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The Menlo Park City Council approved a $76.1 million budget with a $1 million deficit for the coming fiscal year at a June 27 meeting in a 3-0 vote with Vice Mayor Cecilia Taylor and Council member Drew Combs absent.
The city is planning for $76.1 million in expenses and only $75.1 million in revenue, causing a $1 million deficit, up slightly from $0.96 million when the council discussed it last month. Part of shortfall can be attributed to the city paying down its pension liability. City staff plan to balance the budget using the $36 million general fund reserve, but the City Council is still searching for ways to increase revenue that would allow Menlo Park to avoid drawing down its reserves.
Environmental Quality Commission member Jeff Schmidt encouraged the council to approve money for the Urban Forest Master Plan, which he says focuses on reducing the disparity in the number across neighborhoods. The plan focuses on the Belle Haven neighborhood where air quality has consistently been the worst in Menlo Park and has the highest rate of asthma among residents, three times higher than that of other neighborhoods.
“It’s asthma and air quality as key issues, it’s a heating and cooling issue, it’s a quality of life issue, and finally, it’s a climate issue.” Schmidt said. “So with a small investment, it has multiple benefits.”
Concern about the deficit swirled during the meeting, with Mayor Jen Wolosin worrying about the future of the city’s general fund.
“We’re either going to need to make some big cuts, or we’re gonna need to find more revenue, or some combination of the two, because drawing down reserves is not a long-term strategy,” Wolosin said.
She said that when looking to cut items from the budget, they would be “painful expenses” since the city has obligations to budget items that maintain safety and the quality of life in Menlo Park. The cuts would likely come from “fun things that we as residents like to have in our city.”
One of the reasons the council is struggling to make ends meet is the loss of revenue from Menlo Park’s Utility User Tax (UUT) which was struck down by 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 legally collecting the tax 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 it must make to residents who paid UUT in those years.
Wolosin suggested that city staff pursue a community survey on what services residents would be willing to sacrifice or what methods of generating revenue they would be willing to support. City staff is looking into an increased transient occupancy tax (TOT), which is currently 12%, by 1% to 3.5% to match those of 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 a June 13 staff report.
Wolosin said that in a survey, she’d be interested in asking residents their thoughts on introducing an updated UUT and Council member Maria Doerr said the same. The council held off on specifying what questions should be a part of the survey, since only three of the five members of the City Council were present for the meeting.
Removed from the Menlo Park Police Department budget was a startup cost of nearly $285,000 for Flock license plate reader cameras. The cameras were to be installed at several locations around the city and include gunshot detection. Doerr said she was interested in looking into Flock cameras, as residents had reached out to her about the perceived benefits of the cameras, such as identifying thieves. Doerr said that the cameras come at a lower cost than hiring one new police officer. The Flock contract will come back to the City Council for a future study session.
The updated budget included revisions from the June 13 meeting, including a salary schedule amendment for a 3% pay increase for the Police Officers’ Association and Police Sergeants’ Association, which began July 2. City staff also added an extension of the rate assistance pilot program for utility bills including trash and water service, through June 30, 2024. Through the rate assistance program residents can receive a monthly discount for trash pickup and water rates if they’re enrolled in the PG&E CARE program.
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I would be interested to see annual city expenses over the past 50 years adjusted for inflation. It is very difficult to put this into context without this data.
Since 2013, City FTE count has grown by 28%, while population has stayed flat. Do you think you need 28% more ocal government than 10 years ago?
@James Pistorino
Interesting. Do you know what new FTEs are doing?
Not sure about formatting, but posting it below.
2010|2020|2022
population|32,026|33,780|32,295
admin services|25|34|35.2
city council|5|5|5
public safety|75.75|76.50|62.50
public works|56.00|69.50|72.60
community srv|51.50|52.25|45.85
library|14.50|18.50|18.50
community dev|18.00|31.00|32.10
total ftee|245.75|286.75|271.75
census link
https://www.census.gov/quickfacts/menloparkcitycalifornia
MP 2022 annual financial report, pg 191
https://menlopark.gov/files/sharedassets/public/administrative-services/documents/finance/annual-comprehensive-financial-reports/2022-annual-comprehensive-financial-report.pdf
MP 2017 annual financial report, pg 186
https://www.menlopark.org/DocumentCenter/View/12854/I3—CAFR–Staff-report?bidId=
roles of MP departments
https://stories.opengov.com/menlopark/published/tjvOR19_Yh
The most recent Comprehensive Annual Financial Report includes a table on page 191 showing in 2013 FTEs were 229.75. In 2022, FTEs were 271.75. The budget approved at the June 27 City Council meeting has 290.5 FTEs but excluded 6 FTEs that will be added later. If you go with the 290.5 number, staff has increased ~26%. If you go with 296.5, staff has increased 29%. Either way, 60+ additional employees while population has stayed flat is remarkable.
