With fresh, steady money coming from new hotels and double-digit increases in property value assessments since last year, the Menlo Park City Council voted confidently and unanimously on June 19, with Councilman Rich Cline absent, to approve a $143 million spending plan for the 2018-19 fiscal year.
The adopted budget anticipates a surplus of $980,000 across all city funds and $320,000 for the city's general fund by the upcoming fiscal year's end.
The council also took the opportunity at Tuesday's meeting to allocate the estimated $4.73 million in surplus funding from the current fiscal year toward various city projects.
Menlo Park experienced a 12.35 percent increase in assessed property values since last July 1, according to Nick Pegueros, administrative services director.
The council's approval of the budget came with acceptance of the city's capital improvement plan and salary schedule.
The budget proposed to add 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.
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.
The council also approved an ambitious five-year capital improvement plan for the city, a 78-item to-do list of things the city intends to build. The budget sets aside nearly $30 million for building those projects and commits $17.3 million more to others.
Under the new capital improvement plan, the city will be saving for some big-ticket items, including building a separated road 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 on 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 an expansion of Project Read, a nonprofit that works with the library to provide literacy services.
The budget anticipates a city investment of 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.
The budget also takes into account variables such as unfunded pension liabilities and revenue from a fund called the "education revenue augmentation fund," or ERAF, which the city gets from the state but can't rely on.
In December 2016, the California Public Employees Retirement System, or CalPERS, 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 spending by the 2027-28 fiscal year.
Another question will be whether the state will continue to pass along to the city the excess ERAF revenue. It's a pool of tax revenue that's automatically deducted by the state from city and special district revenues to help it pay for local schools. 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 and has sent it back to the city.
With money left over from the 2017-18 budget, the council took action to put those extra dollars toward new specific projects: $450,000 for the Belle Haven Branch Library; $935,000 toward plans to install sidewalks on Sharon Road between Alameda de las Pulgas and Altschul Avenue. There's no timeline yet for when the city will fully take on those projects.
The council also agreed to set aside $1 million to offset some of the added costs that Stanford's new development on El Camino Real will add to the Menlo Park City School District. Since the city isn't permitted to directly fund another public agency, staff is working out a legal mechanism for the transfer.
The council discussed the possibility of setting aside $100,000 for efforts to improve downtown Menlo Park. Council members Kirsten Keith and Ray Mueller talked about how the city might address downtown homelessness.
Mueller suggested that the city dedicate $30,000 toward helping to provide publicly accessible restroom facilities and funding for a study session for council members to "all come together as a group and bring forward ideas."
But exactly how that money would be spent is yet to be decided. Facing a 11:30 p.m. cutoff time at the meeting, the council opted to table its discussion of which council members should be on a subcommittee to work on downtown improvements.
Adopting the budget came with some other formalities: The council agreed to a $63.24 million spending limit, which is set by the state and based on population growth and cost of living factors; and agreed to keep the city's utility users' tax at 1 percent.
Editor's Note: A previous version of this story indicated that the city planned to set aside $550,000 from the surplus to fund a new bike path through Willow Oaks Park. The city plans to seek grant funding for this item.