A presentation by finance director Louise Ho early in the 8 a.m. meeting revealed sobering budgetary figures that project deficit spending of about $856,000 in the 2011-12 fiscal year budget, assuming no salary increases and no capital improvement spending. This deficit would amount to about 8 percent of the current fiscal year's budget of $10.6 million.
Ms. Ho also projected that the town's reserves, which have been tapped into in recent years to balance the budget, will be exhausted by 2015, offering no bail-out of the town's projected $1.2 million deficit in the 2015-16 fiscal year.
"This is the picture of a structurally insolvent (entity)," interim City Manager John Danielson told grim-faced council members after Ms. Ho's presentation.
Noting that 80 percent of the town's costs are for labor, he said there is no way to solve the problem that could lead to bankruptcy without cutting staff. And, he said, he must do it soon to complete the 2011-12 budget, "although I don't have a final tally" on which services and employees will be affected.
Council members Jerry Carlson and Kathy McKeithen, and Mayor Jim Dobbie, told Mr. Danielson that they would support whatever cuts he felt he must make, noting that he was hired to tackle the town's growing fiscal crisis. "John, whatever you need to do, you have my support," Ms. McKeithen said. "Good luck to you and good luck to the town."
Praising Mr. Danielson's job performance and judgment since his hiring in January, Mayor Dobbie said: "He'll be using a scalpel, not an ax. Therefore, he has my support."
Councilman Bill Widmer acknowledged that the town must take "a hard look at how we're providing services," but added that caution must be taken to retain the "institutional knowledge" that many staff members provide. "I offer my support and expertise to (help) decide what to outsource," he said.
Councilwoman Elizabeth Lewis complained that the public was informed about the special meeting only days before. "I know a number of people who would have liked to be here," she said, adding that the majority of residents "have no idea" the meeting was being held. "We are remiss in the outreach" needed to inform residents, she said.
Ms. Lewis also said Ms. Ho's presentation of budget projections was "the first I've seen of these numbers."
After the meeting, Mayor Dobbie defended the scheduling of the meeting, saying that the town announced it well in advance of the 24 hours required for a special meeting. The agenda was posted and notices sent out on Thursday, May 5.
On May 5, Mr. Danielson told the Almanac the meeting had been scheduled for 8 a.m. Monday morning because of scheduling conflicts among council members. Time to complete the budget is running short, he said, so it was necessary to call a special meeting quickly to give the council "one last opportunity to say I'm on the right track" with his strategy for addressing the budget shortfall.
In addition to outright spending and staff cuts, the town also will pursue employee concessions in contract talks, according to Mr. Danielson and Mayor Dobbie. All contracts, except for the police officers association's agreement, expire June 30.
But it's possible, if not likely, that the police officers' contract will be reopened. Current contract terms allow that to happen if the rate of property tax revenue-increase falls below 2 percent from the previous year — which is already the case — and the town publicly declares a fiscal crisis, Mayor Dobbie said and Ms. Ho confirmed.
A Ducky sighting
Because Monday's special meeting is certain to be followed by layoffs and spending cuts, one town resident who has followed the town's budget woes was stunned to see a police car in the detail area of Ducky's Car Wash in Menlo Park shortly after the meeting.
The resident, who asked that his name not be used, was there to get a price on having his own car detailed — which at $180 he determined to be too much. He asked staff at the carwash what it will cost the police department for detailing the patrol car, and was told $200 to $250, he told the Almanac. "I couldn't believe it," he said.
The resident soon after called Mayor Dobbie, who then put a call in to the interim city manager, Mr. Dobbie told the Almanac. The mayor said he's reserving judgment until he learns more, but his initial reaction was: "It's absolutely unbelievable to me. You can get your car washed on Marsh Road for $6."
After checking out the situation, Mr. Danielson, who has been on the job only since January, said he learned that each of the police department's patrol cars gets detail service once a year, at a cost of only $150. The cars are driven 24 hours a day, he said, and "they get a lot of dings and scratches." The detail work helps prevent rusting and other problems.
"We keep those cars a long time, too," he said.