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City plans to cut projected $1.8 million deficit

Original post made on Feb 24, 2009

With Menlo Park facing the prospect of a $1.8 million deficit, city staff has recommended a number of stopgap measures that would allow the city to weather the economic downturn -- at least through the current fiscal year.

Read the full story here Web Link posted Tuesday, February 24, 2009, 1:25 AM

Comments (17)

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Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Feb 24, 2009 at 7:43 am

Hopefully someone understands that the current reduction in building permits will inevitaly result in a much bigger and longer term reduction in property taxes in future years.

"Much of the city's projected revenue shortfall can be attributed to a decline in building permit fees and fees related to new subdivisions, as builders and developers scale back construction projects.

After a steep rise in fees for licenses and permits in the 2007-08 fiscal year, Finance Director Carol Augustine expects this year's fees to come in $750,000 below what the city had originally budgeted. Slash another $175,000 in expected revenue from services related to development subdivisions, and the city stands to fall short by nearly $1 million in development-related fees alone."

But Menlo Park will take in more revenue than originally expected in utility taxes, property taxes and franchise fees, Ms. Augustine said.

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Posted by Why not layoffs?
a resident of Menlo Park: Central Menlo Park
on Feb 24, 2009 at 8:37 am

With the delay of infrastructure projects, and particularly with the decline in development (as evidenced from the "decline in building permit fees and fees related to new subdivisions, as builders and developers scale back construction projects"), it would seem that personnel in these areas could be cut with little effect on services.

This decline in revenue should translate directly into a reduced demand for such services.

Why is it, then, that Mr. Rojas says "there's very little room to cut?"

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Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on Feb 24, 2009 at 10:07 am

The truth is that local governments have gotten use to 6-10% increases in property tax revenues in recent years.
The truth is that most property has it's tax increase capped at 2% by Prop 13.
The truth is that all the rest of the annual property tax revenue increase has come from new property sales and newly sold existing properties.
The truth is that total new and existing property sales in Menlo Park last year feel by almost $100 million.
The truth is that new construction starts are far fewer and smaller than last year.
The truth is that with the decreases in property values there will be reassessments that will lower the former base of a 2% increase.
Some people simply cannot deal with the truth.

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Posted by truth
a resident of Menlo Park: Belle Haven
on Feb 24, 2009 at 10:41 am

None of these are substantiated. Is this how you run the district board? If so, we are big trouble.

The truth is that property taxes look to be up and stable. Call anyone you want who actually knows and you will here the same. This is the same rhetoric every time from you guys.

Sales tax may be depressed for several years, but there is no evidence whatsoever of declining property tax. Go to one meeting, just one meeting before you start running at the mouth with your assumptions and your panic.

Construction starts? You mean big construction I presume. If not, then you are wrong again. Small projects are stable.

Look, Peter, this is all in the public report. What are you reading?

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Posted by reassessment
a resident of Menlo Park: Downtown
on Feb 24, 2009 at 10:54 am

Property taxes follow the fiscal year. With declining sales, declining values, new construction languishing, the reassessment for 2009-10 will cause prop tax income to fall dramatically.
The bigger issue is sales tax will plummet, TOT will not be the expected windfall, residents will rebel at an increased UUT.
Administrative service costs have soared in this city under the current City Mgr.. Time to eliminate NON- essential administrative positions like "Community Engagement Mgr" ( a glorified survey taker), Bus Dev Mgr and asst (how do they think they have some rare talent to attract businesses to MP?). More importantly, put the premature ECR visioning process, (how can we justify paying an outside consultant @ $1Million!), on hold until Stanford recovers its car dealer land (leases up in 2013), and get Planning staff redirected to updating the State Law mandated Housing Element (Fifteen years out of date).

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Posted by peter carpenter
a resident of Atherton: Lindenwood
on Feb 24, 2009 at 11:03 am

In 2008 new single family housing starts in San Mateo County fell 52% from 2007

Menlo Park housing appreciation rate for the last 12 months was -2.62%

Menlo Park currently has 244 pre foreclosures and 29 foreclosures

8,600 people asked the County last year to review the value of their property
That figure was up from 1,070 requests in 2007 and 770 in 2006
About 5,200 of those homes were assigned a lower value

Facts are hard things to deny

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Posted by reassessment
a resident of Menlo Park: Downtown
on Feb 24, 2009 at 11:22 am

County prop tax assessment rolls are set annually in the spring for the following fiscal year (July 1-June 30). 2nd installment of prop taxes due March 1st, 2009, but paid by a lot of property owners at the last minute (April 10th) without incurring 10% late fee, for FY 2008-09 will give a false sense of security because it's based on last year's values, new construction. With upcoming downward reassessments and fall off of new construction/transfers, Expect 2009-10 to plummet.

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Posted by truth
a resident of Menlo Park: Belle Haven
on Feb 24, 2009 at 11:39 am

Peter, you are quoting county numbers. Value assessments have been increasing and I cannot see in the numbers how that increase last year pulled down property taxes. It "may" happen, but how can you expect people to go on what may happen?

