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Budget Crisis

The San Jose Mercury News reports on the budget debate taking place in Palo Alto as that city tries to bring its budget for next year into balance.

As Palo Alto continues to search for ways to keep the city budget balanced in an uncertain economy, the focus will have to be on employee salaries and benefits, council member Hillary Freeman said Tuesday night.

“Pilots just took a 40 percent reduction in salary just to retain their positions. We’re getting close to that point,” Freeman said during a finance committee meeting at City Hall. The average cost to the city of a firefighter, including health care and pension benefits, is $100,000 a year, she said.

But Tony Spitaleri, president of the firefighter’s union, noted that union members have already shifted to a less expensive health insurance plan. Job cuts would damage a department that is already stretched thin, he said: “We’re saying, `Hey, we can’t do more with less, because it’s a delicate balance.'”

This is taking place across the state — it’s that time of year. The Federal Reserve spoke yesterday about increased concerns about deflationary pressures. I’m sure folks in the airline industry who have recently agreed to significant pay cuts would say they know them only too well.

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