News

Menlo Park budget clears final hurdle

 

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.

Budget basics

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.

Read more about the budget here or access the full document here.

Surplus spending

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.

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Comments

Like this comment
Posted by Mailing it in
a resident of Menlo Park: Felton Gables
on Jun 21, 2018 at 10:58 am

Rich Cline missed the City's budget vote? He didn't even call in?





Like this comment
Posted by Lynne Bramlett
a resident of Menlo Park: Central Menlo Park
on Jun 21, 2018 at 4:23 pm

Lynne Bramlett is a registered user.

I would like to better understand MP's unfunded pension liabilities and how serious a problem this is and what more, if anything, MP should be doing about it. Web Link I learned about Pensiontracker.org via an article in today's Daily News that included a reference to the site, so I went there and looked up Menlo Park. The data is from 2015 so the numbers could be better or worse. It lists the "Market Pension/Debt per Household" as being $13,920 for Menlo Park. Instead of the relatively rapid process of draft budget to approval (in about 30 days), it would be wonderful to see more "Study Sessions" or interactive workshops (spread out during the year) on various MP financial topics, such as unfunded pension liabilities, the overall taxes and fees that MP taxpayers pay (and how much they have gone up/down over the past five years), more detailed explanation of the Capital Improvement budget and what is being planned regarding the unfunded amount for the projects, and so forth. Love to see a short survey for residents regarding financial topics they would like to know more about. Based on the highest priorities, would then like to see these topics addressed in a series of seminars, possibly held at the library as part of the library's programming.


2 people like this
Posted by Menlo Voter.
a resident of Menlo Park: other
on Jun 21, 2018 at 8:01 pm

Menlo Voter. is a registered user.

Lynne:

unfunded pension liabilities are a ticking time bomb. The city has consistently "kicked the can down the road" when it comes to pensions. This is going to blow up on the city and the state. Last study I read had the unfunded pension liability for Calpers (which includes MP employees) is $400 BILLION. And NO ONE is addressing this problem. The politicians, in the pocket of civil service unions, continue to ignore the problem and do nothing to address it. Yes, they've been forced to make municipalities contribute more to the retirement contribution, BUT that doesn't necessarily mean a fix. It generally means raises to employees to cover the required additional pension contributions. One only need look at the MPCSD to see evidence of that.


Like this comment
Posted by Lynne Bramlett
a resident of Menlo Park: Central Menlo Park
on Jun 23, 2018 at 9:17 am

Lynne Bramlett is a registered user.

Menlo Voter:

You are right. If I did the math correctly, in 2015 MP's unfunded pension liability was about $160 Million! That's based on Pensiontracker's perr capita/debt of $5,173 and estimating a population of 32,000. Of course, today's numbers may be higher or lower. What will this liability become due? What else should MP be doing? Council recently approved the 2018-19 budget, which included adding 9 full-time employees.

Has MP ever had a staffing audit that included staffing level benchmarks with like cities? Before hiring more staff, I think that we need to implement a city-wide volunteer program with a staff person focused on recruiting volunteers for a spectrum of volunteer work. The projects could range from done-in-a-day ones to short-term or longer-term commitments. According to research, retired boomers want meaningful volunteer activities and aren't likely to sign up to just stuff envelopes.

Having more residents involved in our local government, as volunteers, would build a stronger resident/staff partnership too. The volunteers would increase the residents' voice and perspectives into staff's day-to-day decision-making. It would also tend to lead to staff treating residents as their clients. After all, we should be working towards shared goals. More resident volunteers would also tend to increase transparency, oversight and accountability.


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