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Budget - high risk and unwise

From: domainremoved <Patti>
Date: Fri, 12 Jun 2015 15:52:13 -0700

Dear Honorable Mayor and City Council Members,
You're set to adopt a high risk and unwise budget by allowing deficit
spending in order to hire more planning and building staff. The city budget
needs to be balanced, especially during boom times. Hiring more city staff
needs to be done very, very thoughtfully with the long-term financial
implications and obligations in mind.

It appears that the city manager expects a big deficit directly due to
hiring more staff. This makes little sense. From what I have understood
about planning/building department expenses, all planning/building
department costs can be recouped through fees. For many years, there have
been discussions about how the planning and building fees are set, which by
law must be a nexus with actual costs. That's "just" an issue of doing the
the right cost accounting in order to recover costs incurred once a project
has been submitted and ALSO other costs, including staff time, enabling
service to the community that includes those same project developers before
their project hits the front counter. Not easy but doable. Please do it.

It's one thing to dig into reserves to serve the community, such as to
accomplish major infrequent public works projects, catch up or get ahead of
street repaving, and the like, or in recessions when sales taxes go down
but come up again when the economy recovers. But to go into a deficit to
hire staff in boom times is a totally different thing, especially when
those costs can be covered by fees. Development fee revenue go up when
development activity increases, and down when activity decreases. The
hiring of permanent staff means that costs go up and may not come down.
Hiring permanent staff when the fee revenue doesn't cover the costs is
irresponsible.

Reserves are meant to help the city keep afloat during downturns and to
cover extraordinary expenses such as major or unexpected public works
projects. Dipping into reserves during boom times to cover operating
expenses means that the fee structure has not been appropriately designed
to cover the variable costs of delivering services. When there is more
demand for planning and building services, the fees collected should cover
the higher costs. You can fix that without dipping into reserves.

Also questionable is the idea that permanent hires will be laid off when
activity slows. From an HR perspective, that can be very challenging, and
potentially expensive. Relatively short-term hires of full-time vs
part-time workers makes sense, but can that be done via multi-year
contracts rather than "permanent" hires. Has the city ever done layoffs
before - at what cost - or used medium-term contracts?

It appears that some want to justify the costs of additional permanent
staff on the basis of expected returns from the projects underway. The
benefits of those projects has already been counted against operating costs
and unavoidable adverse environmental impacts. Do not double count those
benefits against new costs.

I hope you are looking hard at sales tax revenue trends. If that source is
not increasing in current boom times above historic averages, the city is
destined for major financial issues in the future. The revenue portfolio
should be a healthy mix of types of businesses, much of which need to
produce sales tax revenue . Menlo Park has experiencde a shift in the mix
of commercial development and mix of types of businesses, producing more
jobs but not more city revenue. Please probe this thoroughly.

Regarding salaries and negotiations: by approving, in a low inflation
timeframe a large salary increase for the city manager, you have set the
stage for high expectations and more difficult negotiations for all other
staff, union and non-union. You've set up another challenge when you
approved providing the city manager a benefit that he can take to the bank
(apparently as a reward for not requiring personal healthcare premiums).
City subsidies of healthcare premiums go to health insurance companies, not
to the bank accounts of other employees. Kudos to Ray Mueller for saying no
to the package. The rest of you who said yes have another chance to
reconsider.

Respectfully submitted,
Patti Fry
Received on Fri Jun 12 2015 - 15:48:55 PDT

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