City may use surplus to give employees bonuses

Daily Post Staff Writer

As a result of an increase in property and sales taxes, the city of San Carlos now has a $6.9 million surplus — and one councilman says some of the money ought to go into a bonus for city employees.

“I remember eight, nine, 10 years ago when people gave up raises and took benefit and salary reductions. And while there have been raises since then, I’m not sure we’re caught up,” Ron Collins said at the council’s Tuesday meeting. “But that’s almost beside the point. (The surplus) was a team effort, and it’s high time to discuss this for our employees.”

Collins proposed a 5% bonus for employees. However it was unclear if the bonus would be given to all employees or just some. Collins did not respond to the Post’s phone call yesterday seeking more information about his proposal.

If all of the city’s employees get a 5% bonus, that would cost $645,000. That’s based on the $12.9 million the city has budgeted for salaries and benefits in the current budget year.

However, the city’s spending on employee compensation may be less than budgeted. During the previous budget year that ended on June 30, the city saved $1.6 million on compensation because of vacancies, according to a report from Administrative Services Director Rebecca Mendenhall.

That $1.6 million went into the $6.9 million surplus.

Collins’ suggestion came up during a discussion of how the council ought to allocate the $6.9 million. City Manager Jeff Maltbie had proposed spending $1.25 million of the surplus on paying down the city’s unfunded pension liability, and earmarking $4.75 million toward unspecified facility and infrastructure projects.

Council approved Maltbie’s proposal on a 3-1 vote, with Mark Olbert dissenting. Matt Grocott was absent.

That whittled down the surplus from $6.9 million to $997,934 — and the bonuses would have to come out of that money.

Olbert voted against the allocations because he said on Tuesday that he’s “never comfortable with the process” of earmarking funds.

‘Not chump change’

“My experience … is that these allocations constrain the council,” Olbert said, adding that he thinks the $6.9 ought to remain in a single pot for the council to decide how to spend.

“It’s always nice to argue about too much money,” Olbert quipped on Tuesday.

Olbert said yesterday that while he is fine with discussing the issue of giving city employees a one-time bonus, he has reservations about the size of the bonus.
“A half a million is not chump change,” Olbert said. “I would want to have a discussion (about whether) there are quality of life issues that this surplus would help.”

Mayor Bob Grassilli, who is leaving council next month after deciding not to seek re-election, said he was OK with putting off the discussion but said the next council members should be the ones who decide whether to give bonuses.

In addition to Grassilli, Grocott and Cameron Johnson decided not to seek re-election. If current vote counts hold, Adam Rak, Laura Parmer-Lohan and Sara McDowell will join Olbert and Collins on the five-member council.

Parmer-Lohan said yesterday that she needs to study the city’s budget and city’s Certified Annual Financial Report, or CAFR, more thoroughly before being able to take a stance on the bonuses for city employees.

Tax revenues greater than expected

The two biggest contributors to the city’s surplus were the city’s property taxes, which exceeded budget expectations by $1.9 million, and the sales tax, which exceeded projections by $1.4 million, according to the CAFR. The rest of the money in the surplus came from savings in personnel costs, projects in the budget the city didn’t complete and unexpected project development fees.


  1. The City Council should reflect on some of the prior decisions made by other Council members that lead to the dismantlement of many of the city services over the years. When C.R. “Bob” Allen ran the place, San Carlos always had a balanced budget, had its own police department, fire department, public works department, and other services. Now, because of poor management, everything is farmed out to “contract” services. It’s not the “budget” money you’re spending, it’s the taxpayers money. San Carlos has been transformed from the wonderful place it once was to another incarnation that people who grew up here don’t like.

  2. Distributing the surplus as bonuses to City employees makes sense ONLY if
    a deficit would be made whole by those same City employees.

    Makes no sense to have a system where “if there’s gain they take and it there’s loss we pay”.

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