The $1.3 million in cuts proposed for Menlo Park's general fund will largely come from reducing personnel costs, according to a staff report presented at the March 15 council meeting, saving an estimated $681,000.
The city has already eliminated 10 fulltime equivalent positions; the remaining employees, with the exception of public safety workers, have seen no salary or benefit increases or bonuses during the past year, and won't expect any for at least another year, City Manager Glen Rojas said.
The national economy continues to hammer away at Menlo Park's revenues. "We're pretty much stuck at a less than desirable return on our investments," Finance Director Carol Augustine said of the city's portfolio, which is responsible for the largest reduction of general fund revenue. Sales tax revenues also took the brunt of the impact from the recession during past three years, she said, dropping 10 percent for two years before nose-diving 20 percent last year.
"I'm looking at the next year as much as possible," said Mayor Rich Cline, pointing out that often the city is too late to fix the situation before passing the budget for an upcoming fiscal year, and asking Ms. Augustine what makes a budget balanced.
"A balanced budget can mean many things to many people," Ms. Augustine answered. "The way Menlo Park has defined 'balanced budget' is that it's a sustainable budget over many economic cycles."
So what direction will the city take for the 2011-2012 fiscal year starting July 1. Staff continues to investigate outsourcing services such as grounds maintenance, janitorial service, parking enforcement, and Onetta Harris Community Center management.
Other options on the table include eliminating frozen positions and drawing from the reserve fund to pay off the city's $7 million unfunded pension liability, as suggested by Councilman Peter Ohtaki, to save $828,000 during the next fiscal year, and nearly $3.6 million in interest charges, according to staff.
Mr. Ohtaki also broached the idea of a 3 percent pay cut for city employees making more than $100,000.
And, of course, further service cuts remain a possibility. The council may consider eliminating the police department's two-officer traffic unit and shutting the public library one day per week or more. Child care at the Menlo Children's Center along with Belle Haven Child Development Center sits alongside those services on the chopping block.
"There's a good need behind it," argued Mayor Cline during a discussion of whether to continue subsidizing the child care centers given that approximately half of the users are East Palo Alto residents. The centers may also lose additional funding if the governor's proposal to shut down redevelopment agencies passes, he said.
Local nonprofits could also lose community funding from the city as they simultaneously attempt to weather drastic decreases in state funding.
The city plans to release a proposed budget by May 12.