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By Steve Levy

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About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved ...  (More)

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Reader's Choice

Uploaded: Dec 22, 2013
I usually write on topics that interest me or about recent economic news.

For this blog I invite questions on the local, state and national economy issues and constructive suggestions for future blog topics.

Wishing everyone a happy holiday season and peace and good will for 2014.

Steve

Comments

Posted by Sam, a resident of Midtown,
on Dec 27, 2013 at 10:11 pm

Steve,

What are the unfunded mandates facing Palo Alto over the next 20 years?


Posted by stephen levy, a resident of University South,
on Dec 29, 2013 at 8:05 am

stephen levy is a registered user.

Sam,

I may not have the expertise to answer your question but it might start a good conversation.

What do you mean by unfunded mandates?

Are you thinking of public employee retirement benefits, which are partly unfunded, but not normally called mandates?

Or regional air quality regulations? Or housing planning targets?


Posted by Sam, a resident of Midtown,
on Dec 29, 2013 at 1:38 pm

Steve,

I am referring to all requirements that we are obligated to pay for, going forward, and which are not currently budgeted. The public employee benefits are a good place to start...why would they not be called mandates, since we are required to pay them?

BTW, I highly appreciate your open call to such serious issues.


Posted by Justin, a resident of Mountain View,
on Dec 30, 2013 at 11:43 am

Could you address any efforts (or lack thereof) to implement paid parking in Palo Alto? I see almost no mention of parking meters despite seemingly every other comment being about the "parking problem."


Posted by stephen levy, a resident of University South,
on Dec 31, 2013 at 1:06 pm

stephen levy is a registered user.

@Sam

I do not know all the answers but here are a couple of points to consider.

Palo Alto adopts an operating budget each year and there are and, by law, cannot be, unfunded annual budget obligations. In point of fact, the City is now running a largish surplus as the economy surges and has set aside $8 million in each of the past two years for future infrastructure funding as well as added $2 million each year to accelerate road repair.

I do not know as much about the school finances but the board also must balance its operating budget each year.

All large bond issues by the city and school are funded by property taxes associated with the bond issues so there is no unfunded liability there.

I think the major unfunded obligations for both city and school relate to employee retirement programs. I do not know the actual current accounting of future obligations--perhaps other readers can help out. I will attempt to get an update of the city obligations next month.

I do not call them mandates (it is really a language issue only) because they are not imposed by an outside body but they are definitely obligations.

There is no definite "unfunded" amount. For pension obligations, the part that is unfunded currently depends on the expected rate of return on pension fund assets. It will be interesting to see what new estimates are given the large recent surge in equity and real estate prices. I would imagine that pension funds did well in 2013 and made up lost ground.

What is unfunded also depends on the contributions of employers and employees, both of which are subject to some discretion and are generally rising.

So I am sure the City has not fully funded all future retirement obligations but cannot offer a number at this time though they are probably lower than people think

In terms of retirement health benefits, for a long time this was the major area of unfunded obligations. Recently the Congressional Budget Office reduced the Medicare projected future deficit since health care costs were rising at a much lower rate than expected.

if you can think of other examples of what would be "unfunded mandates" in your opinion, send them along and I will try and respond.


Posted by stephen levy, a resident of University South,
on Dec 31, 2013 at 1:22 pm

stephen levy is a registered user.

@ Justin

Paid parking is definitely on the agenda and nothing is decided yet. I will go to the next infrastructure committee meeting and report back and I am sure the Weekly will cover it also.

Paid parking can include meters and permit fees for parking in downtown garages.

My own take is that meters alone will not do much for the parking shortage and might induce more people to park in neighborhoods. We need a new principle (parking isn't free in high value crowded areas) AND we need more capacity to alleviate the problem of excessive parking in neighborhoods.

But meters combined with new garages, perhaps a shuttle from the Baylands and some resolution to parking in neighborhoods could help.

The challenge is mostly in my opinion in the "parking isn't free" area as most posters want someone else to pay for parking solutions.


Posted by Sam, a resident of Midtown,
on Dec 31, 2013 at 2:42 pm

Steve,

Thanks for your reasoned response.

You mentioned the bond issues. Question: Taking the library bond issue, for example, and the subsequent cost overruns to build it (still going on), who picks up the difference? Is our general fund obligated, when bonds cannot complete the job?

I have a worry that Palo Alto (and many other cities) is betting on unrealistic growth projections, going forward, in order to pay its bills. Do you have this same worry?


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