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February 02, 2005

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Publication Date: Wednesday, February 02, 2005

Menlo Park: More lean times predicted as budget season kicks off Menlo Park: More lean times predicted as budget season kicks off (February 02, 2005)

By Rebecca Wallace

Almanac Staff Writer

Lean times are expected to continue in Menlo Park, with City Manager David Boesch predicting an $812,000 shortfall between revenues and expenses in the city's budget for fiscal year 2005-06.

Sales-tax revenue, the largest source of income in the city, has dropped more than 50 percent from the 2000-01 heyday of $13 million, he wrote in a staff report. In addition, pension costs are increasing, and the state is continuing to take away funds.

The City Council kicks off the 2005-06 budget process on February 1 by discussing the general approach it will take on the city's budget for next year. As in the previous four years, Mr. Boesch is saying the council could continue to make service cuts and draw out of the city's general fund reserves.

Trouble is, after four years of reductions totaling $4 million and the equivalent of about 30 full-time employee positions, cuts become a more difficult fix, Mr. Boesch wrote.

"Staff believes the city will soon reach the point where continued incremental cutbacks (e.g., reduced operating hours, decreased service frequency...) either cease to produce sufficient savings or result in services that do not meet customer needs and are not worth delivering," he wrote.

For this reason, Mr. Boesch is suggesting a new approach to budgeting in the following year, 2006-07. It would involve developing a budget "from the ground up" by working with the public to see what services residents would want to keep and how much they'd be willing to pay, he wrote. Community meetings would be held in 2005 and 2006.

"This approach ... focuses on what the city decides to keep rather than what it decides to cut," Mr. Boesch wrote.

Meanwhile, one piece of good news stands out from Mr. Boesch's report. Since the $29 million general fund 2004-05 budget was adopted last June, staff members have created revised projections for 2004-05 that include $1.4 million more in revenues than anticipated.

This is partly due to a one-time, unanticipated $462,000 refund in property tax from the state, as well as higher-than-expected vehicle license fee transfers from the state and a "modest increase" in property and sales-tax revenue, Mr. Boesch wrote. In addition, expenses for 2004-05 are about $402,000 higher than projected, largely due to new labor contracts.

As a result, the city will be drawing only about $2 million from its reserves, as opposed to the anticipated $3 million, Mr. Boesch wrote.

The city has about $22 million of general fund reserves not yet designated for other purposes, then-finance director Uma Chokkalingam said earlier this year.
INFORMATION

The February 1 meeting begins at 7 p.m. in the council chambers at 701 Laurel St. The council is expected to discuss project priorities for 2005-06 at a meeting on March 5. For a copy of the staff report, go to menlopark.org, click on "City Council," and go to the February 1 agenda.


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