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Budget Deficit, Continued...

From: Chuck Bernstein <chuck4council_at_(domain_name_was_removed)>
Date: Thu, 28 Oct 2010 18:36:11 -0700


Council Members: This communication is an update of the information I provided you on Tuesday evening. I have also reformatted slightly the spreadsheet I provided to make it more "technically" correct. The numbers contained within it are unchanged and the conclusion that--without some action--we will have a deficit of $3.0 to $4.0 million remains valid. I strongly disagree with the comments made by staff at the meeting that we have to continue to wait before taking action. We now have enough information based on 2009-10 data to know that Menlo Park is in serious financial trouble: • Actual "Sales Taxes" of $5.5 million in 2009-10 are substantially below the 2010-11 budget of $6.2 million. As of the mid-year correction on February 23, they were still projected to be $6.0 million in the adjusted budget for 2009-10, so it appears as if the downturn is accelerating. • Actual "Transient Occupancy Tax" (hotel tax) of $2.1 million in 2009-10 are substantially below the 2010-11 budget of $2.7 million. Again the mid-year correction resulted in an adjusted budget for 2009-10 of $2.5 million, so the correction missed the mark by a wide margin, too. • Actual "Interest and Rent Income" was $0.8 million for 2009-10, substantially below the 2010-11 budget of $1.4 million. In this case, the adjusted budget at mid-year was unchanged at $1.1 million, so the reduction was entirely unexpected. The city appears to have a good understanding of what property taxes and charges for services will be, so I have left them as budgeted. The ACTUAL revenues from all the other sources of income in 2009-10 are $2.4 million LESS than what is budgeted for 2010-11. If I make a simple assumption that the revenues remain constant this year, the $2.4 million shortfall combined with the $0.6 million LOSS that was already planned accounts for a total of $3.0 million in projected losses this year. The assumption is optimistic, though, because it appears that the declines in revenues were continuing up through June. In addition, the city manager announced at the September 21 council meeting that he would be asking for a supplement to the Planning Department budget to continue work on the streamlined planning process for the M-2 industrial area. Additional declines in revenues and the additional funding could easily increase the losses to $4.0 million or more. Again, my reason for bringing this up is political: one of the major reason I am running is that I do not think this council is taking seriously its fiduciary responsibility to keep the city solvent. I believe, though, that the reason the budget deficit is NOT being discussed by the council is political. If residents knew the precarious position of our finances, the incumbents would not be able to say that everything was going well on their watch. --Chuck Bernstein

Received on Thu Oct 28 2010 - 18:37:01 PDT

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