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Taxes on businesses, hotel guests or residents’ utility bills are under consideration as the Menlo Park City Council looked for ways to boost revenue at a July 11 meeting. The city is facing a shortfall of $1 million in the current budget year, and council members want to avoid depleting the city’s fiscal reserves to make ends meet.
Offered a range of options by city staff, the council favored moving forward with a utility users tax (UUT), a business license tax and a transient occupancy tax (TOT), also known as a hotel tax.
The city is currently facing a loss of revenue from its prior UUT, thanks to a class-action lawsuit. Menlo Park for several years failed to make the necessary findings to continue collecting UUT from residents, according to a San Mateo County Superior Court judge who issued a tentative ruling against the city in April. The city estimates that it will owe $4.5 million in refunds to residents who paid the tax during those years.
Council members were not in lockstep on the idea of levying a new tax.
“I do not support increasing taxes for residents in Menlo Park period,” Council member Cecilia Taylor said. “We adopted a budget … $74 million last week. And so I’m just thinking that we need to do more around looking at how we spend money as opposed to how to generate more money.”
All of the council members agreed that city staff should look into a utility users, business and hotel tax. Menlo Park’s TOT is one of the lowest in San Mateo County, at only 12%, and the city is considering an increase of between 1% and 3.5%, to bring it in line with other Bay Area cities’ hotel taxes. 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.
The city’s business tax was set in 1978, and has not been modified since. Council members put emphasis on protecting small business owners and applying the tax to businesses with a yet-to-be determined number of employees.
“I definitely would like to look at protecting retail and small businesses who do not have much profit margin,” Council member Drew Combs said.
The City Council directed city staff to study the UUT and TOT to go before voters on a future ballot, and to pursue a conversation about changes to the business tax later.
The Menlo Park City Council needs to look at cutting their spending before they look to taxing residents or businesses further. They are already on the hook for over taxing the residents on their utility bills, I don’t think any one is going to be happy, certainly not me, if they try to increase our taxes without making a very good case for it and that case needs to include why they can not reduce their fiscal year budget to meet current income.
Brian:
I agree. I have yet to hear council put forward any reasoning for not cutting staff and cutting expenses, other than Taylor’s vague reference to not raising taxes. Council directs staff to look into raising taxes instead of cutting expenses. How typical. Until I hear some logical explanation for not cutting staff, tax increases are off the table as far as I’m concerned.
> Menlo Park’s TOT is one of the lowest in San Mateo County
> The city’s business tax was set in 1978, and has not been modified since.
C’mon, man!
Let’s start at the top. How much money could be saved by getting rid of the city council?
Observer:
Very little. Staff is where the big expense lies.
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 consolidated dispatch with a consolidated service serving the fire agencies in the southern San Mateo County. That was so successful that 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.
Let me guess: if the council members deign to read this thread, their reaction will be “yes, a few residents are unhappy with increased taxes, but the non-posters are thrilled with city services and willing to pay more taxes to cover all the staff expenses needed to deliver those services.”
Council: read the room. It’s foolhardy to ask for more money, especially in this precarious economy. Most residents would not even notice a cutback in services. (Of course, asking staff to come up with solutions is not going to yield the optimal answer. They’re not going to recommend that you cut their jobs.)
For most of us, the idea of raising taxes to meet this shortfall does not compute. If my travel budget doesn’t cover all the trips I’d like to take, I take fewer trips. If I can’t afford to go out to dinner every night, I don’t go out to dinner every night. I don’t insist that my boss raise my salary so that I can do everything I’d like to do. It would be nice if the council could model their decision-making process on ours.
There is over $32 billion in covid fraud cases waiting for what California Attorney General Bonta calls a whistle blower fee. Recently a Southern California Doctor convicted of $11 million in Medi Caid fraud was convicted with his funds RICO’d back to the State of California, Oregon and the Feds.
The Medi Caid fraud case is a drop in the bucket compared to $32 billion in Covid Fraud.
Why don’t the law enforcement wizards in both the North and South bays form strike forces to recover the Covid Fraud money that is escaping Attorney General Bonta and his strike force as they task themselves chasing after California’s 58 counties in order to enforce RHNA numbers.
Hi Everyone. If you haven’t yet, please send in your input directly to the City Council members AND the entire Finance & Audit Commission. You may write to the City Council, and senior staff, at city.council@menlopark.gov. Comments go to a public website that is widely read, including by reporters.
The Finance and Audit Commission is an advisory (to Council) commission and it meets tomorrow night. You can write the Commissioners and also make public comments at the meeting.https://menlopark.gov/Government/Commissions-and-committees/Finance-and-Audit-Commission I think it’s important that you stay “in the game” via the established forums for submitting input to the elected officials and advisory committees. Public input matters! Disclosure: tomorrow, I will take my seat as a new member of the Finance & Audit Committee. Here’s the link to the agenda packet! chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://menlopark.gov/files/sharedassets/public/agendas-and-minutes/finance-and-audit-committee/2023-meetings/agendas/20230720-finance-audit-commission-agenda-packet.pdf
Lynne,
Congratulations and thank you for stepping up to the Finance and Audit Commission role.
Citizen participation is crucial to good local government.
“The city’s business tax was set in 1978, and has not been modified since.”
Let’s be clear: a tax RATE can remain the same while the tax REVENUE increases, as a byproduct of business growth and normal inflation.
You don’t have to ‘modify’ (code for ‘increase’) a rate to get additional revenue.
Pro-tax sycophants always try to imply that an un’modified’ tax rate means un’modified’ tax revenue. It’s blatant deception.
This state has some of the highest sales taxes, business taxes and income taxes in the revenue, and our state and this area are feeling the results of this in real-time in reduced tax revenue.
Read the room. Citizens and business owners have had enough and are taking their families and businesses (and the resulting tax revenue) elsewhere in part because of this level of confiscation.
How about cutting some recent budget items? When funds are flush, expenses are approved for optional programs. By default, after a little time, these programs become essential. We got along just fine without them. Cut them out.