June 27th 2023
Dear Fellow Councilmembers,
I am not able to attend the June 27th Special Meeting of the Town Council. Below for your review and consideration are my comments on Agenda Item 8: Public Hearing on the Adoption of the 23-24 Budget:
As I shared at the June 14th Council meeting, given the sharp increase in expenses (Sheriff contract, COLA/costs to recruit staff, insurance, risks associated with ERAF and VMT, etc.), and our likely need to pursue a revenue enhancement measure on the 2024 ballot, it is of particular importance we do everything we can to mitigate this year’s budget shortfall, and get our financial house in order. We are facing a budget cycle that is unprecedented in our Town’s history. Tonight is step one of what I anticipate will be a 3 year effort to course correct. I feel we need to make difficult budget decisions now by tightening across the board, and deferring discretionary expenses as possible.
I appreciate the diligent work by Town staff since the last meeting to find additional revenue and opportunities to cut costs (UUT, gas tax fund, reductions in landscape and engineering services expenses, etc.).
With these updates we have progressed toward alignment with our General Fund Minimum Fund Balance Policy (also referred to as our “reserves policy”). I do think we should strive to adhere to the existing policy to the greatest extent possible. If there’s a majority that believe the current 60% reserve policy is too conservative and should be updated, then let’s go through that process; but until that’s done, we should adhere to the policy as written.
In any business I’ve been a part of, if there was a budget shortfall all teams were expected to sharpen their pencils and defer discretionary expenses. With this mindsight, and an eye toward a likely revenue enhancement measure, my recommendations are as follows, in no particular order:
1. Fund the $185K Willow Commons fee waiver from the In Lieu fund vs. General Fund. (I continue to believe fee waivers will be part of the In Lieu Fund policy and disagree with the outcome of the June 14th discussion and unwillingness to make decisions about the use of In Lieu Fund dollars when, after years, there still is no policy, even though doing so further eroded compliance with the existing General Fund Minimum Fund Balance Policy, a policy that has been in place since 2014.)
2. Keep the full $300K in the budget for fuel mitigation, but defer the WFPD grant writer ($30K) and Flamemapper contributions ($50K), until we know more about project specifics and anticipated outcomes. Additionally, I expect we will need the full $300K + likely more once the two new WFPD vegetation management ordinances are adopted.
3. Fund open space maintenance from 10% of the Open Space UUT Fund.
4. Approve $35K for the Post Approval Process for the time sensitive Sunrise work, but defer all other less time sensitive expenses. (Note I’m still unclear on the impact of Thresholds to the majority of sites on the HE sites inventory given the majority is currently either on Town-owned land or exempt as a supportive housing project. It’s my understanding that if a project came in before Thresholds are established the project would be evaluated under CEQA using staff/attorney judgement which is the standard process in SMC and neighboring similar communities including Atherton, Hillsborough, Woodside and LAH.
5. Hold committee budgets flat to FY22-23 levels (~ $95K vs. $115K)
6. Keep attorney fees at the original $300K. I do not think it’s realistic to believe fees will decease given increased hourly rates, ongoing threatened legal action, increased PRAs and a backlog of work to update town policies (records retention, ethics, electronics, committee handbook, etc.) If my math is correct, the net impact of these changes, in addition to the savings and increased revenues identified in the staff report (UUT, landscape/engineering services, gas tax fund), will keep us in compliance with the General Fund Minimum Fund Balance Policy with a reserve of ~ 62%.
Looking ahead I would direct staff to continue to expand the list of discretionary items that can be frozen, deferred or eliminated for consideration by the Council at the time of a fall revision (to be clear, not including currently budgeted staff/headcount). On the revenue side I believe we should further pursue the cash flow management strategy discussed in the Finance Committee, consider the sale of non-buildable Town-owned parcels between Wayside and Tynan, and pursue an update to the Alpine Inn parking lot lease.
Thank you,
Sarah Wernikoff
Portola Valley Town Council