Portola Valley finance committee hears draft budget showing roughly $585,000 deficit; ballot revenue options discussed

Assistant Town Manager Tony presented the town's draft FY 2026–27 general fund budget at a finance-committee meeting, saying the committee is projecting roughly $8.26 million in revenues against preliminary expenses of about $8.85 million, producing a near-term gap of about $585,000.

Tony said most revenue remains tax‑based (about 75–76 percent) and that the recently adopted fee study could change the revenue picture once departments finish implementing updated charges for building, planning and recreation. "We are projecting about 8.26 million," Tony said, adding the fee study—if implemented at full cost recovery—could add roughly $500,000 but that staff are still reviewing which fees will be adjusted and whether some will be set below full cost to encourage compliance.

The expense side, Tony said, reflects salary and benefit increases (including a 2.5 percent cost‑of‑living increase the council approved), steps to fill two formerly vacant positions in planning and a net reorganization in finance that replaces a finance director line with a finance manager plus an "accountant one" career step. He called out the sheriff's contract as a major driver of the projected increase. "The big culprit is the significant increase to the general fund for the sheriff's contract," he said.

Committee members asked for clarifying detail on revenue assumptions and how the fee study would affect the draft numbers. Tony said the user‑fee study estimates about $500,000 in revenue if full cost recovery were applied, but that some fees were intentionally reduced to promote compliance and that updated estimates would be available after staff and relevant committees finish their reviews.

The draft budget includes a proposed capital improvement program of about $1.45 million, driven primarily by street resurfacing; staff warned that not meeting a roughly $350,000 annual maintenance‑of‑effort for streets could jeopardize RMRA (SB1) funding. Tony also reported higher projected medical premium costs (Anthem ~12 percent, Kaiser ~8 percent) and a continuing advertised unfunded pension liability that will be amortized over multiple years.

No formal budget vote occurred at the meeting. Committee members and the mayor discussed potential revenue options to close the gap, including a property‑transfer tax and adjustments to the utility users tax, and Mayor Taylor outlined plans to take a public education presentation to neighborhood and civic groups ahead of any ballot proposals. He noted the fast calendar: ballot materials must be finalized by early August for November consideration.

Next steps: staff will refine consultant and subscription line items, finalize updated fee‑study revenue estimates and schedule follow‑up review with the finance committee when the 2022–23 audit deliverable is available. The council is expected to consider budget adoption in July and any ballot decisions would have a separate timeline for public outreach and final ballot placement.