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Guest opinion: Hard to find a financial crisis in Atherton

Original post made on Jul 19, 2011

A few weeks ago in these pages, I urged the Atherton City Council to survey the community before firing all of our building and public works department personnel.

Read the full story here Web Link posted Wednesday, July 20, 2011, 12:00 AM

Comments (20)

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Posted by C Shea
a resident of another community
on Jul 19, 2011 at 8:30 pm

Mr. Dudley surfaces the Building Department's revenue model. They should be self-sustaining, but have fallen short in the last fiscal year.

I think the reason is found in an intentional effort to reduce reserves from the Building Department. Apparently, a consultant informed the Town the surpluses were too high, exposing them to legal action for charging more than required.

The Town made a decision to lower fees in an effort to lose money to reduce the surplus.

Web Link


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Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Jul 19, 2011 at 9:30 pm

The financial crisis faced by the Town is clear when looking at the next 5 years IF no fundamental changes are made not next week.

We expect the Council to take a strategic perspective not manage the Town based on wether or not it can meet next week's payroll.


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Posted by mytown
a resident of Atherton: West of Alameda
on Jul 20, 2011 at 5:21 am

Mr Dudley states in his article, "Good morale is very important, both for our employees and residents. It is not a good sign when so many of our senior staff people have recently left the town, including the police chief, city manager, assistant city manager, public works director, two building officials, and so on. I hear from many other Atherton residents who share this concern."
I share this concern as well as it is clearly a indication of lack of leadership within the Town Council. There are and have been individuals on the Council who are divisive, rude, and lacking management skills and vision. The result has been this constant turnover in employees and this last event of hiring consultants of an interim nature and outsourcing efforts reflects their inability to manage the town.
It is clear lawsuits have really driven the economics of recent years and these legal actions are also are a symptom of lack of management. The Recology payment overhang is another example. A huge Community Center (not a library) touted by the council is an attempt to shift park expenses off on the county library system.
My suggestion is that Atherton residents wake up to what has happened and start the process of identifying good people to elect to the council come November.
Thank you Mr Dudley for your viewpoint.


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Posted by bob
a resident of Woodside: other
on Jul 20, 2011 at 12:12 pm

Peter Carpenter can now predict 5 years out , how about telling us where the Dow is going to be.


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Posted by peter carpenter
a resident of Atherton: Lindenwood
on Jul 20, 2011 at 12:26 pm

peter carpenter is a registered user.

Bob - I don't know where the Dow will be in five years but I do know where the Town's deficit will be if they don't reduce expenditures - about $7 million in the hole.

The Town Council is not responsible for predicting the Dow, it is responsible for having a long term balanced budget.

Perhaps Bob can speak to this issue. Cute comments don't count


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Posted by bob
a resident of Woodside: other
on Jul 20, 2011 at 12:49 pm

Peter 5 year predictions are very rarely accurate. What are your revenue predictions? Expenses are easy to predict not so with revenues. You need both to come to conclusions.


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Posted by John P Johns, CPA
a resident of another community
on Jul 20, 2011 at 12:56 pm

Malcom Dudley is right. Neither the current financial condition of Atherton nor its financial prospects for the near term justify a move as radical as outsourcing two departments and laying off 13 long serving Town employees.

It is clear the Town has an ulterior motive in outsourcing building and public works. Evidence of this ulterior motive lies in the fact that the decision was made before bids from private contractors came in. Additionally, since the bids arrived it does not appear as though the Town has entered into good faith negotiations with the employees who will be affected.

Another indication of an ulterior motive is the fact that not a single Police Department employee faces the loss of a job in this current "fiscal crisis" even though the Police Department consumes more than 1/2 of the total General Fund budget

If Atherton does not feel as though it is being served well by the two departments facing elimination, then it should take the necessary steps to improve the workings of these two departments within the framework of existing collective bargaining agreements and with existing management. Failure to do so constitutes a failure of leadership.


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Posted by WhoRUpeople
a resident of another community
on Jul 20, 2011 at 2:10 pm

JPJ - "another indication of an ulterior motive" is that you have had multiple run ins with APD, and consistently take a side on an issue based solely on where APD falls. I have no skin in this game as I am not a resident; neither are you, sir. How about we both "stiffle ourselves" and leave this debate to those who do.


