Commentary: Slow Down on the New Revenue Talk
Written by David Greenwald Friday, 29 June 2012 05:50
No sooner has the city proposed a realistic austerity budget that starts cutting into the type of city services that the residents have come to expect, but we hear talk about new revenues.
"Given that 84 percent of us voted 'yes' on a tax that needed just two-thirds approval, it's clear the city didn't ask for nearly enough money from residents who dearly cherish their parks and greenbelts and vast urban forest that stretches from one end of town to the other," Davis Enterprise columnist Bob Dunning wrote on June 14.
On Tuesday, there was a general agreement, both from the city manager as well as from people like Councilmember Dan Wolk, that in addition to the short-term fix with cuts, the city needs to be looking at additional revenue.
"We have to look at new revenue sources down the road," City Manager Steve Pinkerton said.
"This community could embrace, as long as it were coupled with structural changes, I think this community could accept additional revenues measures. I think this community could accept an increased parks tax," Dan Wolk argued.
To this I say, "woah horsie."
There are practical and also philosophical problems with this approach.
In 2010 and now 2012, the Vanguard did not oppose the city's efforts to renew first their half-cent sales tax and second their parks tax measure.
In a way, these were promissory notes from the voters - an act of faith that the new council and city management would be more responsible with our tax dollars than the past councils.
Indeed, as the Vanguard's research has shown, the original half-cent sales tax passed in 2004 by the voters was supposed to go to prevent the loss of city services like parks and other services. Instead it went, in its entirety, to a 36% salary increase for firefighters.
We did not oppose the passage of the parks tax because (a) it was strictly a renewal, and (b) we took it on faith that this city council would clean up the fiscal house.
This week we explored the impact of cafeteria cash out, which is costing the city $1.7 million over and above what it would cost to cap at the $500 per month level, and also the impact of retiree health which will consume 25% of the city's payroll.
We would not have to think about service cuts and outsourcing city services if we had our fiscal house in order. But we certainly should not be talking about revenue when the city is paying $15,000 in health care for people the age of 55 to retire.
The reason that 84% of the voters supported the parks tax is that it was a strict renewal, it was only $49, and only Thomas Randall opposed it. Numbers are misleading when there is no organized and credible campaign run against a proposal.
There was no one talking about the city's unfunded liability, about the amount of money we are paying for health care, for pensions, for salaries, or about the fact that we for years had a huge and growing deferred maintenance backlog and yet claimed to have a balanced budget.
So, do not look at the results of that election and think, oh we could have asked for more - because that margin of victory would have closed fast with real numbers put out on the table. The voters really do not know the extent of the problem.
There is a reason that we cut $7 to $8 million from the budget with almost no fanfare. The hard and heavy lifting is still to come, but the public really has no idea that the loss of tree trimming services is probably just the start.
But there is more on the horizon. Last night, the school district put a parcel tax measure on the ballot for November asking for $446 should the governor's budget not pass. If it does pass, it is a straight-up renewal of Measure A.
Some people have indicated that voters in Davis are suffering from tax fatigue and no one can blame them for that. The voters will have to make a determination if the current problems facing the district - which are serious and quite severe - warrant another time entering into the public's collective wallet.
At some point the voters will say no. Now it turns out that few things that the city offer the taxpayers rank up there with schools, but parks are at least close.
However, until the city fixes the structural problems, the problems with the cafeteria cash out, retiree health, and pensions, the voters should be pressing the city to fix those rather than looking to new revenue.
The other problem that faces the city - and we do not yet know when but at some point the city is planning to ask the voters for a chunk of money for the surface water project. It may be in November, although I still think April is more likely, but that's a chunk of money that will go into the voter's willingness to fund an additional parks parcel tax.
Long term, I think the city has to look at diversifying its economic revenue portfolio, though it is worth noting that communities that have much more retail and a larger sales tax base were hurting just as badly as Davis and, in most cases, a lot more.
The Vanguard was willing to hold its fire in 2010 and 2012 on the tax measures, in hopes that the city could get its act together, but it will not support new revenue without reform. We need to reform the way we do city services and reform the way we compensate those who provide those city services.
