|
Getting your Trinity Audio player ready...
|
Two new hotels in town and ever-rising property tax revenues promise a rosy fiscal year starting in July, according to the city of Menlo Park’s financial team. And with strong expected revenues, the city government has proposed to increase spending on both its staffing and planned projects in a draft budget for the upcoming fiscal year, according to City Manager Alex McIntyre.
McIntyre has proposed a draft budget for the city’s 2018-19 fiscal year that shows $144.2 million in revenue and the spending of $141.6 million across all city funds – up 13.9 percent from this fiscal year’s amended budget.
For the city’s biggest fund, its general fund, the draft budget shows spending of $67.4 million, with $420,000 left over from revenue generated, representing a spending plan 18.4 percent larger than in this fiscal year.
With that plan comes a complex and ambitious to-do list that lays out a framework for the city’s operations, policies and projects in the coming fiscal year and beyond.
Planned revenue
When it comes to city revenue reflected in the proposed budget, one of the biggest changes from this fiscal year is the cash boost expected to come from two new hotels: Hotel Nia at 200 Independence Drive, which opened for business in April; and the Park James Hotel at 1400 El Camino Real, set to open in July, according to developer Jeff Pollock.
Menlo Park receives 12 percent of the room rate collected from all hotels in the city as part of its hotel tax, said Nick Pegueros, finance and administrative services director.
Also set to boost revenue are recently approved updates to the city’s fee schedule, which, among other shifts, set major increases on permitting fees for private developers. This, staff said, was intended to make developers cover the full cost of the work it takes the city to review and approve plans.
Sales tax revenue, meanwhile, is expected to decline slightly in the coming year, Pegueros said. That’s partly because when people in town shop online, the sales tax revenue goes to the county, which then distributes it to cities based on each city’s share of the total taxable sales, according to the draft budget.
Although voters in 2006 authorized the city to increase the utility users’ tax to 3.5 percent, the city hasn’t done so, and the draft budget reports that the city plans to continue the tax at the current 1 percent rate.
All in all, staff say the city appears to be in good fiscal health. Ten-year forecasts indicate that the city could have up to $5.5 million in surplus revenue by the 2028-29 fiscal year.
Pegueros said the city worked with its Finance and Audit Committee to use a new uncertainty modeling method to come up with what’s believed to be a more accurate 10-year forecast. That method looked at more than a thousand possible scenarios, including economic downturn and recovery at various points in time over the coming years, before reaching its conclusion, Finance and Budget Manager Dan Jacobson explained in an interview.
Staffing up
Since January, McIntyre and other managers within city staff have spoken of difficulty in hiring people to work in public sector jobs in a region with so many employment opportunities, and have noted a substantial number of staff vacancies as staffers have left to take better offers elsewhere.
The new draft budget calls for the city to hire the equivalent of 9.25 new full-time employees in the city’s public works, police, library, community services and administrative services departments, including two new full-time employees to maintain and improve the services of the Menlo Park Municipal Water District. (This cost would be borne only by people who receive their water from the water district.)
If all city positions are filled, the number of staff would rise to 287, an increase of 3 percent over this fiscal year and a 17 percent increase since the 2015-16 fiscal year.
At least recently, McIntyre explained, it has been even more expensive to contract outside of City Hall than to hire a new person, even accounting for the costs of an employee’s retirement and other benefits. That said, he noted at a public presentation about the budget May 29, it is easier to end a contract than to terminate an employee.
The draft budget requests $507,000 to increase contract staffing, which, the document says, will allow the city to do organizational reviews of the community development and public works departments and complete the biennial review of the city’s downtown specific plan.
The draft budget also calls for setting aside $615,000 as contingency funding for rising costs for services the city currently contracts out and may soon need to renew contracts for: janitorial services, street repairs, street sweeping, pool operations and operations for the city’s flood and storm drainage systems.
Questions
Like other cities across California, a big question for Menlo Park in the coming years will be how to pay for its unfunded pension liabilities. The California Public Employees Retirement System, or CalPERS, in December 2016 cut its expected return rate from 7.5 percent to 7 percent, which increases the city’s unfunded pension liabilities by more than 40 percent and will more than double the city’s annual pension expenditures by the 2027-28 fiscal year, according to the draft budget.
Pegueros said that the system is decreasing the risks in its portfolio and may expect lower returns in years to come.