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Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Jul 20, 2011 at 2:45 pm

Atherton runs almost solely on property taxes.
This year's property tax revenues are based on last year's property assessment.
Last year's property assessments are based on sales and transactions made two years ago.
Given the dip in transactions in the 2008-2010 period it is reasonable to estimate that property tax revenues will also not increase at the same 8-9% rate that they did in the 2001-7 period. In the meantime, IF nothing was done on the expenditure side, expenditures would continue to rise 6-8% per year. Ergo a structural deficit.


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Posted by lingering doubts
a resident of Atherton: Lindenwood
on Jul 20, 2011 at 2:53 pm

Who R u people states that Atherton's Former Finance director has had "multiple run ins with the APD". However, it is not clear what "run-in" whoRUpeople is referring to.

WhoRUpeople could be referring to when the former Finance Director's office was ransacked after he objected to improper spending by the Chief.

WhoRUpeople could also be referring to the former Finance Director's complaint that the Atherton PD failed to protect an elderly woman from elder abuse even though the Chief of Police at the time was purportedly a good friend of the woman.

WhoRUpeople could also be referring to the former Finance Director's complaint over Mike Guerra trying to hide official misconduct on the part of his officers, including the falsification of police reports.

WhoRUpeople fails to mention that just two weeks after Chief Guerra was cleared of the allegations that Johns raised against him, Guerra was demoted and now idles his time while his vacation runs out while another Chief steps in.

WhoRUpeople looks as though he'd like to stifle all comments made by those critical of the Atherton PD.

This causes readers of this forum like me to wonder: what ulterior motive does WhoRUpeople have?


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Posted by Not that hard to figure out
a resident of Atherton: other
on Jul 20, 2011 at 2:54 pm

WhoaRUpeople:
I can only think of one "run in" between Mr. Johns and the APD. The one in which the APD followed through on it's promise to "turn" him if he would not back down on his audit of certain building projects, as had been ordered by the entire Council.
The rest of it has been a lot of expensive fall out from that one event never getting properly resolved.
Your beef should be with the people who got the APD to "turn" on the finance director in order to divert attention away from themselves. Not with Mr. Johns


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Posted by In the know
a resident of Atherton: Lloyden Park
on Jul 20, 2011 at 5:05 pm

Danielson has told the City Council that the Building Department is rotten and that the only fix is to fire everyone.

If the City Council had paid attention to Johns instead of letting the Atherton Police Department run him out of town, things might different.

Instead the Council has chosen to listen to Danielson. The result? Another expensive lawsuit that Atherton is bound to lose and poor morale to boot.

They should get rid of that high priced hit man Danielson and bring in a real leader, one who isn't afraid to take on the Atherton Police.


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Posted by Ellen
a resident of Menlo Park: The Willows
on Jul 21, 2011 at 10:53 pm

Peter

Your estimate of a deficit 5 years out assumes property values in Atherton will not increase at the rate they did between 2001-2007.You didn't say why you thought they wouldn't.
I think it is likely they will, because the fundamentals aren't really changed. The Valley economic roller coaster is on the way up again which means companies will be competing for top talent; and will be willing to pay a premium for it. Those people will need a place to live, and Atherton is still a top choice. They will pay what they need to to live there. If Atherton were a larger more diverse community, I would agree with your assessment, since property values were too high (people couldn't really pay them)in many places. Not so Atherton.
Similarly, I think you estimate of increasing costs may be too high; at least to the extent it reflects salaries,as opposed to medical benefits. Most workers can't bartgain for much in the way of salary increases these days. Supply exceeds demand.


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Posted by mytown
a resident of Atherton: West of Alameda
on Jul 22, 2011 at 5:58 am

Ellen, you make a very good case regarding the property tax future in Atherton. It is a very unique community and according to Forbes magazine the 94027 is second highest in the country in terms of personal wealth and house values. All you need to do is drive around Atherton and look at the new construction, tear downs and remodels to get the idea visually. In the tax year the assessment rolls increased over 3% adding $191,732,690 to the total value of $6,361,378,487. Looking back about five years ago the total value for Atherton in 2006-2007 year was $4,864,479,697.
Without getting into today's budget "crisis" which is in full panic mode by the council it is hard to believe that Atherton cannot afford the needed city employees needed to maintain the town in the same manner they maintain their houses. The same would go for first class police services. So perhaps Atherton at some point will wake up as a community after the baby has been thrown out with the bath water but it is a hard place to wake up. As Mr Dudley has pointed out an additional parcel tax of a relatively minor nature is one solution. Apparently the town council is not interested in surveying the town to find out what they want in the way of services,library location and the consideration of a new parcel tax.


