Uploaded: Mon, Jun 11, 2007, 5:58 pm
Henry Riggs behind utility tax survey
The mystery has been solved behind an anonymous survey targeting Menlo Park's utility tax.
Planning Commissioner Henry Riggs, a leading critic of the utility tax, e-mailed a link to an online survey to some 4,000 Menlo Park voters on June 8, seeking what he called the "community's voice" regarding what the City Council should do with the tax.
This isn't Mr. Riggs' first criticism of the utility tax -- he firmly opposed the council's decision to enact the tax at the maximum rates starting April 1, and was joined by Councilman John Boyle and former councilwoman Lee Duboc in opposition to the utility tax.
Mr. Riggs said about 200 people completed the eight-question survey, and most of the respondents shared the sentiment he has expressed to the council over the past several months -- if the city was more upfront about the city's better-than-expected financial situation, the tax wouldn't have passed.
According to the survey results e-mailed by Mr. Riggs to the council, about 88 percent of the participants would not have voted for the tax if they knew the city ran a $3.7 million surplus in the 2005-06 fiscal year, compared to the $800,000 deficit city staff projected prior to the election. He said about 94 percent of participants said the city should reform its "fiscal auditing process so that voters will have accurate information prior to voting."
"I know this is an imperfect research tool, but a whole group of [Menlo Park residents have had a list of concerns about the [utility tax and the whole budget process," Mr. Riggs said. "We need a little more daylight on our financial process ... so we can end this awkward and rather unfortunate tax."
Posted by Paul Collacchi,
a resident of Menlo Park: The Willows
on Jun 12, 2007 at 8:56 am
I agree that Menlo Park needs to go through an exercise to re-learn the true budget numbers, but the deeper fact of whether or not there is a "structural" deficit remains to be answered.
There are real policy decisions involving perhaps as much as $4M per year, which if spent or not, would balance the budget or not, but, if neglected, would result in lower service levels or run down assets such as streets and storm drains and facilities.
Unfortunately, Henry Riggs is not saying Menlo Park needs "daylight" to determine the facts, he is saying he needs "daylight to end the awkward and unfortunate tax." Will Henry fit the facts to justify the policy?
I am deeply concerned that yet another "official" in Menlo Park, is reporting partial or distorted accounting numbers to justify a personal policy agenda as did the prior council during their ill-advised privatization phase.
This destroys any confidence the public has in financial facts for every council, not just those who engage in financial distortion. The city is no longer trusted to tell the truth, not because staff misreports financial data but because some elected and appointed officials are mis-using it.
Between 2000 and now, for legitimate reasons documented below, Menlo Park has also used different and inconsistent budgeting practices in almost every year. That makes it difficult to establish a trusted budgetary baseline.
Here are things Menlo Park citizens need to know about the city's budget in order to help determine whether or not there is a structural surplus or deficit.
1.) The budgets and the yearly Consolidated Annual Financial Reports are online here: Web Link Citizens should read them.
2.) Former city manager David Boesch was hired with the understanding that he would implement a new "service-based" budget approach rather than the traditional "departmental-based" budget approach. After implementing the new approach, all costs for all services were completely "re-normalized", in other words, reported differently than they had been.
Unfortunately, former council members exploited this change to confuse, report, and mis-report partial truths in order to justify policies decisions, particularly those regarding privatization. That has helped produce much of the confusion.
3.) Around 2002, a state law forced accounting practices on all cities that required them to report the book value, after depreciation, of all city assets including streets, lamp posts, curbs, buildings, etc.
After making its initial study to comply with the new reporting practice, Menlo Park fully learned how much yearly capital maintenance had been "deferred", not performed, on important community assets such as the street system and the storm drain system, both of which are less than optimal. The policy decision to restore them even to mediocre shape would require millions per year. I believe then facilities manager Kent Steffens recommended $2M per year.
Hence if a council wants to show a balanced budget, it can defer (i.e not make) the yearly transfer of $2M, but it cannot defer those costs forever. They will come due. Budgets in the recent past have both included and excluded this $2M line item.
4.) Beginning with the recession in 2000, the city manager began implementing emergency budget-balancing practices of "deferring" still more capital maintenance. For example, police cars were bought and upgraded less frequently, as were computer systems. It's unclear whether this second level of deferred spending has been fully restored to "normal." The practice has been inconsistent throughout the 00's.
5.) The city has unfunded pension liabilities that must be computed in future years. During the late 90's those liabilities didn't exist, until the market crashed. Those pension liabilities may now or soon be hitting the yearly operating budget. If so, those costs are new costs that didn't fully appear in prior year's budgets.
6.) The surplus year, fiscal 2006-2007 was a one-of-a-kind budget that contained non-recurring anomalies. It should not be used as a baseline.
Part of the reported "surplus" came from non-recurring type 3.) deferred maintenance above (no streets and storm drains), and part of the reported "surplus" came from the fact that permanent staff positions, went un-hired during the period. Both are non-recurring. These make the "surplus" look larger.
When the city computes the potential budget figures to restore two kinds of capital maintenance, recently deferred, and long-time deferred, including streets and storm drains, and the city computes the money need to fund pension liabilities, and when the city fills all outstanding staff positions it will have a much better idea of its yearly expenditures. Menlo Park may incur structural costs on a yearly basis that could alter the expenditure columns by millions,
These spending decisions are community policy decisions, but until Menlo Park has made those decisions to create a "normal" yearly expenditure, it cannot know whether or not it has a structural deficit.
As far as my own policy bias? I think the city should restore its streets and storm drains, but my preferred mechanism is to use issue a bond specifically for those items rather than levy a tax such as a utility tax.