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Henry Riggs behind utility tax survey

Original post made on Jun 12, 2007

The mystery has been solved behind an anonymous survey targeting Menlo Park's utility tax.


Read the full story here Web Link

Comments (6)

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.

Conclusion:
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.



Posted by Paul Collacchi, a resident of Menlo Park: The Willows
on Jun 12, 2007 at 9:16 am

PS. I am no longer a resident of the Willows, but for some reason I could not get the Town Square software to accept my neighborhood designation of "other" so I tried another neighborhood.


Posted by Richard Hine, a resident of another community
on Jun 12, 2007 at 9:37 am

Paul: Sorry about the problem in selecting a neighborhood. The neighhborhoods are organized into three categories: Neighborhoods, School Communities, and Other. Under "Other" there is only one selection: "Another Community." If you pick that, it should work. I tried it here and it did.


Posted by still_not_convinced..., a resident of Menlo Park: Belle Haven
on Jun 12, 2007 at 10:13 am

I would like to thank Mr. Collacchi for his attempt to add background to the complex topic that is the city's budget. But nonetheless, it sounds an awful lot like an apology or an excuse for those either in charge (city staff) or should have known (current/past council members). The core issue is WHY did the city bury or fail to publicize before the election the KEY fact that the city had/has plenty of money. What we should do with the money is peripheral to the question of the deception. Moreover, the appearance of dishonesty is compounded by the fact that, despite the many budget priorities mentioned by Mr. Collacchi, the FIRST thing that the city does is increase STAFF compensation with a thirty plus percent increase in pensions.


Posted by Another Resident fooled, a resident of Menlo Park: Central Menlo Park
on Jun 12, 2007 at 3:39 pm

I voted for the tax based on what we learned from the city wide survey and the meetings. It seemed like the only way out of our mess. While I might appreciate Mr. Collacchi's interest in Menlo Park's problems, it is odd that as a Resident of Redwood City, he continues to be so active in our affairs. His involvement in the Derry negotiations is also odd. Perhaps, Mr. Collacchi ought to move back to Menlo Park and run for council again. Or should we move on and leave our past in the past?


Posted by Paul Collacchi, a resident of another community
on Jun 12, 2007 at 5:12 pm

I wasn't fooled, and, as you have noted so many times here in the forum, I don't live in Menlo Park.

Perhaps if you had digested some of what I wrote you might better understand why you were fooled. Most of the data was publicly available *before* the vote on the utility tax.

Some of it applied to the city wide survey and meetings that you say informed your mis-understanding. I simply re-iterated one big discrepency as noted here: Web Link

Money quote: But throughout the "Your City" exercise, the public wasn't told that at least two-thirds of the deficit was based on an annual payment for infrastructure improvements. Nor were the infrastructure improvements mentioned in the thousands of budget surveys mailed to every Menlo Park household, or later at workshop meetings.

Why weren't residents participating in the budget-cutting program told that $2 million of the deficit was going to pay for facility upgrades or road or street improvements, projects that could be postponed if necessary to avoid cutting police or social services, and laying off personnel? No city official ever explained how the last-minute "infrastructure" expense was approved or was inserted into the budget.

I noted the fact that whether or not there is a deficit depends on assumed fiscal policies some of which are "embedded" without being explicited noted as policy choices.

I also noted that some of the so-called "deferred" maintenance cannot be deferred indefinitely. How long would you defer fixing the roads and storm drains to escape taxes?

After that, you can explain why its "odd" that I care about Menlo Park and its governance, or why where I live is relevant to helping your overcome your mis-understanding of Menlo Park's financial history, particularly when I was seated or a principle decision-maker in some of the early decisions that now confuse you so.


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