Another question in coming years will be whether the state will continue to refund Menlo Park for what’s called an excess “education revenue augmentation fund,” abbreviated to ERAF. That’s a pool of tax revenue that’s automatically deducted by the state from cities and special districts to help it pay for local schools.
But since Menlo Park generates what the state considers to be sufficient money to run local schools through property taxes alone, the state hasn’t claimed that money. It has, in past years, sent all of that funding back to the city, which has resulted in what’s effectively been an annual bonus for the city’s general fund.
The city can’t count on receiving it, Pegueros said, so it only assumes the city will be refunded about half of the full amount. In the future, the state could update its school funding formulas to keep the funds, according to the draft budget.
There is also an effort, spearheaded by Menlo Park Vice Mayor Ray Mueller, to consider using this funding as a source that local jurisdictions might use to help the Ravenswood City School District pay for critical capital improvements as part of a joint powers authority that would be established.
City departments
During a May 29 meeting, heads of the city’s different departments briefly summarized some of their accomplishments over the past year, ongoing projects, and initiatives they’d like to see funded in the future.
Among the accomplishments was the completion of a number of complex land use project approvals – including Stanford’s 500 El Camino Real project and Facebook’s updated plans for its “Building 22” – and beginning to review Facebook’s proposed 59-acre redevelopment to create a new mixed-use neighborhood called “Willow Village.”
In addition to a wide range of projects, the city also launched an online “SeeClickFix” program, an app people can use to report non-emergency problems like code violations, potholes or graffiti to the city; and a new police unit to patrol the city’s bayfront area. Internally, the city also began using Facebook Workplace, an internal application for employees that Facebook runs which costs $3 a month per user. It cost the city $459 last month, Pegueros said.
The budget also includes requests from city departments to fund new programs. For instance, the police department hopes to start a “Text to 911” program, which, according to interim Police Chief Dave Bertini, would enable people to text their requests for police service to the dispatch center, which might help in areas where people have weaker phone signals, he said.
Building projects
The city also has major capital improvement plans, with a five-year list that includes 78 projects. It has set aside nearly $30 million for building those projects and plans to commit $17.3 million more to others.
The draft budget calls for beginning to save for some big-ticket items the city has long debated how to pay for: building a separated roadway from the Caltrain line at Ravenswood Avenue and a separated bike and pedestrian path at Middle Avenue; flood protection projects along the Bayfront Canal and Atherton Channel; moving forward with improvement plans for Bedwell Bayfront Park; improving information technology; and building a downtown parking garage.
New projects added to the list are street resurfacing; a study to design and build a Caltrain crossing for bicycles and pedestrians at Middle Avenue; a sidewalk power-washing program; a holiday lighting program in Belle Haven; removal of hazardous trees; expanded library services, including plans to clean the Belle Haven branch library more often; and a proposed expansion of Project Read, a nonprofit that works with the library to provide literacy services.
Capital improvements
According to the draft budget, it’s expected that the city would need to invest about $73.5 million over five years to meet the needs for all the projects on its list. Yet the city is expected to have only about $44.6 million of that.
However, the city can put general fund surpluses toward such projects, which McIntyre said would enable the city to chip away on other projects that could otherwise take years to get funded.
And there are yet more projects the city wants to move forward with that haven’t yet been priced out, said McIntyre: a new emergency operations center, improvements to the main and Belle Haven branch libraries, rebuilding or expanding the Onetta Harris and Senior Center complex, improving or replacing the Belle Haven pool, and implementing the parks and recreation master plan.
The Menlo Park City Council is scheduled to host its first discussion of the budget Tuesday, June 5, at its meeting scheduled for 7 p.m. in the council chambers at 701 Laurel St. in the Civic Center, and a subsequent discussion of the budget Tuesday, June 19.
Access the meeting agenda here or stream it online here.
—
-
Menlo Park’s 10-year forecast for its operating revenues. (Image courtesy city of Menlo Park.) -
The city of Menlo Park is expecting a major rise in hotel tax revenues for the 2018-19 fiscal year, thanks to the recently-opened Hotel Nia and the soon-to-open Park James Hotel. (Image courtesy city of Menlo Park.) -
A table showing Menlo Park’s planned spending in its 2018-19 fiscal year budget. (Image courtesy city of Menlo Park.) -
A table showing Menlo Park’s planned revenue in its 2018-19 fiscal year budget. (Image courtesy city of Menlo Park.) -
A table showing Menlo Park’s staff numbers over the past several years. With the addition of 9.25 new staffers in the upcoming fiscal year, the staff size has increased about 17 percent since the 2015-16 fiscal year. However, the city is also reporting having a hard time hiring people and is not currently fully staffed. (Image courtesy city of Menlo Park.)
