Menlo Park is facing a projected $1.01 million budget deficit for the fiscal year that starts July 1, but City Manager Glen Rojas says there's no need to panic.
Instead, he's suggesting the city try to ride out the current storm of national and state-wide economic problems, and see if the local economy improves.
Mr. Rojas released the first copy of his proposed 2008-09 fiscal year budget on May 22.
According to the 200-page document, the city is expected to spend about $38.24 million in the fiscal year starting July 1, and collect about $37.23 million in revenues.
Rather than make any drastic budget cuts, or raise the utility tax rate from the current 1 percent tax on all utility bills, Mr. Rojas is suggesting the city pull the $1.01 million needed to cover its costs from its $24 million reserve fund. The utility tax should stay at the current level for at least another year, Mr. Rojas said in a report attached to the budget document.
"The availability of adequate reserves provides an opportunity to take a longer term view, allowing for a more thoughtful process toward a sustainable spending plan -- neither over-committing city resources nor over-correcting for near-term conditions," Mr. Rojas said in the report.
Council members will discuss the budget at their June 3 meeting, which will start at 7 p.m. in the council chambers at the Civic Center, between Laurel and Alma streets. Council members are expected to approve the final budget document at their June 17 meeting.
Why the deficit?
The city's expenditures are expected to rise 6.3 percent in the next fiscal year as revenues grow just 1.5 percent, and a big chunk of the rising costs are tied to personnel.
Personnel costs are projected to increase $2.1 million, partially due to two sets of salary increases for the city's 39 line-level police officers -- a 6 percent increase scheduled for July 6 and a 3 percent increase set for January 2009, both approved by the current council. For the first time in several years, the police department is expected to be fully staffed, adding to projected personnel costs.
The city has also added 4.75 full-time-equivalent positions to the payroll in the past year, including a community engagement manager, a business development specialist, and a computer support technician.
About $27 million (71 percent) of the city's costs are projected to be personnel expenditures, according to the budget.
Could be OK
But if past budgets are any indicator, the projected deficit could turn into a surplus by year's end.
Last June, the city was estimating that revenues would fall about $1.59 million short of expenditures after the council reduced the utility tax rate for the 2007-08 fiscal year. But due to unexpected savings, the city now anticipates a $715,000 surplus for the fiscal year that ends June 30.
Past budgets have also come in rosier than expected.
Mr. Rojas noted that the city is expected to collect about $250,000 of additional transient occupancy tax dollars in the upcoming fiscal year thanks to the anticipated opening of the Stanford/Rosewood Hotel by early 2009. He also said that the city's new red light cameras, although intended to reduce collisions, are estimated to net the city $100,000 next fiscal year.