The books have closed on the first half of the current fiscal year, and the outlook isn't exactly rosy for Menlo Park -- though it's also not as bad as it may seem, according to the city's finance director.
Through Dec. 31, halfway into the fiscal year that began on July 1, the city's revenues had only hit 41.8 percent of the revenue projection for the year -- $3.1 million short of half the expected revenue for 2008-09. Sales tax is down from the previous fiscal year, building activity has decreased, and the city is earning less interest on the general fund.
The shortfall "might look bad, but it's not too much more than was anticipated" when the city prepared its budget, said Finance Director Carol Augustine, because Menlo Park tends to receive a higher percentage of its income in the second half of the fiscal year, for a variety of reasons.
For one thing, three budget categories, the bulk of which tend to be collected in the second half of the year -- franchise fees, property tax and the tax on guests in hotels and motels -- fell approximately $1.5 million short of the prorated revenue projection, though they are not far off the last fiscal year's pace.
Fees associated with building permits and business licenses -- the two are lumped into the same category -- were $918,000 below the prorated revenue projection. Ms. Augustine attributed much of that decline to the fact that the vast majority of business license fees are paid in the second half of the year.
Still, both the number of building projects and the size of those projects has decreased, Ms. Augustine said. Sales tax is off $134,000 from the same time in the 2007-08 fiscal year. And the interest the city gains from the general fund has also declined.
City staff will make recommendations on expenditure cuts when it presents its mid-year report on the budget to the City Council in late February.