Menlo Park is raising fees, cutting programs and eliminating jobs, but the city is still $1.8 million short of covering its costs.
The City Council, at its June 20 meeting, unanimously approved the city’s budget, which calls for $32.5 million in spending in the fiscal year starting July 1 — a 9 percent increase over the current year.
Revenues are expected to rise 4 percent, partially due to an anticipated $2.2 million increase in property tax income.
The council approved $1.16 million in cost cuts for personnel and operations; and it agreed to $378,000 in fee increases.
The city expects to draw about $1.8 million from its $21 million of unallocated reserves to bridge the gap between revenue and spending — a gap due largely to higher wages and benefits for employees, said City Manager David Boesch.
About $21.9 million of the city’s expenses — about 67 percent — are personnel-related. Annual personnel costs have grown from about $16.9 million in 2000-01 to an estimated $21.5 million today.
The city’s annual sales tax revenue, which was the city’s largest source of income at one time, has plummeted from about $12.5 million to $6.1 million over the past five years.
Employee costs
Rising employee costs weren’t addressed in the city’s recent “your city/your decision” process, which encouraged residents to express their views on budget issues through a community-wide survey and workshops.During the budget process, city staff said increasing employee costs would be dealt with separately. Contract negotiations with the Menlo Park Police Officers Association and Police Managers Association — two of the city’s four labor bargaining units — are currently under way.
The survey, workshops and the council’s March and April budget deliberations focused on deciding what city services to cut and/or fees and taxes to increase to balance the city’s budget.
The council raised fees for 13 city services, including gymnastics classes, child care programs and parking permits.
The city will also eliminate five full-time-equivalent jobs, but they are all vacant positions.
In January, when the city has a better handle on actual revenues for the year, the council plans to consider other budget strategies, including charging non-residents fees for Belle Haven programs or reducing staff in the city manager’s office.
Privatization debate
Budget meetings in March and April were contentious, and debate often centered on the potential savings of privatizing city services.The privatization debate briefly resurfaced at the June 20 meeting.
Councilwoman Kelly Fergusson questioned staff’s estimate that turning the city’s new aquatics center over to a private operator will save the city $415,000 a year.
“There’s no question in my mind that the pool could have been a profitable center for the city,” Ms. Fergusson said.
Councilwoman Lee Duboc — who in February voted with council members Nicholas Jellins and Mickie Winkler to privatize the pool — maintained that privatizing the center is saving the city through cutting personnel costs.
The overhead costs associated with the facility — staff costs that won’t disappear with privatization — haven’t been defined.
Ms. Fergusson said similar overhead costs won’t be saved if the city privatizes its child care programs.
The city is currently seeking bids from private operators to take over the new Menlo Children’s Center, action approved in April by council members Duboc, Winkler and Jellins.
Tax measure
On July 18, the council plans to discuss results from a community-wide poll on what tax measure residents might support on the November ballot, Mr. Boesch said.A 1 percent utility tax could add about $800,000 a year to the city’s coffers, according to city staff.
Ms. Fergusson said if the council doesn’t pursue a tax measure in November, the city would have to endure “substantial cuts that would really affect the quality of life in Menlo Park.”