Menlo Park is well aware of the foreclosures, moreso than others cities. I have seen Cohen and others working to solve this problem, which means there is little surprise here.

None of your numbers equates into a disasterous plunge in property taxes in Menlo Park. Using words like plummet don't make that disconnect any better.

The facts are on the table as far as I can see. You playing the role of some amateur financial analyst does not cure the information gap.

My point is the current numbers and guidance we have in the city report gives no indication of a precipitous slide in property revenue or a "plummet" as you folks want to contend.

You want this city to act on assumptions that may or may not be accurate.

"The Assessor's Office reports that the volume of "Decline in Value" requests in manageable and reportable declines in value are rare. In 07/08 poperty taxes were 2.4 percent higher than adjusted budget. Actual growth in the assessed role of secured property taxes in 2008-2009 was 6.24% or 1% higher than expected."

Transfer taxes are down some. Secured prop taxes are uo more.

What are you reading? Country reports cover many different cities and it seems you are out of touch in this city. Perhaps because you neither live here or spend the amount of time others do working on this?

I would be more open to you POV if I did not see you take petty pot shots over your past issues and if you did not so overtly play obvious political football.

Reassessment may be right and I think I agree with the notion that next year this council needs to approach the budget with extreme caution as the tax valume could be reduced.

But this is mid-year stuff. Next month, we can all get into 2009/2010.

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Posted by Jack Be Nimble
a resident of Menlo Park: Stanford Weekend Acres
on Feb 24, 2009 at 1:06 pm

Here's wishful thinking that they would lay off some overpaid staff. I won't hold my breath though.

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Posted by Sean Howell
Almanac staff writer
on Feb 24, 2009 at 2:45 pm

Sean Howell is a registered user.

Truth, Peter:

I thought a little more information might be helpful. The city actually expects property tax to come in $100,000 over budget for 2008-09. And here's a link to an article in this week's Almanac about the county proactively reassessing homes for the 2009-2010 tax roll:

Web Link

For what it's worth: The city expects sales tax to come in $70,000 below its initial projection (less than 1 percent of the total expected sales tax revenue).

Hope this helps.


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Posted by new linfield owner
a resident of Menlo Park: Linfield Oaks
on Feb 24, 2009 at 3:22 pm

probably a good share from the new homes over here in Lane Woods, etc.

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Posted by peter carpenter
a resident of Atherton: Lindenwood
on Feb 24, 2009 at 3:26 pm

There is a lag time between decreasing property values and lowered assessments and lower property taxes - but the result is absolutely certain.

In '08 the County reassessed 5400 homes and now the County has just announced that it anticipates reassessing as many as 20,000 homes in 2009!! And this includes some in Menlo Park including Belle Haven where 'prices have plummeted'.

It is wishful thinking to think that property tax revenue will continue to rise. Staff reports do NOT create either reality or property taxes.

Our economic world has changed and the sooner we respond the better.

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Posted by Peter Is Right!
a resident of Menlo Park: Menlo Oaks
on Feb 24, 2009 at 5:16 pm

Thank you Peter for sounding the alarm. I wish we had more people doing this, and were more aware, and frankly not complacent about Menlo Park's financing. The wizardry behind the city's numbers is amazing, however it is all coming to light right now. No matter what the current city employees, or the council wants to say about the budget, we need to get our act together, and stop the political bickering that "Truth" wants to start, during every conversation!

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Posted by Peter carpenter
a resident of Atherton: Lindenwood
on Feb 25, 2009 at 9:32 am

More data - Year to Year SF Bay Area new home values are down 31.2%

And the WSJ cites economists who predict that the housing price peak to trough drop will be 40%

And Menlo Park is not an island - all of these trends will impact Menlo Park, perhaps somewhat more slowly than East Palo Alto or San Mateo.


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Posted by WhoRUpeople
a resident of another community
on Feb 25, 2009 at 2:04 pm

To continue to look at the future without doing so with caution due to the all of the uncertainty in our economic situation is just plain dumb. Will property taxes revenue be flat or drop, will sales tax revenue drop a little or a lot, will the economy suddenly overcome all of the obstacles facing it and miraculously turn around this year--I think not, but I don't know. What I do know is now is the time to be cautious and not spend money that is not necessary to get through the short term (i.e downtown visions, more trees in center islands, raises to people who likely can't find another job to jump to even if they wanted to). In short, whats happening everywhere can and will happen to Menlo Park-and THAT, unsubstantiated as it may be, is the TRUTH as I see it.

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Posted by arlan kurtz
a resident of Atherton: West of Alameda
on Mar 13, 2009 at 7:47 am

Peter Carpenter should do something about the Menlo Fire District before he starts mouthing off about othe governments.

The Fire District is one big bloated beauracracy. I say merge it with another district. Eliminate the board, consolidate management and streamline shifts.

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Posted by ryan
a resident of another community
on Mar 13, 2009 at 7:48 am

[Removed due to excessive posts by the same poster]

Sorry, but further commenting on this topic has been closed.

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