Add a possible utility tax measure and potential privatization of Menlo Park’s child care services to the list of issues that have divided the five-seat City Council.
The council at its April 5 special meeting was scheduled to give city staff direction regarding strategies to balance the 2006-07 fiscal year budget, but after council members showed major differences in approaching the tax and child care services issues, Mayor Nicholas Jellins suggested the council postpone further discussion for a future meeting.
The council will pick up budget talks at a special meeting at 7 p.m. April 19 in the council chambers at the Civic Center.
Utility tax
Menlo Park is facing a projected $2.9 million budget deficit, largely the result of the city’s decision to earmark $2 million from the general fund to put toward street, sidewalk, park and storm drain maintenance.City staff is recommending that the council consider a 1 percent utility tax to help eliminate the deficit — a tax that would cost a household with $175 in monthly utility bills about $21 a year, and would generate $800,000 for the city.
About 90 percent of the groups participating in the recent budget workshops supported a utility tax of at least 1 percent.
Council members Kelly Fergusson and Andy Cohen said the city should conduct polls and studies to see if support for the tax is community-wide. Mr. Cohen suggested that the city pursue putting a 5 percent utility tax measure on the November ballot — the average tax on utilities for California cities.
A 5 percent tax measure would generate about $4 million annually for the city.
Other council members said the tax might inconvenience the business community. “We need to make sure we don’t lose more businesses because of this [tax],” said Councilwoman Lee Duboc. She suggested that a parcel tax, which charges all property owners the same fee, regardless of property size, might be more appropriate.
She said that support for a utility tax in the budget workshops doesn’t necessarily translate to support from the voters. “I don’t want to take anything for granted,” she said.
Councilwoman Mickie Winkler said a utility tax is “very business unfriendly.”
About two-thirds of the revenue from a utility tax would come from the city’s businesses, Finance Director Carol Augustine said.
Child care
Although Ms. Winkler and Ms. Duboc pushed for more options regarding a potential tax measure, both said the city should move quickly regarding a different cost-cutting measure — privatizing the city’s child care services.But to the delight of about 20 union representatives and child care employees at the meeting, Ms. Fergusson and Mr. Cohen said privatizing child care services should be taken off the table.
The city’s children’s center preschool program and Burgess school-age after-school program run at a combined $444,000 annual deficit, and city staff is recommending fee increases for both programs to recover costs.
After a local child care specialist said a private operator could run the programs without raising fees, Ms. Winkler asked the council to discuss the matter.
But city employees and union officials said a private company will cut employee salaries and benefits, leading to a higher turnover rate.
“Low staff turnover is the key to quality child care,” said Albert Carlton, a field researcher for the Service Employees International Union Local 715. He noted that there has been no staff turnover in either of the city’s child care programs for several years.
Kelly Gallo, a teacher at the children’s center preschool program for eight years, said it is likely that she won’t be able to live or work in Menlo Park if a private operator cuts wages.
In a memo to the council, Assistant City Manager Audrey Seymour said if the city conducted a formal request for proposals to privately operate the programs, the process would take eight to 16 months.
Ms. Winkler and Ms. Duboc said the city should aim for a shorter time frame. “We have the potential to save $444,000 in direct costs to the city,” Ms. Winkler said. “We can have a very open process and we don’t have to take eight months.”
She suggested that the city put together a committee of residents and members of the Parks and Recreation Commission to help speed up the process.
Ms. Duboc said the city should do everything it can to avoid fee increases, which could “price [the city] out of the child care market.”
Ms. Fergusson reminded the council that, at its March 28 meeting, it directed staff to undertake a study to determine what adjustments, if any, need to be made to make child care services more efficient. She also questioned the premise behind privatizing a city service.
Mayor Jellins said he had more questions, and would not “take one side or the other,” acknowledging “polar views” on the council.
