The third tier was funding for overdue big facility projects like a new police building, parking garages, two new fire stations, restoring our Municipal Services Center, and other projects. The challenge was how to fund these needs while continuing to provide our most valued services. We developed and implemented a funding plan, primarily through zoning incentives and marketing to expand our number of hotels and increase the hotel tax (TOT) revenue.
The plan was to grow new revenue for big capital projects. It was never intended that these projects would be built at the expense of the services we value and need. But with the COVID-related loss of TOT income, the proposed budget instead prioritizes paying for new facilities and other capital projects by cutting public safety and community services while keeping the record capital funding budget. These projects address important long-term needs, but many are not critical over the next couple of years.
By only modestly reducing the rate of infrastructure spending, re-bidding projects, and curtailing salaries and raises, we can eliminate the most severe cuts to employees and valued services.
For a more complete set of recommendations, here is a link to a recent Op/Ed that I co-authored an Op/Ed with Pat Markevich, a former member of the Infrastructure Blue Ribbon Committee, addressing the need for principled financial leadership during this year’s budget negotiations.
This is a difficult time with tough decisions ahead, but with smart choices, we can respond to the crisis without devastating the services that make Palo Alto a safe and wonderful place. Now more than ever, we need a sense of community. Working together, we can get through this.