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Menlo Park proposes measures to reduce projected $1.8 million deficit
• No layoffs or pay cuts are proposed.

by Sean Howell

With Menlo Park facing the prospect of a $1.8 million deficit, city staff has recommended a number of stopgap measures that would allow the city to weather the economic downturn — at least through the current fiscal year.

The city estimates that it will be able to trim about $578,000 from its budget by cutting corners in several departments. And City Manager Glen Rojas has recommended that the city hold off on just over $1 million worth of projects for now, while it considers a more comprehensive strategy for the 2009-10 budget.

If the City Council agrees to put off those projects at its Tuesday, Feb. 24, meeting, Menlo Park would find itself only $164,000 in the red for the fiscal year ending June 30, according to Finance Director Carol Augustine. That would allow the city to escape relatively unscathed from a year in which revenues have slid, primarily because of a decrease in fees related to development.

But it would not be a long-term salve, as the country hunkers down for what is anticipated to be a drawn-out recession.

Under the staff's proposed mid-year budget amendment, Menlo Park would draw a total of $1.18 million from its reserves this year. That expense includes part of the cost of the El Camino Real/downtown planning process — not considered part of the general fund budget — as well as encumbrances from the 2007-08 fiscal year.

Projects deferred

Deferring "infrastructure" projects is a fairly simple way to make ends meet, said City Manager Glen Rojas. But he also acknowledged that it's only a temporary fix.

"We're not assuming that all these cuts are the right cuts," he said, noting that the council might come up with a different solution.

Still, Mr. Rojas said, several high-cost projects could potentially be put on hold indefinitely.

The "infrastructure" projects Mr. Rojas has recommended for deferral: $550,000 for new sidewalks on Santa Cruz Avenue; $220,000 for new sidewalks on Woodland Avenue; and $30,000 to refurbish the gymnasium floor at the Onetta Harris Community Center. Those projects would have been funded out of the city's capital improvement fund — separate from the general fund. In delaying them, the city would reduce the amount of money it usually transfers from the general fund to the capital improvement fund.

The city doesn't expect it will be able to meet the state-mandated June 30 deadline for updating its housing element. Removing that project from the budget would save $282,000 this year.

City staff also recommended deferring a $6,500 plan to improve the library's Web site.

Decrease in building

Much of the city's projected revenue shortfall can be attributed to a decline in building permit fees and fees related to new subdivisions, as builders and developers scale back construction projects.

After a steep rise in fees for licenses and permits in the 2007-08 fiscal year, Finance Director Carol Augustine expects this year's fees to come in $750,000 below what the city had originally budgeted. Slash another $175,000 in expected revenue from services related to development subdivisions, and the city stands to fall short by nearly $1 million in development-related fees alone.

But Menlo Park will take in more revenue than originally expected in utility taxes, property taxes and franchise fees, Ms. Augustine said.

No staff cuts

The city's recommendations do not include layoffs or reductions in staff time. Mr. Rojas maintains that in attempting to cut costs, the city should consider staff cuts only as a last resort — despite the fact that roughly 72 percent of the city's year-to-year expenses are devoted to personnel costs, not including pension payments.

After the city axed some 35 staff positions following the dot-com bust, a reduction in staff hours would mean a concomitant reduction in city services, according to Mr. Rojas.

"You can't cut staff and not cut service," he said. "Because we already had so many reductions, there's very little room to cut."

He also said he wouldn't recommend eliminating raises for department heads not represented by unions, or asking them to take a pay cut.

According to Mr. Rojas, potential expense cuts might include reducing the city's annual contribution to the capital improvement fund; easing the city's dependence on consultants; reorganizing personnel as employees retire; and dipping into the city's sizable general fund reserve to cover deficits.

The city could increase its revenue stream by upping the utility tax. It should also get a big boost from the Rosewood hotel/spa/restaurant complex, set to open April 2. A city-hired consultant estimated that the resort would generate over $1.3 million in its first full year of operation.

Posted by Hank Lawrence, a resident of the Menlo Park: Sharon Heights neighborhood, on Feb 28, 2009 at 10:25 am

The City Council can do all the explaining it wants with regard to the budget deficit but the bottom line is how much money will be taken from reserves to plug the gap. If we plot the reserves drawdown over the past few years we can see that the day of reckoning will come in 8 to 12 years. That will be the time when we have no reserves and the entitlement pay to retirees will be over 70% of the city budget. This means our tax dollars will be used to pay for overly generous city employee retirements and there will be virtually no money for operations and maintenance. Our roads are a disgrace!

