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June 13, 1991
HONORABLE CITY COUNCIL
Palo Alto, California
Members of the Council:
.Report in Brief
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Belo~ are respons~s to questions raised during the slide presenta
tion of the Financial Overview of the city of Palo Alto at the May
13 city Co~cil study session.
Q: In conjunction with the pie graph showing that saJaries ~nd
benefits exceed 60 percent of total General Fund s:pendinq, how
do salaries and benefits in Administration compare .ith the
other departments?
A: For FY 1990-91, salaries and benefits in Administration (City
Council, City Clerk, City Manager, city AttorneYt City
Auditor, Human Resources, Information Resources, and Finance)
constitute 68 percent of total expenditures. For the other
departments, the figures are!
public Works
Planning
Police
Fire
Community 5ervices
47 percent
57 percent
67 percent
,3 percent
46 percent
For the enterprise funds as a 'Whole,
constitute only 15 parcent of total
utilities purchases are 50 large.
purchases, the salaries and benefits are 35
salaries and benefits
expenditures because
Excluding utilities
percent of expenditures.
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Q: What are the components of the revenue base of a typical
California city?
A: The table belo~ sho~s the revenue pie graph percentages for
palo Alto~ and compares them with all California cities, based
on the mcst recent data available from the Census Bureau:
Revenue Source
Pro pert,,' taxes
Sales tax
utility users tax
other taxes
Subtotal -Taxes
Palo
Alto
1990-91
13\
23\
8\
11\
Serv~ce fees and perrr.its 10%
Transfers (utilities , other) 22\
Other revenues -11\
Total revenues 100\
All
California
Ci ties
1988
50%*
10\
1H
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100\
-Some of california's largest cities derive siqnificant amounts of
non-tax revenue from airports, ports, and harbors, and from grants
by the state and federal governments. Thus, the tax/non-tax
revenue split for all cities is held do~n to 50'/50\ in this table.
For all but the largest cities, the split ~ould usually be higher
than Palo Alto's 55%/45',
Q: Hov does Palo Alto's sales tax per capita compare with other
cities?
Palo Alto accounts for 8 percent of Santa Clara County's total
sales tax receipts, but has only 4 percent of the County's
population. Thus, in 9cneral, Palo Alto's per capita sales
tax receipts are twice as high as the rest of the County.
Q: If during fiscal year 1988-89, the General Fund showed a $5.5
million operating surplus, t~en why did reserves go dow~ that
year?
A: The reserves included in the Reserve barchart include only the
General Fund contingency, reserves for adVances to other
funds, and the CTP reserve. Other reserves, which include
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reserves for encumbrances and reappropriations, and invgntory
reserves, increased in 1988-89 ($.5 million). In additic;n,
fund balances designated for self insurance and for the
streets and sidewalks1school site projects, also increased
($3.2 million). Funds appropriated directly from the elP
reserve durinq the year amounted to $2.9 million. Together
vith the increase in the reserves r.ot included in the Reserve
barchart, this accounts tor the $1.05 million decrease in
reserves shown.
Respectfully sub~itted,
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KE'V IN RIPER
Assistant Finance Director
~dl(<-<LO J6iv: HARRISON
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