YouTube 'auditor' provoked, pepper-sprayed shopper at Mountain View Costco, police sayApril 8, 2026 12:23 pm
Facebook should pay for the full cost of city staff that work on its projects including benefits and retirement costs. Additionally since at some point these projects will end there should be termination clauses in the staff employment contracts to make sure staffing costs end.
How does the Council justify a 17% increase in personnel in 2 years? I’m sure that the city government could come up with 100 more ways to spend our money, but we need to draw the line at some point. I say that until we either 1)fully fund our city retirement fund liabilities or 2) change the grossly outdated retirement system to a defined contribution fund (matching IRA or something like it) that we pursue NO NEW projects that consume our tax money. It seems that no matter how much money we take in, and believe me, it is increasing every year, the City figures out a way to overspend, outgrow, and still plead for more revenue. Enough is enough!!
While modest spending increases are called for, it is also prudent to place some of this revenue into a rainy day fund as a hedge against future shortfalls and the inevitable additional costs associated with recovery from sudden disasters such as wildfire or earthquakes, or the slow and steady disasters caused by rising ocean levels. There is also aging infrastructure to maintain. A twenty-year plan that accounts for such things would suggest that each and every spending increase be individually justified and weighed against future needs.
steve taffee
Whatever, Inon and Steve — I encourage you to also write Council via city.council@menlopark.org. I agree with Steve that MP needs to do long-range strategic planning, which is considered a municipal best practice. Having a long-term strategic plan would cut down on the too often reactivity and shifting priorities that we see in MP. We might even be able to save money due to thinking ahead and anticipating needs and preparing for them before they become emergencies. I would also like to see measurable goals and outcomes for government’s performance put into our budget documents, like they have in the City of Baltimore. Our neighbor Palo Alto has a 30-year Comprehensive plan that is startling in its focus on residents. https://www.cityofpaloalto.org/gov/depts/pln/long_range_planning/default.asp Palo Alto also annually prepares two budget documents: a proposed Operating Budget and a Proposed Capital Budget. I’ve closely studied the PA Capital document and I especially like the Project Pages. https://www.cityofpaloalto.org/gov/depts/asd/budget.asp I consider PA’s budget documents a best practice and I’ve proposed using a similar “project pages” template in MP to our Finance and Audit Committee where the idea was well received. To Inon’s comment, some members of the F&A Committee are also very concerned about unfunded pension liabilities. Our local democracy needs informed residents who get involved, ask questions, share concerns and suggest different ways of doing things based on best practices elsewhere. I’m told that it’s most impactful when one attends a Council meeting but emails (especially sent at least 2 days before a meeting) are helpful too. Please also consider applying to serve on a MP Committee/Commission the next time there are openings.
Meant to include the link to the City of Baltimore’s Outcome-based Budgeting. https://bbmr.baltimorecity.gov/outcome-budgeting which is considered an innovative best practice for other local governments. Another innovation is Participatory Budgeting, a democratic process where members of the public directly decide how to spend part of a public budget. https://www.participatorybudgeting.org/ Implementing both innovations in MP would strengthen the residents’ role in our local democracy and lead to a city that worked better across all our communities.
Lynne
Almanac comments and articles should be required reading for all city council members, city manager, police chief, city attorney and all city department heads.
To Whatever — I suspect that at least some on your list read the comments but they can ignore what they don’t like or don’t agree with. It’s better to have a public record of the feedback as that might make its way into staff reports and/or influence Council decisions. Other people reading/hearing the public input have more courage to speak out too — because they know that they are not alone with their concerns. I also write council/staff and make public comments at meetings. Anyone may read the public emails at the City Council email log. http://ccin.menlopark.org/ I recently wrote on the topic of the need for bias-free staff reports and a preliminary one on the budget. I will be writing again on the topic of the budget. I’m also working on the broader issue of the need for a significantly improved public engagement process. The residents need a much stronger role in our local government’s decision-making process. Increased resident involvement is bringing more transparency, oversight and accountability — but even more is needed. I agree with Mayor Pro Tem Mueller’s request that Council discuss a Sunshine Ordinance. The Brown Act is the floor for open, public meetings, not the ceiling.