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In the midst of a financial crisis, the town of Portola Valley is actively seeking new options to revise its budget and increase revenue. On Nov. 13, the Town Council voted unanimously to approve a new proposed budget with an additional $20,000 investment to go toward staff development.
Finance Director Tony McFarlane presented the council with a revised budget that would reduce town expenses by $2.5 million, leaving the town with a surplus of $97,000 for fiscal year 2024-25.
Due to the town’s seven vacant staff positions, it is able to save about $800,000 on staffing costs. McFarlane also proposed that no investments will be made toward staff development training to cut costs, which council members all rejected.
For a full staff, funding for staff development would cost about $50,000 but for the current number of staff the town is only investing $5,000. Council members emphasized that staff development is crucial to solve its issues around recruitment and retention and asked McFarlane to reassess available funds.
“I think it’s important to remember that cutting out development is sort of a drastic thing to do with staff,” said Council member Jeff Aalfs. “It’s a very small cost, but it’s something that contributes greatly to people.”
By cutting costs, the town and its residents may also be impacted with delays in services, said McFarlane. Community members may experience delays in permit and plan checks, building inspections, public records requests and town website updates. The current reduced hours for Town Hall and Building and Planning from Monday through Thursday, 8:30 a.m to 12:30 p.m. may also remain indefinitely, said McFarlane.
Recruitment and retention of town staff will also continue to be an issue while administrative roles remain vacant for a permanent town manager, planning and building director, town clerk and town engineer, according to the presentation.
“Recruitment will be challenging with this budget and lack of development and lack of clear advancement,” said McFarlane. “With retention, we should be looking at continued staff turnover. Also with the reduced staff positions, filling those positions, we’re going to have a continued reliance on consultants and contractors”
McFarlane also explained that this revised budget will impact the town’s future budgets in staffing and consultant fees. Full-time employees will be reduced from 20 to 15 members. With limited staffing resources, the town will also need to negotiate reduced hours for contractors and consultants to keep costs low.
The town can also expect a $600,000 increase in the San Mateo County Sheriff’s Office contract after fiscal year 2025-26, but the town is attempting to negotiate a cheaper contract. McFarlane estimates that the contract will increase by 10% each year based on trends from previous contracts.
The revised budget will also limit investments in capital improvement projects. Without these investments, facilities maintenance costs and IT issues will increase but the town will invest if necessary, said McFarlane.
Previously, Mayor Sarah Wernikoff introduced the idea of a lease-leaseback as a possible financial option. This would involve leasing town property to San Mateo County. In McFarlane’s example, if the town were to agree to a 5-year lease-leaseback with the county for $3 million with an interest rate of 3.77%, the annual investment yield would be 4.22%.
Another strongly supported idea was to become a charter town, which would require a ballot measure in the November 2026 election. This would allow the town to impose its own Real Property Transfer Tax rate. Currently the town’s rate is $1.10 per $1,000 in home sale value.
If the town were to adopt an $8 per $1,000 rate, it will generate about $1.5 million per year, said McFarlane. If voters approve the measure, the rate would be effective in January 2027.
Mayor Wernikoff expressed concerns over the 2025-26 budget with the town’s current “Band-Aid solutions” of interim staff and lack of resourcing in departments like Planning and Building.
“We will continue to struggle with getting to the work that’s in our housing element that before we know it, in April, we’re going to be looking at another annual review of the housing element,” said Wernikoff.
If the town is going to pursue a measure to become a charter town, Wernikoff recommends that it take action now to educate and build confidence in the community about why it’s necessary and how it will benefit the town.
During the public comment, the Open Space Committee recommended the town allocate $65,000 from the 2% User Utility Tax this year to “maintain the primary town owned open spaces and areas that have been designed for open space purposes,” said Nona Chiariello, vice chair of the Open Space Committee. This is 1.5 times the amount of the committee allocation of $44,000 in 2023 which was used for maintenance of Spring Down Equestrian Center, Ford Field and Frog Pond Park.
Chiariello’s report also recommends against the town using the UUT funds for trail maintenance outside of town owned open space and to have stronger coordination with joint subcommittees and staff to best use tax dollars.
Council member Craig Taylor said he believes that with the Open Space Committee’s recommendations and allocations, there may be available funds to put toward staff development rather than cut costs.
“Retention of employees in my mind right now is paramount. Without that, sort of none of the rest of this works,” said Taylor.
‘Retention of employees in my mind right now is paramount. Without that, sort of none of the rest of this works.’
portola valley council member craig taylor
