Feb. 15, 2023
By Braden Cartwright
Daily Post Staff Writer
When Councilman Greg Tanaka asked why the city of Palo Alto didn’t know about a $40 million budget surplus before voters approved a new business tax, he received two different answers from city leaders.
“Why was this a surprise?” he asked at Monday (Feb. 13)’s council meeting.
“Frankly, it wasn’t a surprise,” Chief Financial Officer Kiely Nose said. “Yes, it was higher than staff expected. But we were tracking to have higher revenues than budgeted and lower expenses than budgeted.” City Manager Ed Shikada jumped in because he said he wanted to ensure the city’s responses were accurate, and Tanaka had characterized the surplus as a surprise.
Tanaka interrupted and said that he had the floor. Shikada had “usurped” his time to speak, he said.
“Council member, I would really like to answer your question,” Shikada said.
The city follows a traditional budget calendar, Shikada said. The fiscal year ends in June, auditors review the finances in the fall, and council gets an update in December.
“We have perhaps been, quite frankly, too responsive in setting an expectation that information is available sooner than the traditional calendar,” Shikada said.
For example, Shikada said that council got an update on the budget in May 2022 that projected a surplus, but “information was limited and final results differed when all revenues and expenses were accounted for and audited and released November 2022.” Tanaka, who opposed the business tax, said that he views the budget timing “very differently” than Shikada.
“We should probably have disclosed as soon as we knew this, especially as people were making decisions on the measures,” he said.
The city closed its books on June 30 last year for the 2021-22 fiscal year and sent its financial information to an auditor. At the same time, council was working on two revenue-generating measures to put on the November ballot. One was a business tax and one was a transfer of profits on natural gas bills to other city projects.
The tax was approved by 67% of voters on Nov. 8.
The audit showing a $40.6 million surplus was released a week later, on Nov. 16.
The council should repeal this tax and have a re-vote.
If you go by the buckets council established for the business tax (1/3 grade separations, 1/3 for low-income housing and 1/3 for police) that gives the city $13.3 million for police. That’s more than enough to have cops at Stanford mall to stop robberies and robberies downtown. Why isn’t the City spending this money now to stop crime!
The Council should repeal the pathetic little business tax and try again but more critically it should immediately repeal / cancel the Utility Transfer Tax — which is almost 3 times as large as the Business Tax — and cancel the 20% utility rate hike.
““We have perhaps been, quite frankly, too responsive in setting an expectation that information is available sooner than the traditional calendar,” Shikada said.”
He really has to be kidding. Or delusional. Or just greedy since the Utility Transfer Tax feeds his absurdly high salary and that of his ever-growing staff.
And shame on all the politicians and “leaders” who kept threatening us with loss of critical services like Emergency Dispatch unless these 2 taxes were passedimmediately.
Remember the local papers endorsed both measures including the Daily a little late to find a backbone!
The surplus was a surprise because Shikada, Nose and maybe others on council decided to keep it from the public. I think they all should be fired. I’ll keep this in mind at election time.