It would be helpful to have detailed org charts that included ongoing use of contractors to supply services. A number of residents, including some Council members, have asked for these org charts. These do not have to list the names, beyond the senior level managers. I consider the org charts essential for fact-based decision making.
The survey idea is a good one but it should be positioned more positively. The residents should be surveyed as to what services we don’t use, value or want and the data used to make changes.
Other ideas: The City could also increase its use of volunteers and go after more grants. An outside auditor function, that worked off a yearly Council-approved work plan, could also identify ways to reduce possible waste and inefficiency, or to bring in more revenue. For example, suitable scrutiny of the City’s public-private partnerships might determine they aren’t delivering enough value to the taxpayer.
It would be nice if the city simply provided reasons why staff has increased by 29% while the population has not grown. So far, I have seen no explanations as to the need for that much additional staff. Here’s a novel thought, if the population hasn’t grown and staff has grown by 29%, and we’re looking at a major budget shortfall, CUT STAFFING LEVELS. The city was operating just fine before the staffing increases. I would imagine if staffing was cut, we could balance the budget, the city would still continue to operate as it has before, AND there would be no need for additional taxes.
I would love to hear from council as to the reasons all of this additional staff has been added when the population hasn’t grown. A survey would be of little value when we voters don’t know why we have the staff levels we do.
Looking at number of FTE is misleading because Menlo Park’s revenue base has increased from $54M in 2013 to $96M in 2022, an increase of about 78%. Even though population has remained flat, the percentage growth in revenue base is higher than FTE growth. MP has ran a surplus every year since 2013, except for 2021 (pandemic).
Not disagreeing that cutting staff may be needed to balance the budget, MP did that during the pandemic. However, how much did ending the utility tax impacted the 2023 budget or is making it worse due to projected shortfall in overall revenue?
Using your numbers, $54M in 2013 would equate to $70.33M in today’s dollars factoring in inflation. Subtracting that from your $96M figure gives an increase in spending of ~36%, which is not far off the increase in staff size. Additional expenditures are millions being spent by MP on “climate emergency.”
A thorough analysis might reveal if some of the differences are due to timing and external factors. For example, the efforts to address the state’s housing mandates and the large amount of development in Menlo Park could account for a good part of the difference between staffing and population. Huge projects such as Middle Plaza, Springline, Willow Village are not fully occupied at the same time their planning, approvals and construction that consume a lot of staff time (that SHOULD be fully paid by the developers).
The Council has approved massive commercial growth that hasn’t been accompanied by massive new revenue. How about a focus on that?
Iris:
The building and planning departments are supposedly self funding. Fees paid for plan check, planning review, inspections etc. are supposed to be set to cover the costs of the building and planning department. The increase in construction would explain the added staff, but not the budget shortfall. Unless, council is diverting some of those funds.
Do you have any data to substantiate the idea that there has been increased construction activity in the last year/two as compared to 2013? If building and planning are self-funded and all the increase in staffing is in that department, that just means the rest of Menlo Park is even more poorly managed and, in real terms, spending has increased by 36% in 10 years.
James:
I don’t have the data, but from my personal experience in construction, there is definitely more construction now than in 2013. Covid saw a large increase in construction, primarily in the remodeling sector. In my experience, construction has not slowed down since Covid.
Again, building and planning are supposed to be self funding, so if they have been managed that way, budget shortfall should not be occurring in those departments. It would be good to know how much of the staffing increases have been in planning and building. That would give a more accurate idea of how bad the problem really is.
Even if all the planning and building staff are paid through fees, which I question even though that is possible and SHOULD happen, the number of staff would be higher than in the past. Thus the comparisons of flat population and increased staff should take the building activity into account. Some posts do not reflect that reality.
I believe that a big part of the budget problem is that the city’s bread basket of sales tax-paying businesses has diminished, replaced by internet companies that do not provide such revenue. Time to create a comprehensive revenue plan.
” Time to create a comprehensive revenue plan.”
And a comprehensive expenditure plan!
this is a great opportunity to do a Zero Base Budget.
“Zero-based budgeting (ZBB) is a method of budgeting in which all expenses must be justified for each new period. The process of zero-based budgeting starts from a “zero base,” and every function within an organization is analyzed for its needs and costs. The budgets are then built around what is needed for the upcoming period, regardless of whether each budget is higher or lower than the previous one.”
https://www.investopedia.com/terms/z/zbb.asp
With Zero Base Budgeting every function must justify its purpose and the associated costs.
I suspect that such a process would quickly identify some very expensive function that could easily be eliminated.
An example is that Menlo Park has its own police dispatch – a very expensive function and one that could be easily replaced by a consolidated dispatch serving multiple departments. Years ago Menlo Fire started such a consolidated dispatch with a consolidated service serving the fire agencies in southern San Mateo County. That was so successful that now ALL San Mateo fire agencies now use a SINGLE county wide dispatch system. The result is better fire response at a lower cost! A rare event in government.