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Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Jul 22, 2011 at 8:23 am

"Your estimate of a deficit 5 years out assumes property values in Atherton will not increase at the rate they did between 2001-2007"

The Forum format precludes graphs which would make my response easier to understand but I will try. During the 2001-2007 period Town revenues and expenses rose at approximately the same rate- the lines overlapped. From 2008 to the present revenues flattened while expenses continued to rise creating a structural deficit. The expense and revenue lines are now offset and will remain offset unless property tax revenues increase more rapidly than expenses and or expenses are permanently reduced. The annual gap is cumulative so that each passing year means a greater accumulated deficit.


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Posted by POGO
a resident of Woodside: other
on Jul 22, 2011 at 8:25 am

Ellen and mytown make the mistake of using optimistic projections to mute current attempts at real, serious reform. I also hope that things return to normal and we'll all be fat, dumb and happy. But hope isn't a strategy. And if the past few years haven't cautioned you to the dangers of wearing rose colored glasses, nothing I can say is going to change your mind.

I disagree with Mr. Dudley who, in my opinion, is offering a band-aid that does not address a serious, systemic problem. I respect Mr. Dudley for his expertise, but we have seen a lot of very smart people fall victim to irrational exuberance. You'd be hard pressed to identify people victimized by rational restraint.

For that reason, I think we should embrace those citizens who are calling for a new era of fiscal responsibility from our government. While it will mean some pain today, especially for those impacted public employees, it will result in a healthier more sustainable tomorrow... and avoid far more pain for everyone.

As someone in Washington recently said, it's time to eat our peas.


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Posted by mytown
a resident of Atherton: West of Alameda
on Jul 22, 2011 at 9:20 am

Peter says
"During the 2001-2007 period Town revenues and expenses rose at approximately the same rate- the lines overlapped. From 2008 to the present revenues flattened while expenses continued to rise creating a structural deficit".
We can go back and forth on this forever but what is missing from your "structural deficit" argument perhaps is that you offer no explanation for why expenses went up. First, as Mr Dudley noted is largely the cost of lawsuits. It might be said that if there were no lawsuits there would be no deficit. Everyone would agree this is a non-productive use of our taxes. Second your argument ignores the spending by the town council that is discretionary as in the Park and some road projects. Perhaps the biggest number was last year for over $900,000 if my memory serves me correctly for the Town Managers house plus wells, tennis court netting, redoing the lawn,remodeling the Pavilion and so on. The point is these items are not very important to me in the context of town services and the ROI not very much.
Some of these monies came from the parcel tax and some from the general fund. So Peter you might cry the "structural deficit" theme it has no merit in the face of these expenditures. I do not send off my tax money to fund lawsuits either. Also I would also ask you to check your facts regarding the flat increase since 2008. Only in one year was it flat and not very flat at that ,-.06%. The rest of the years it has increased and although the percentage might seem to be small it is a huge number on top of the total assessed values.
POGO, you may like peas so eat all you like but personally I reject that suggestion given to the masses.


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Posted by POGO
a resident of Woodside: other
on Jul 22, 2011 at 9:44 am

mytown -

You reject fiscal sanity at your own peril. A few peas today is preferable to the equivalent of chemo therapy tomorrow. What's that old cliche about the worth of prevention...

And wishing that the lawsuits weren't so? I'll bet your fellow citizen who was falsely arrested, handcuffed, put in the back of a police car, jailed, and had a false police report filed against him wishes it weren't so, also. And if you think those suits are expensive now, just wait until they settle or there is a judgment against the town! Of course, maybe you can just click your ruby slippers together and make them go away.


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Posted by Michael G. Stogner
a resident of another community
on Jul 22, 2011 at 10:17 am

Pogo...Well said

"And wishing that the lawsuits weren't so? I'll bet your fellow citizen who was falsely arrested, handcuffed, put in the back of a police car, jailed, and had a false police report filed against him wishes it weren't so, also. And if you think those suits are expensive now, just wait until they settle or there is a judgment against the town! Of course, maybe you can just click your ruby slippers together and make them go away."

For the residents of Atherton who did not demand the police officer be identified, fired. and criminally charged, and are wishing lawsuits weren't so ....they need to be concerned with Punitive damages.


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Posted by mickie winkler
a resident of another community
on Jul 22, 2011 at 1:02 pm

Is there a crisis now or will there be one in the future?
No matter. Every city should be maximizing its effectiveness and minimizing its cost.

There need not be an "excuse" to do that.


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