---David M. Greenwald reporting
With people continuing to claim that the City and schools have been irresponsible in their management of the money we have approved in the past and are voting irresponsibly regarding utility rates (fraudulent, is the term repeatedly used), don't you think people will eventually vote no for schools, for city utilities, for parks and rec? Maybe the City should lay off a bunch of fire fighters and return the money to the general fund before asking for more money - is that what you think should happen?
"That would be now." -Neutral
I beg to differ. Doing nothing is not an option; the status quo is untenable. We have no choice but to cut spending and services, increase revenue, or a combination of the two. Option #1, will lead to an unacceptable downward spiral in our quality of life.
I support Dan Wolk's choice of option #3. And I predict the community is going to get behind it.
-Michael Bisch
This and a few other comments from the new council member Wolk give me the impression that he either does not completely get it, or else he is a bit too cosy with city workers to be completely objective. The only viable solution for long-term revenue increases is economic development to expand our tax base. Prior to us seeing any increases inflows from an expanded tax base, our only viable solution is to cut our spending. For cutting our spending, the only viable solution is to reduce the city workforce, and roll back pay and benefits to private market compensation levels. Councilman Wolk should not be delivering any false hope that there is any less painful way to do this. Yes, it took years for us to get to this point, but when the point is a looming financial cliff you need to stop Wolking (pun intended) toward it... and start retreating to a point of safety.
Things with the state budget are likely to get worse. Does the new council have an adequate sense of urgency about our fiscal problems?
I should also point out that a twist on the 3 options that I've laid out is to privatize some services that the public sector is currently providing to achieve cost savings without cutting services. I'm in no position to gauge the potential savings, nor the impact on service quality.
-Michael Bisch
On the question of how the public will vote on tax on tax increases, don't forget that the State is asking for the same. And, the national government just got handed a SCOTUS gift approving the largest middle-class tax increase ever. I agree with Ryan Kelly. I think it is a waste of time looking toward tax increases. I agree with Michael Bisch that we should be looking to privatize some services to cur expenses.
We all care about city employees and do not want them harmed, but we cannot afford to make them a charity case. If there are less expensive ways to provide our needed services, it should be a key performance requirement that our elected officials and city manager pursue them. We should be doing this constantly... even when the economy is good and budgets are balanced.
vanguard: "I think we have to separate the city and schools, because at least in my opinion, the schools have had their act together the last five years. Their problem has been the loss of state funding. The city is now where the schools were in 2008."
DSHS having 3 vice principals and an assistant to the VP is "having their act together" - the valley oak debacle is "having their act together."
Mike Bisch: "We have no choice but to cut spending and services, increase revenue, or a combination of the two."
We have other choices. One is to make our spending more efficient. The CM is attempting to do that--maybe attempting is too soft a term here; change that to accomplishing that--by outsourcing the tree trimming positions. If successful, that will improve services at less cost.
Another choice is to maintain the status quo by controlling the growth in the cost of labor. In effect, this is another way of making the spending more efficient. It is achieving the same level of services for less money (in real, as opposed to nominal dollars).
And yet another way of improving efficiencies is to lay off or to not replace employees who are not needed to maintain the same levels of service. An example of that is moving to a 3-per-truck fire staffing model, which is what Davis historically had and what most cities our size in California now have.
Unfortunately, in its nasty and zealous campaign to attack Sue Greenwald, the Chamber of Commerce lost sight of what needs to be done to improve Davis, and this blindness appears to be ongoing.
"btw: stockton just filed for bankrupcy - the largest city in US history."
Stockton is uique among California cities because from 2007 (after home prices in Stockton had already started to fall precipitously in price) to 2009, its City Council began a big borrowing campaign, greatly raising Stockton's level of bond debt. This borrowing was done on the heals of the borrowing Stockton did to build its big new basketball/hockey arena and its lovely professional baseball stadium and its upgrades to its marina.