We have four council members who aren't doing anything to avoid this cataclysmic train wreck. John Boyle is the only responsible city council member. Menlo Park deserves better. Menlo Park residents need to beome more engaged with what the current council is doing and get involved so we can oounteract the propaganda that the SEIU, Gail, and her minions, are promoting. Enough is Enough! As Margaret Thatcher once said "The only problem wih socialism is that sooner or later you run out of other people's money".

Posted by truth, a resident of the Menlo Park: Belle Haven neighborhood, on Mar 2, 2009 at 8:51 am

Ridiculous commentary. Bashing everyone but his boy Boyle, socialism paranoia and union insults...even took down Gail. I have no words except to say that I do not want my city represented on this forum by people like Hank. This is embarassing.

Posted by excuse me, a resident of the Menlo Park: Felton Gables neighborhood, on Mar 2, 2009 at 5:06 pm

I thought the budget vote was 3-2 with both Boyle and Cohen voting against the staff recommendation. Praising only Boyle looks just political to me.

How about asking the Council to cut the pay of the management team, including themselves, for not achieving the budget that was approved? There had better not be ANY bonuses this year no matter how nice everyone has been, either.

Posted by Steve, a resident of the Menlo Park: Allied Arts/Stanford Park neighborhood, on Mar 3, 2009 at 9:02 am

1) Were there any suggestions to lay off workers or reduce some salaries?

2) Well said, Hank.

Posted by I Agree, a resident of the Menlo Park: Fair Oaks neighborhood, on Mar 3, 2009 at 11:19 am

FINALLY, people are starting to wake up and see the wasteful spending of our city government. If more people would take pen to paper and calculate the outrageous cash output for salaries, salary increases, bonuses, benefits and pensions, I think this blog would blow up. A city the size of Menlo Park, 30,000 residents, with a budget that exceeds $30M, has got to be in the Top 5 municipalities in the U.S. for spending budgets. We have GOT to reign in this spending, it is only going to get worse with the impending out of line pensions. Someone PLEASE act like a leader and just say "no"!

Posted by WhoRUpeople, a resident of another community, on Mar 3, 2009 at 2:28 pm

I usually stay out of dialogs on subjects such as this since, while I have worked in MP for years and really care about the town, I don't live here (sigh). However, I have to respond to a couple of the previous comments, and, as usual, subject everyone to my opinion.

First, to I Agree, (1) I doubt that MP is in the top 5 for spending (I assume you mean per capita), but whether or not it is, rather than immediately go THERE, what about all of the money this town spends on studies, consultants and "feel good" crap? The other night the President said (I'm paraphrasing) "when times are good, people remodel their kitchens, when times are tough, they should pay attention to fixing their foundations". To me, downtown visioning is the kitchen remodel, the potholes on our streets are the foundation. Lots of opportunity to reduce expenditures without affecting the salaries of our -yes I'll say it--hard working city employees.

Second, to Excuse Me, excuse me, but you need to get your civics facts down-City Council members, whether good or bad, whether you agree with them or not, work for NO compensation. If it was a paid gig, we would all apply. So, to cut their pay you would have to ask them to pay to serve.

Now, for my opinion--stop reading if you care to--My company, like most, is going through a belt tightening process due to the uncertain and weakening economy. My company, unlike many I know of and would never want to be a part of, is looking first at ways to save money that does not directly impact employees. Reductions in services and expenses for "stuff". We may eventually have to get to cutting jobs, salaries or benefits, but not as the first brush. I respect such an approach, and I respect the management and elected leadership within Menlo Park who view the priorities this same way.

Posted by investment, a resident of the Menlo Park: Central Menlo Park neighborhood, on Mar 3, 2009 at 5:46 pm

While I do understand the analogy "kitchen remodel/foundation", I would seek to defend the Visioning project. I have participated as a citizen observer. I compare it to re-designing the center of town in preparation for better times ahead. These better times will produce a livelier downtown, more fun, more services and more tax revenues. It's unfortunate that the project hadn't been funded in more prosperous times, it's unfortunate that several similar earlier efforts came to nothing because of political will. But it's worth considering the Vision plan as a "foundation plan" for a future more properous town center.

Posted by menlo park is great but could be even better!, a resident of the Menlo Park: Allied Arts/Stanford Park neighborhood, on Mar 3, 2009 at 7:06 pm

While I do not agree with Hank, he did raise this good point:

"Menlo Park residents need to become more engaged with what the current council is doing and get involved..."

