General Fund and Infrastructure are Competing for Revenue

Although infrastructure isn’t formally a Council priority, it has taken lots of council and staff time, and unlike the five official priorities, it has been the subject of special study sessions with more to come.

This is pushing a struggle between funding and supporting existing public services, and fixing and improving our infrastructure.  The discussion about replacing Animal Services with a tax-generating auto dealer and perhaps dropping local animal services in favor of contracting it out to an outside agency is just one example.

The Great Recession and resulting loss of tax revenue already is impacting Palo Alto general fund spending and staffing. Per the 2011 Service Efforts and Accomplishments Report (SEAR), since 2007, staff dropped by 68 people or 9 percent. Police lost 7 employees, or 4 percent, Fire lost 3 staff, or 2 percent, Community Services lost 24 staff, or 16 percent, and Planning lost eight, or 15 percent.

Per capita spending dropped from $1645 in 2010 to $1575 in 2011.  Some services like maintaining the golf course and janitors were outsourced, and others may be in the future. So far these cuts haven’t had a big impact on provision of satisfactory services based on the public responses cited  in the 2011 SEAR, but how many more cuts can be made before services start to suffer is a real question.

Inadequacies in capital improvements and problems with city facilities not being quake-safe or handicapped-accessible have been concerns for more than 15 years, but there hasn’t been the funding or concerns needed to fix things. 

After several studies and audits plus formation of a special infrastructure committee the needs to close the infrastructure repair gap became indisputable.

Council and staff are considering several possible tax increases to fund infrastructure, but any tax raised to pay for infrastructure repairs can’t also be used to cover shortfalls in operating expenses and provision of needed services. There may be an infrastructure-related tax on the ballot this November.  

Asking voters to approve another tax for general fund operations on the same ballot probably will result in both taxes failing. It’s most likely that some sort of tax increase to fund upgrading and repairing infrastructure will be on the November ballot, but no tax increase to maintain general fund income would be likely.

Residents know we have infrastructure problems and they need fixing. In the SEAR 81 percent of respondents supported or strongly supported new revenues for capital improvements.

No surveys have been done regarding raising taxes to maintain city services, but if one was taken I suspect there would be less than 50 percent supporting or strongly supporting higher revenues for standard city services. We may get our infrastructure repaired and made modern, but more taxes or fees in order to maintain or slightly increase current service levels seems unwinnable at this time.