About Us

State of the City, 2004

Before I share my thoughts with you on the Great City of Palo Alto, I’d like to
highlight what you think of our city. Last November, our city auditor, Sharon
Erickson, conducted a survey of you, the residents of Palo Alto, and asked your
opinion about our town. Here’s an overview of what you said:

•        90% of you think Palo Alto is a good or excellent place to raise children,
       putting us at the 95th percentile of cities across the nation.
•        88% think that your neighborhood is a good or excellent place to live – the 91st percentile.
•        87% rate city services overall as good or excellent – the 80th percentile.
•        69% agree that you receive a good value for the taxes you pay, putting us in the 89th percentile.
•        And a striking 94% of you believe that Palo Alto is a good or excellent place to live.

I share with you the belief that Palo Alto is one of the best cities in the country. But, that said, we
face continuing challenges as a community in being able to maintain and improve on what we have
today.

Tonight, I will talk about challenges in keeping Palo Alto as good as it is and in improving it. These
challenges include the budget and how we fund much of what you appreciate. I also will talk about
threats to our retail services and about Palo Alto’s process.

Budget
Since the economic downturn began in spring 2001, we have balanced our budget without
impacting delivery of services. We’ve kept our budget reserve at its target level. We’ve cut $14.5
million in expenses over the past three years. We’ve eliminated nearly 40 positions through attrition
and restructuring.

But the outlook is still unclear, with unresolved challenges ahead.

At the state level, fiscal uncertainty in the budget will persist. Last week’s passage of Props 57 and
58 makes the short term a bit more manageable. But the state still suffers a massive deficit and
will require controversial structural reform over the next several years.

We should expect the state to cut programs that support Palo Alto and the county. And we should
expect them to look for new, creative ways to take our resources. As a jurisdiction, the City is not
alone. Our pre-eminent school district may need to fend off more attempts by the state to raid our
“basic aid” funding.