Menlo Park Mayor Nicholas Jellins learns of “larger than expected budget surplus"
Original post made by Richard Hine, editor of The Almanac, on Oct 27, 2006
Below is an Oct. 26 press release from Menlo Park Mayor Nicholas Jellins. In addition to the surplus, he says: "… we recently identified a currently unfunded retiree healthcare liability of approximately $13 million."
PRESS RELEASE REGARDING MEASURE K ISSUED BY MENLO PARK MAYOR NICHOLAS JELLINS
OCTOBER 26, 2006
I issue this press release because new information has become available from City staff that I believe the voters should know prior to voting for or against Measure K -- the Utility Users Tax.
Following the end of the City's most recent fiscal year on June 30, 2006, and while in the normal process of preparing its year end accounting, I have learned that the City will have a larger than forecast budget surplus. This surplus is due to a variety of factors, including the outsourcing of Burgess Pool and other operating efficiencies, a number of staff vacancies, and higher than expected revenues. While the exact magnitude of the surplus will not be known until staff completes the audit, staff believes that it will be in excess of $1.3 million, or at least $1 million more than originally forecast.
City staff are now in the process of determining how this surplus will impact our forecast budget deficit of $1.85 million in Fiscal Year 2007. Some of the ongoing cost savings, such as the Burgess Pool operations, have already been factored into the approved 2007 budget. Others, such as the staff vacancies, are not necessarily expected to continue throughout the remainder of the fiscal year. On the revenue side, this will be the third consecutive year of higher than forecast revenue growth. Staff will review each revenue category to determine how much of the additional revenue growth may be recurring. The results of this process will not be known until the mid-year financial review. However, if local economic conditions continue to improve, there may be a reduction in the deficit for Fiscal Year 2007.
I want to caution that the City still faces a number of long-term fiscal challenges. As our workforce ages and retirees live longer, we are experiencing a steady increase in employee compensation costs. The City is also in the midst of ongoing labor negotiations with three of its four employee unions. Depending upon the outcome of those negotiations, the City may have to set aside substantially more reserves in order to fund pension obligations. Furthermore, we recently identified a currently unfunded retiree healthcare liability of approximately $13 million.
The Utility Users Tax would provide the City with an additional source of stable revenues unaffected by economic conditions that are largely out of our control. Such revenue potentially would give the City increased flexibility to provide the kinds of programs that the citizens of Menlo Park desire. I therefore continue to support Measure K -- the Utility Users Tax.
(Questions on this Press Release may be directed to Nicholas Jellins at (650) 329-1300.)