How would you get more people to be involved? How do you get people engaged in their own community?

I look forward to your suggestions or feedback.

Posted by excuse me, a resident of the Menlo Park: Felton Gables neighborhood, on Mar 4, 2009 at 9:45 am

Sorry WhoRUPeople, but the Council does get an extremely modest salary. I was only suggesting an important symbolic gesture.

Unlike most businesses, most of the city's services are provided by people. Thus cutting services means either pay cuts, layoffs, or not filling positions. What services do you propose cutting?

I totally agree with Investment that the planning for El Camino and Downtown is building the foundation for our city's future. This process is once in a generation opportunity. It is truly unfortunate that prior councils declined to step up to this, and I hope that the current Council sees it through to implementation.

Posted by Ben, a resident of the Menlo Park: Stanford Hills neighborhood, on Mar 4, 2009 at 12:11 pm

re "What services do you propose cutting? "

The business development manager and assistant. While the position could be useful, it isn't clear that the incumbents are the best people or qualified for the task.

The community engagement manager.

Burgess childcare.

Providing police dispatch services for San Carlos.

Posted by cost cutter, a resident of the Menlo Park: Linfield Oaks neighborhood, on Mar 4, 2009 at 12:34 pm

Ben, good list. Add to that, Assistant City Manager. No question that the city manager needs an assistant, but he should be able to manage with an admin rather than a highly paid professional.

Posted by Joanna, a resident of the Menlo Park: Downtown neighborhood, on Mar 4, 2009 at 5:29 pm

Cost cutter,

The assistant makes around $170k I believe. The manager makes around $250k.

Working for the city can make you rich. Just saying that sounds wrong.

Posted by empire builder, a resident of the Menlo Park: Downtown neighborhood, on Mar 4, 2009 at 6:11 pm

Our relatively new city mgr. needs a lean and mean council to suggest we cut those aggregate $500K salaried non essential administrative positions. Then you could get the Santa Cruz sidewalks, among other overdue safety/infrastructure improvements that were cut from the current budget. This week's Almanac states on Page 8 that those adminsstrative cutbacks are "on the table".

Time to pressure the council to get in step with the rest of country in these fiscally troubled times.

Posted by Joan, a resident of the Menlo Park: Allied Arts/Stanford Park neighborhood, on Mar 6, 2009 at 8:56 am

My vote goes to a salary freeze and a reduction in salary (maybe 5 percent?) for anyone making more than $100K. Some cities are asking represented employees to return to the table mid-contract to adjust agreements that now are clearly too generous in light of the economy. A two or three year contract might have excessive raises built in for next year and the year after. (Police and sergeants' contracts in Menlo are good examples.) This city should consider such a move.

Also, no replacing staff members who leave unless a thorough review of the position is undertaken and the position is considered essential. I hear a number of top managers will be retiring soon, and if other staff members in those departments get promoted, it's possible some of the lower-level positions will be the ones needing filling. I don't want to see layoffs, but attrition could save a significant amount of money.

Posted by Good Thoughts Joan, a resident of the Menlo Park: Stanford Hills neighborhood, on Mar 6, 2009 at 10:10 am

Good points Joan, I wish our city government thought like this. For the City Manager to propose a tax, rather than even consider salary roll backs, or layoffs is incomprehensible! Every business in this country has felt some type of hurt, and that means most, if not all employees have felt some type of hurt. If the city council did what the City Manager proposed, no employees would be terminated, no employees would have a decrease in salaries, our taxes would be increased and some employees (the police) would actually get a raise during the worst economic conditions of our time! This is outlandish, it makes no sense, and our council needs to speak up and act like leaders!!!!!

Posted by Kathryn, a resident of the Menlo Park: Allied Arts/Stanford Park neighborhood, on Mar 6, 2009 at 12:54 pm

I suggest axing the gymnastics program -- all of it.

Posted by James Madison, a resident of the Menlo Park: Central Menlo Park neighborhood, on Mar 6, 2009 at 5:06 pm

It would improve the quality of the debate if those who post comments included their names.

Posted by daily post, a resident of the Menlo Park: other neighborhood, on Mar 10, 2009 at 5:04 pm

check out the salaries for administrators and assistants, plus police in today's edition March 10.

Alarming to say the least. Where's the voluntary salary reduction like private sector and institutions across the country are enacting?

BTW, is city hall closed this Friday, or is next week? Can't keep track of how many days off these "civil servants" get at full pay.