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With Portola Valley’s finances in a precarious state because of growing costs, including a big spike in sheriff’s office services, Town Manager Sharif Etman spoke to the Town Council during an April 24 meeting about town finances, staffing updates and his plans to “reset, refocus and restructure” the town staff.
The town also introduced its new full-time planning and building director, Romeo Herrera. The town announced in January that the interim Planning and Building Director Jon Biggs would be leaving the town in February, having reached the maximum hours under his contract. The town is in the process of hiring a financial director as well, according to the presentation.
Etman said his immediate focuses are in recruiting and filling vacant positions. According to the town manager, the town has faced a 70% turnover rate in staffing, with currently only 12 staff members.
“It hasn’t been easy. It hasn’t been fun for the last six months,” said Etman. “We cannot get the work done that the community wants us to do. We cannot entertain the discussion of a dog park, sustainability or true fire evacuation plan.”
Financial updates: Dip in property tax revenue, increased policing costs
The town has completed its financial audit for fiscal year 2020-21 and is currently working on audits for 2021-22. Etman said that fiscal year 2022-23 will be scheduled for an audit by the end of the year.
The town is a $12 million agency and has control over $8 million in funds. For the fiscal year 2023-24, the town started with a structural deficit of $868,000 due to an $850,000 annual increase in its contract with the San Mateo County Sheriff’s Office
Etman however was able to work with the county to receive a lower rate with the sheriff’s office for this year and the next two fiscal years. For 2023-24 and 2024-25, the town is in contract for a $425,000 increase and a $650,000 increase in 2025-26. By 2026, the town will need to be paying the full contract amount, which Etman clarified will be inflated to over $1 million by then.
“I also made a commitment as your town manager to increase the visibility of the sheriff,” said Etman. “The sheriff really wants to have a visible storefront in the town and have a more resident friendly place to meet with residents.”
During public comment, community members commented on the lack of services that the town receives from the sheriff’s office despite the increased contract.
The town has approved $868,000 in reserves to cover the projected deficit for this fiscal year. The increased rate with the sheriff’s office and legal fees has put the town in a structural deficit.
“It’s normal to have a structural deficit every once in a while in a city’s history,” clarifies Etman. “It doesn’t intimidate me, it shouldn’t intimidate us. Everything has a solution and we have time for this solution.”
Some 46% of general revenue for 2023-24 comes from property taxes — about $3.7 million. The town manager notes that there was a spike in property taxes when about 40 houses were sold during the height of the COVID-19 pandemic. With fewer houses selling moving forward, the growth of property tax will decrease, putting the growth off balance with inflation rates, according to Etman.
Solutions: Charter town, parcel tax, land sale floated
To optimize town revenue, Etman proposed multiple options to create a sustainable fiscal model by 2025-26 including the following ideas: becoming a charter town, passing a parcel tax, or annexing and land sale.
“We don’t have the ability to say ‘we are a town, our town ethos is small, we want to stay small,’” said Etman. “Unfortunately, the fiscal model and the town ethos of staying small, contradict.”
The town manager has created a three-year initiative he calls “Portola Valley Thrive” to examine what Portola Valley can do to maintain the town’s characteristics while also enhancing revenue strategies.
Since taking over as town manager in August 2023, Etman evaluated positions within the town and reorganized staff to “make sure that we have the right people in the right spots.”
Additionally, Etman cut retirement benefits in which the town matched the employee retirement funds.
In Etman’s vision to restructure the town, he emphasizes that the town needs to have 20 full-time staff members. He hopes for all changes to be completed by June 30.
If Portola Valley were to become a charter town, it would be able to charge a document transfer tax, a tax that is paid when a new owner purchases a house, Etman said. This would create another method for the town to raise revenue, but would cost the town millions of dollars in legal fees to set up, Etman explained.
Mayor Sarah Wernikoff questioned a possible parcel tax, asking during the April 24 meeting, “when would we actually see the revenue?” Etman responded that if this idea were to move forward, the tax would be placed on a special election ballot in 2025 and would take about a year and half after passage for revenues to flow in.
To reach the goals of “PV Thrive” Etman called for the help of the town Finance Committee in assisting with coming up with suggestions for the council and evaluating ideas to generate revenue.
“While we may not all agree on where we go from here … it’s my hope and intention that we all agree we want to preserve Portola Valley, keep our town ethos and allow Portola Valley to thrive for decades to come,” said Etman.
With all due respect, given that the Town no longer has local control over building & planning issues (albeit something many of us would have fought against and still wish we would), and given further that we have significantly increased our budget allocation for building & planning over the last several decades, it seems that the most optimal and obvious way to reduce costs and balance our budget is to cut back on staff and administrative costs in the building and planning/management department. The last thing we need to do is tax our residents more with a parcel tax to cover this bloat (as per the advocates of below market rate housing, we should do everything to keep land affordable in PV).
Portola Valley, Woodside, Atherton, and Menlo Park should merge into one city and have more efficiencies around staffing.