News

Hotel tax heading to Menlo Park ballot

Two percent hike would help balance budget

"If you hear nothing else tonight -- your city budget is balanced," new City Manager Alex McIntyre told the council on May 22. The $65 million spending plan for fiscal year 2012-13 maintains quality of life and services, he said, and even has a small $296,000 surplus for Menlo Park's general fund despite the loss of redevelopment agency funding.

That balance depends on increasing the hotel guest tax rate from 10 percent to 12 percent, however, which means voters get the final say. All five Menlo Park council members agreed to put the "transient occupancy tax" (TOT) on the November ballot. According to staff calculations, passing the higher tax would raise more than $560,000 annually for the city, and bring local rates in line with neighboring cities, including Palo Alto and Redwood City.

But the proposed budget avoids increasing another tax that already has the voter stamp of approval. The utility users tax (UUT) remains at 1 percent, a reduced rate passed by the 2007 city council after voters approved a higher rate in 2006. Staff argued that since the budget doesn't draw on general fund reserves, and raising the tax would require substantial administrative time, there's no reason to change it right now.

Given that the higher 3.5 percent rate would add about $2.3 million in annual revenue, at least one council member -- Kelly Fergusson -- found staff's reasoning unconvincing. The UUT will return to the council for reconsideration in October.

No discussion of Menlo Park's budget would be complete without mention of Facebook, the company that "saved us," according to Mr. McIntyre. Thanks to the city's developer agreement with the social networking giant, Menlo Park will see a bump of at least $800,000 in annual revenue.

Between Facebook and the anticipated hike to the hotel guest tax, the budget avoids service reductions for the next fiscal year. It does propose some cost-cutting measures such as eliminating paper council agenda packets to save $10,000 a year, sharing vehicle and median maintenance services with other city entities, and delaying the replacement of $100,000 worth of police cars for one year.

The budget returns to the council for approval on June 12.

Comments

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Posted by new guy
a resident of Menlo Park: Downtown
on May 30, 2012 at 11:54 am

So Kelly thinks that since she is not extracting every possible dime from her servants (taxpayers) the council's reasoning is "unconvincing"?

When can we vote this one out?

Oh, and sorry, voting NO on new taxes.


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Posted by MP Deception
a resident of Menlo Park: Belle Haven
on May 30, 2012 at 1:05 pm

The very things the UUT was voted in for is now being ignored. Was the vote in 2006 a scram to make us believe in the great mirage? Just calling it like it is!!!


 +   Like this comment
Posted by Peter Carpenter
a resident of Atherton: Lindenwood
on May 30, 2012 at 1:28 pm

Peter Carpenter is a registered user.

What is the amount in the 'balanced budget" to cover the current unfunded pension liabilities?

Does the budget even show the unfunded pension liabilities?


 +   Like this comment
Posted by Morris Brown
a resident of Menlo Park: Park Forest
on Jun 9, 2012 at 4:39 am

The statement from the new City Manager:

"If you hear nothing else tonight -- your city budget is balanced,"

is exactly the kind of budget balancing act that Gov. Brown plays on the State level. Balanced only if the voters will approve a new tax.

In this case, the tax would come out of the pockets of "out of towners" visiting and staying in hotels.

Having blown $1.7 million on the downtown / El Camion miss-guided specific plan, our Council comes back to the voters for more revenue.

In previous years (John Boyle era) we heard the song "don't worry about a deficit, we always are too conservative and will show a surplus in the end". This then led to mid-year corrections to supply needed funds to plug what indeed turned out to be deficits.

The last few councils have managed to deplete the City's general fund reserve by about one half, while continually raising fees and dipping into capital accounts to balance budgets.


 +   Like this comment
Posted by Hank Lawrence
a resident of Menlo Park: Sharon Heights
on Jun 9, 2012 at 8:04 am

Morris,

I thank you for your comments. Disagree with the Boyle Statement though. The ideal City Council would consist of

1. Roy Thiele Sardina
2. Henry Riggs
3. Ned Moritz
4. Peter Ohtaki, and
5. Gail Slocum

I put Gail's name down so we could watch her be continually frustrated on television with a series of 4 to 1 votes. We wouldn't want people to be bored by efficient and effective council proceedings that are on track and don't meander. Heyward or Kelly could easily be replacements for Gail; but she's more fun to watch. However, Heyward gives her a run for the money.


 +   Like this comment
Posted by truth
a resident of Menlo Park: Belle Haven
on Jun 9, 2012 at 9:22 am

[Post removed; personal attack on other posters.]


 +   Like this comment
Posted by Bob
a resident of Menlo Park: Downtown
on Jun 9, 2012 at 11:05 am

If we want people to occupy hotels, why would we want to tax them more?
Didn't the county just vote down a similar measure?

Correct me if I'm wrong, but a budget isn't balanced if it depends on the passage of a tax. That's like a homeowner saying my budget will be balanced if I get my bonus.

Think again Menlo Park city officials.


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