The Menlo Park City Council on Tuesday night sent a proposed deficit budget back to the city manager with a request that he make changes so the budget will be in balance with anticipated general fund revenues for the fiscal year starting July 1.
The council plans to meet again soon on the budget with the goal of having the budget adopted by June 30.
"I'm loath to pass an unbalanced budget," said councilwoman and mayor Catherine Carlton.
Councilman Ray Mueller said it was good policy that during an economic upturn, the city balance the budget and keep reserves for a "rainy day."
The budget that had been presented to the council would have the city spending more than it takes in for the next three years. The city's staff proposed a $78.1 million budget for fiscal year 2015-16 that would spend $49.3 million from the general fund, but with estimated revenue of $48.1 million. The imbalance would be mainly due to increased labor costs, as approximately 11 full-time employees would be hired to help process incoming projects.
Councilwoman Kirsten Keith said she would not approve the proposed budget. "I think we need to get together and decide what is important and what is not important," she said with regard to a list of projects the council had said it wanted to implement.
Councilman Peter Ohtaki asked City Manager Alex McIntyre how the plan to hire temporary contracted employees, instead of full-time hires, has worked out. Mr. McIntyre said the city is struggling to hire engineers to deal with major development projects, and there is high turnover. A temporary employee will leave when offered a full-time job. There is great competition for skilled staff by cities from Mountain View to Redwood City due to the boom in development projects, he said.
Mr. McIntyre did have some good news to report. The city will receive about half a million dollars from the state in the current fiscal year. This is payment for city-funded programs that were required, but not paid for, by the state.
Mr. Mueller cautioned the city manager about spending one-time funds for ongoing costs, such as those to employ new full-time employees. "It's always tempting to use one-time money, but it's bad economic policy," he said.
Councilman Rich Cline, who asked for more data on the budget, said: "Maybe we need another meeting to give the council some more confidence in these decisions."