By Mark Gilles
Last Tuesday, the Menlo Park City Council voted 4-1 (Boyle opposed) to set the Utility User Tax (UUT) at its maximum allowable rate. The tax, authorized as Measure K by a margin of 67 votes in last November's election, was designed to address a projected $2.2 million annual budget shortfall. The measure was promoted on the basis that it was needed to maintain essential services such as police protection, street repair, libraries, and senior programs.
Since then, we have learned that instead of a deficit, the city had a $3.7 million dollar budget surplus in the fiscal year ending June 2006, and that more than half of the estimated $2.4 million to be raised from the UUT will be spent on a $1.3 million per year pay and benefit increase for about 200 city employees. The council members voting in favor of the tax each expressed their own ideas of where the remainder of the tax revenues might be spent ranging from improving our parks, to expanding our business development staff, to reducing our greenhouse gas emissions, to growing our reserves in preparation for a great natural disaster.
What is wrong with this picture? Aren't these all good causes?
First, it is clear from an October 6 audit report that the city management either knew or should have known about the $3.7 million surplus at least a month before the vote on Measure K and did not disclose this information to the council or the public. Second, since this information has come to light, the staff has not provided a complete explanation of why the information took over six months to become public and continues to provide less than complete information about the city's financial conditions. Lastly, rather than honoring their promises to only use the tax as a "short term bridge" to maintain basic services the council majority now seems intent upon increasing spending to consume the new revenues on priorities that the voters did not approve.
It is time that we started holding our city to the same standards of financial accountability and transparency that apply to public companies and charities. The council should establish a process and format for the timely reporting of revenues and expenses against the council-approved budget on at least a quarterly basis. When financial surprises do happen (and they inevitably will) the city should be required to immediately report them to the public. The council should establish an audit subcommittee to review financial reports and to meet independently with the city's auditors at least annually to discuss how Menlo Park can improve its financial management processes.
And what of the Utility User Tax? The council should set the tax rate to zero until it develops a budget for 2007-2008 and explains to the public why Menlo Park needs the additional revenue. The city is now telling us that there is no financial emergency and that even after increasing spending on infrastructure by $2 million we have more than adequate surplus from 2006 to cover any conceivable deficit in 2007. While there may be plenty of areas where additional revenues can be put to good use, there is a public process for setting budget priorities that should be followed before the council raises new taxes and before the council commits the city to long-term spending increases.