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Menlo Park is facing a nearly $1 million deficit in its annual budget for the coming fiscal year, thanks in part to a lawsuit over its utility tax and the need to staff up the new community center in the Belle Haven neighborhood.
The City Council discussed how to increase revenue while also boosting social services at a June 13 council meeting. The city is planning for $76.3 million in expenses and only $75.3 million in revenue, causing a $0.96 million deficit. The proposed city budget can cover the deficit with its $36 million in general fund reserves, but asked the City Council to find ways to increase revenue that would allow Menlo Park to maintain its general fund.
The city is facing the loss of revenue from its Utility Users Tax (UUT) due to a class-action lawsuit. In April, a San Mateo County Superior Court judge issued a tentative ruling that Menlo Park failed to make the necessary findings to continue collecting UUT from residents. The council failed to make findings in 2016, 2018 and 2020 showing that the tax was vital to the city’s financial health, which it was required to do, according to the court. The city also has an initial estimate of $4.5 million in refunds due to residents who paid UUT.
To increase revenue, city staff proposed raising the current 12% transient occupancy tax (TOT) by 1% to3.5% to match other cities in the Bay Area. The revenue from the higher hotel tax could bring in an additional $875,000 to $3 million annually, according to the staff report.
City staff also proposed authorizing a new UUT similar to the now-defunct tax to bring in $1.8 million to $5.8 million annually, or to increase the current sales tax or business tax.
Vice Mayor Cecilia Taylor said she is “definitely not in support” of a renewed UUT tax but would consider increasing the hotel tax, and Mayor Jen Wolosin concurred. Nash also pushed back against the UUT, as well as the proposed sales and business tax increases, saying she didn’t want to do anything to hurt small businesses, a concern Council member Maria Doerr said she shared.
“We have to recognize that ‘what’s the moment in time that we’re going to go to voters asking for more money,'” Combs said. “If we’re going and asking at a time when inflation is high and (people are) overall struggling?”
The increased tax measure could be on Menlo Park’s November 2024 ballot.
Taylor also pushed for increased funding for anti-displacement programs and for the community wellness and crisis team, in which police officers would be paried with to a mental health clinician on mental health-related calls. Wolosin referred to anti-displacement strategies as “time-sensitive” as she voiced her support.
Taylor pushed to see what resources the city could provide for residents in crisis, particularly for youth.
“I’m thinking specifically (of recommendations for) our youth around mental health crises, drug use, just the things that unfortunately our teens are facing,” Taylor said.
In the proposed budget, there are 296 city employees, which includes six additional positions to work at the Menlo Park Community Campus at the cost of $2 million, projected to open in early 2024. The proposed budget assumes an employee vacancy rate of 10%, down from the current 14%.
The Menlo Park Police Department has the biggest budget in the city at $23.7 million, and is expected to bring in about $450,000 in revenue in the coming fiscal year.
The Menlo Park Police Department budget includes a startup cost of nearly $285,000 for Flock license plate reader cameras to be installed at several locations around the city and that include gunshot detection. The cameras carry an estimated recurring cost of about $251,000, and have been approved in the neighboring towns of Woodside and Atherton.
Council member Drew Combs pushed back on signing on for Flock cameras, saying that there needs to be a “substantive discussion” to determine whether the communities that the cameras would be observing want them.
“Safety is a priority and always will be, but of course, there always has to be a balance between safety and measures of privacy and personal liberty,” Combs said. “We could put cameras on every corner, and it would make us safer. We have to ask ourselves like, is that a community that we want?”
Nash supported a study session before moving forward to discuss the costs, both monetary and privacy-related, as well as the benefits. Taylor suggested using a mid-year budget amendment in order to discuss the issue with the community.
The proposed budget will return to the City Council on June 27.
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How about starting with hacking away at some of the city employee retirement benefits which are very much out of line with the vast majority of the private sector.
Observer:
A good idea, unfortunately, not workable. You cut retirement benefits and none of the other Bay Area municipalities do it too and we lose our employees to them. One only need look at the disaster San Jose created for itself when it tried to cut police pensions. Officers fled San Jose for other cities in the region that would continue their retirement benefits. The city became and remains seriously understaffed with police and the crime rate soared.
The true answer is program cuts. The other thing the city should consider is putting the utility tax on the ballot. Since they can’t collect it anymore, that is where part of this deficit is coming from. That, and the fact they have to pay back the taxes they collected illegally after the first utility tax expired. Voters approved it once to avoid program cuts, they’re likely to do it again.
California needs propositions to stop the endless cycle of public employee salary and retirement increases. Otherwise, what Menlo Voter says will happen…until every city goes bankrupt in this twisted game of musical chairs!
This problem was completely anticipatable and will only worsen with time. What’s our expenditures for police per capita relative to other local communities? We should start cutting the police budget, reducing the pensions, and reducing overtime. I disagree that people will flee to nearby communities because this belt-tightening is going to happen all over the Bay Area. It was never sustainable here nor anywhere else and this million dollar deficit is the canary in the coal mine.
Allied Arts:
Again, ask San Jose how that worked out for them. Not well. There is no evidence of belt tightening going on in the areas of pensions anywhere in the bay area, especially where police and fire are concerned.
Police and Fire salaries, benefits and pensions seem to be on an endless and unsustainable uptick. Programs need to be cut, salaries and benefits need to be pared back to match private sector rates. We can’t continue raising taxes and fees indiscriminately. Otherwise people will continue to flee the Bay Area and California in general. Enough is enough. Learn to cut back. Learn to live within your already bloated budgets. Otherwise you (government) will be killing the Golden Goose (your heavily taxed citizenry).
Outsource fire and police……
Menlo 2024:
That is not a solution. Whoever you outsource to will have to pay pensions and they certainly aren’t going to not charge for the cost of those. Cost will be virtually the same with a small savings in combining some administrative costs.
True it did not work out for San Jose, but Menlo Park doesn’t have the violent crime that San Jose does. I have to believe that the MPPD beat is probably one of the easiest in the Bay Area, and I’m sure when the potential to put your life on the line is measured against traffic stopping minorities and noise complaints there’s a lot of wiggle room.
According to the 21-22 published city budget: “City Council approved an increase in BMR funding to MidPen Housing’s 1300 Willow Road project from $6.7 million to $9.331 million for the development of 140 units of affordable housing.” Really? Over 2.5 million of our tax dollars to FUND people’s housing. That’s just one project. And they’re gonna come to us in the fall and raise taxes. Nope.
@Menlo Lifestyle, the BMR housing fund isn’t funded by taxes – it’s a separate special revenue fund. Developers pay into it because development creates a need for BMR housing. The city then uses those funds to pay for BMR development (or acquire BMR parcels). They can’t use those funds for anything other than BMR housing.
You can read more about it here if you’re so inclined.
https://menlopark.gov/Government/Departments/Community-Development/Housing/Developers/Commercial-development-BMR-requirements
https://www.menlopark.org/DocumentCenter/View/30001/J2-20211109-CC-BMR-CLT
Menlo Lifestyle:
Clearly you haven’t spent much if any time in Belle Haven. If you think the MPD officers are just hanging out and “traffic stopping minorities” I suggest you go on a ride along and see what the officers ACTUALLY do rather than retaining your less than informed opinion.