But Stockton is not unique in how, during the decade from 2000-2009, it greatly increased the total compensation it paid to its workforce with large salary raises, much larger raises in the costs of its medical and dental benefits packages, and even larger raises in the costs of its pension payments. Almost every city and almost every county in California followed Stockton's pattern with regard to labor cost inflation.
And for that reason, almost every city and every county is now on the road to bankruptcy, including Davis and including Yolo County. I hope that most cities and counties will never have to file for bankruptcy.
One way most are going to avoid that outcome is by providing much worse services and by screwing over the poor. We have seen the latter two in Davis (not maintaining our roads) and Yolo County (eliminating mental health care and other health programs which benefit the poor).
The other way to avoid bankruptcy--hopefully what Davis and other agencies will do--is to deflate our long-term labor costs and to make our labor more efficient.
Seeing that Jeff Boone is commenting on this thread, I think it needs to be repeated what he has long said: We also need to substantially reduce the amount of time we pay public employees for not working. They get way too much paid vacation time and holiday time. That is an expense we cannot afford.
"Unfortunately, in its nasty and zealous campaign to attack Sue Greenwald, the Chamber of Commerce lost sight of what needs to be done to improve Davis, and this blindness appears to be ongoing."I'm not sure what this comment has to do with anything else you're discussing here, efficient spending and 3-per-truck staffing. Is the chamber against what you're proposing?
Sue won't be around to help, but others will be. That's because we voted for the other folks.
The election is over. Michael B. seems to be in alignment with your ideas; what ongoing blindness do you see?
"No school needs 3 vice principals and an assistant to the VP, I don't care how these "never seen a school tax they don't like" enablers feel."
I generally agree with Rusty here. However, there is one thing to consider about Davis High School: Its scale.
Many cities our size have two all-purpose high schools. We have one, Davis Sr. High.* So there we have 4 top admins (1 principal, 3 vice principals) for 1,672 students. If we had instead two all-purpose high schools, they would probably have 1 principal and 1 VP each, and that would likely cost us more than 1 + 3 at the single high school.
I certainly don't know enough to say that Davis High could scale back to 2 vice principals. But I suspect that if they had to, they could make that work.
*If I recall correctly, the 7th-12th grade Da Vinci Charter Academy has a principal, Rody Boonchouy, and a VP, Scott Bell (who also teaches Social Studies) for its 490 students.
Well, there's always economic development to try and spur revenue. So maybe getting the changes to the development agreement that governs the pads near Target would be a starting point. But it looks like the slowdown there might be....the DDBA:
http://www.davisenterprise.com...ff-target/
Mike Bisch: "We have no choice but to cut spending and services, increase revenue, or a combination of the two."
JS: "The election is over. Michael B. seems to be in alignment with your ideas; what ongoing blindness do you see?"
Read Mike Bisch's "no choice" comment. He and The Pope of Greenwaldless Village repeated this in their anti-Sue attacks many times. It was wrong then and wrong now. They were blinded by their hatred of Sue, which was largely based on personalities, not real issues. At least that is what Bisch told me, that his hatred of Sue was personal.
The recovery is not robust and it does not help that tax revenue, which is what we rely on, is a lagging rather than a leading indicator of recovery.
or maybe it just isnt there the way administration supporters have claimed. and as elaine demonstrated earlier - the "recovery" or "recession" can be claimed and data can be massaged to support whichever politicians you want in office.
but this argument has dragged on too long and gotten too off track. Why the vanguard needed to write multiple paragraphs when its position can be summed up as follows:
"I'm against talk of other taxes or water proposals that are going to interfere with any upcoming school parcel taxes in november. Those come first because I support schools above all else."
See, that wasn't so hard was it?
David Vincent Van Gogh: "Davis High does not have three Vice Principals. It has two and a part time third one who doubles as the librarian."
It lists three on its website: Sheila Smith, Vice Principal; Tom McHale, Vice Principal; and Stacy Desideri, Vice Principal.
From what I was told, Ms. Desideri is not "the librarian." She is a called a "Library Media Teacher," and I would guess then that the issue is that she is being paid as a Vice Principal, much like Mr. Bell is being paid at Da Vinci, where he also teaches Social Studies.
