Palo Alto City Council adopts cautious fiscal year 2026 budget amid hiring challenges

The Palo Alto City Council convened on June 16, 2025, to discuss the adoption of the fiscal year 2026 budget, a critical step in addressing the city's financial planning and workforce challenges. The meeting highlighted the city's cautious approach to budgeting amid ongoing uncertainties, with a focus on recruitment and retention efforts in light of new state legislation.

Chief Financial Officer Lauren Lai opened the session by expressing gratitude to the council and finance committee for their extensive work on the budget. The proposed budget includes a $6 million savings plan, which will be revisited in upcoming months. The council also reviewed the city’s organizational structure and fee schedule adjustments as part of the budget adoption process.

A significant portion of the meeting was dedicated to discussing workforce vacancies, as mandated by Assembly Bill 2561. Human Resources Director Sandra Blanch presented data indicating a citywide vacancy rate of 11%, a notable improvement from a post-pandemic peak of 17%. This reduction is attributed to strategic recruitment initiatives aimed at addressing workforce challenges.

However, concerns were raised by SEIU representatives, who highlighted that while improvements have been made, many departments still face high vacancy rates, particularly in utilities and public works. SEIU Chapter Chair Seirah Temple emphasized the strain on current employees, noting that many are handling workloads that exceed their capacity due to unfilled positions. The union called for timely hiring to alleviate pressure on staff and improve service delivery to residents.

The council's discussions underscored the importance of maintaining a robust workforce to ensure the city can continue to provide high-quality services. The meeting concluded with a commitment to address these workforce issues while finalizing the budget, reflecting the city’s dedication to both fiscal responsibility and employee well-being. As Palo Alto moves forward, the council aims to balance budgetary constraints with the need for a strong, supported workforce to serve the community effectively.