City of DavisA year ago the city basically identified around $13 million in what it called unmet needs. These were needed projects in a variety of departments that the city needed to undertake but lacked the available money to pay for them. As the Vanguard has mentioned previously, some of these are quite basic road repairs and other vital services.
Right now the city is projecting a growing budget deficit for the foreseeable future. It begins at close to $1.5 million for the current fiscal year and doubles to $3 million next year.
As Finance Director Paul Navazio stated on Tuesday night, the city is going to have to first address the structural and immediate budget problems. That means that these unmet needs will continue to be unmet needs into the foreseeable future.
From the staff report:
“While the growing list of unmet needs – both one-time and recurring – remains a significant concern, current economic and budgetary realities suggest that emphasis should be placed on securing existing revenues over seeking new revenue sources that could, potentially, jeopardize revenues relied upon to provide existing City services.”
Right now the city is focusing on addressing existing revenues. They do not believe they will be able to in this climate get the voters to approve tax increases. Therefore the priority at this point is on renewing the existing tax measures–namely the parks tax and the half cent sales tax. One alternative would instead of the renewal of the parcel tax for the parks, combine the the parks measure with an additional quarter cent sales tax to produce the $1.5 million the parks tax is currently generating.
From the staff report:
“At this time, staff is suggesting that the highest priority related to future ballot measures should be the renewal of the ½ Sales Tax (Measure P), approved by the voters in June 2004, with a 6-year sunset provision. This measure currently provides roughly $3 million in General Fund revenues to the City.
Secondly, priority should be given to options for renewing or replacing the Parks Maintenance Tax (Measure G), which was re-authorized by the voters in June 2006, with a 6-year sunset provision. This measure provides roughly $1.3 million in dedicated funding in support of park maintenance activities. In the past, some concerns have been expressed over the appropriateness of assessing this tax on the basis of a flat $49 tax on parcels within the City. Staff has previously been directed to explore alternative funding mechanisms, to the point where the text of Measure G provides that the measure would be repealed in the event that the City secures an alternative means of funding parks maintenance activities.”
What is driving this is the basic reality of the situation for the city. The taxpayers in Davis have already been asked to pass two parcel taxes for the school district and one for the library. They will be asked to pass another parcel tax by the school district in either late 2011 or early 2012.
The city does not want to be competing against the school district for tax funds. Right now they are simply looking to renew what they have. That would mean a June 2010 ballot measure to renew the sales tax or possibly fold Measure G into the sales tax.
The problem here is obvious but unavoidable given the city’s lack of addressing the unmet need problem previously. The assessment of Navazio and the city is exactly right–the public is not going to approve the slew of tax measures that it proposed a year ago.
In December of 2007, the city was considering a public safety tax placed on the ballot sometime in 2009. At that time, Councilmember Souza even pushed for it by November 2008.
Second, they suggested a new sales tax on the ballot in 2010 with a quarter-cent increase. At that time it would not have subsumed the park tax but rather would have paid for street and road maintenance.
Finally in he called for a replacement of the park tax with an increase in the municipal services taxes.
Now the dilemma. Many will undoubtedly be pleased to hear that these taxes are essentially off the table. However, the downside is twofold.
First, the city is going to have to find a way to cut millions from the budget over the next several years.
Second, the city while cutting millions from the budget over the next several years, needs to find a way to chew into what is now $8.74 million of one-time unmet needs (including nearly $6 million for the fire department which I assume still includes possibly a fourth fire station and a new engine) and $7.35 million in recurring unmet needs, that one is more spread across the board.
In December of 2007 Councilmember Don Saylor said:
“Today we really can look at the structural deficit as we refer to so often as something within our grasp. The numbers are so small that they will be taken care of by small increases in the economic development plans that are already underway.”
Councilmember Saylor was wrong. He did not foresee the magnitude of course of the economic crisis bearing down upon us. But he did not recognize that our failure to appropriately deal with the unmet needs would become a crisis just over a year later. The problem was that everyone assumed or at least three councilmembers at time assumed that we could simply tax ourselves out of our hole. Now that is no longer a possibility.
In the meantime, no one dealt with the longer term structural problem namely unchecked employee salaries, and this is not a general statement about employees. There are specific areas that are particularly problematic.
It turns out in December of 2007, that then-Mayor Sue Greenwald was the one who was correct.
“We have a structural deficit, we haven’t really done anything to improve it, we’ve just changed our accounting principals, made them less conservative. But that also means it’s going to be more sensitive to downturns in the real estate market and other potentially recessionary phenomena.”
She continued:
“We have not only not reduced it [structural deficit] but we’ve also made ourselves more vulnerable to our PERS contributions.”
Mayor Greenwald turned out to be exactly correct and the current Mayor Pro Tem was overly optimistic.
The system has imploded. We have seen our vulnerability to the real estate market downturns and for the first time really to a major recession. There is no light at the end of the tunnel. The unmet needs are still unmet and now there is no immediate plans to meet them.
It will be interesting to watch the impact on this community when the city has to cutback on vital city services. We have already seen push back on the issue of parks and recreation–and frankly that was mere pennies compared to what awaits us.
—David M. Greenwald reporting
No wway will I go for a sales tax increase. The state is already going to do that. Note to Davis City Council: Start living within your means, cut the extra school programs. The turnip is dry. There are plenty of corners you can cut without laying your problems on Davis citizens.
The sales tax increase, if there is one, would be the continuation of the current sales tax and subsume the parks tax into it. You’ve however probably illustrated why streamlining the process won’t work.
The …extra school programs… are funded by the school district, not by the city. Two different organizations.
I will not support another tax increase either!!!We were in a mess year ago when you wrote about it David. I recall Asmundson, Saylor, and Souza (A.S.S.) saying that all is well with our budget. The city manager, who still doesn’t even live in Davis but makes bad decisions for our city agreed that we were looking good.Now, we are in worse condition and they will blame the economy as a whole instead of taking responsibility for the lofty paybacks via salaries and overtime to firefighters. This is unacceptable and i will not support another tax increase! They can learn to live within their means like the rest of us do.
…Asmundson, Saylor, and Souza (A.S.S…. sorry, I just blew my orange juice through my nose laughing!David- you had it exactly right a year ago. The lady in the purple hat told us what was happening and the ASS team ignored her. There is no way that the city should even consider any form of tax increase when they have millions and millions in painless cost reductions in public employee salary reductions, PERS contributions etc. that MUST come out of the city budget before the public can take ASS seriously again.
Folks:Many headlines these days illustrate the same issues playing out in cities and states across the nation. It’s easy to focus on pet peeves (which in this case seems to be public employee compensation), but to suggest that Davis’s financial condition is either unique or the product of some conspir-ASS-cy is overly simplistic.The community, state and nation face difficult choices about the right level of public services in light of rapidly declining resources. Just as individuals facing similar circumstances have to choose between reducing lifestyle (ie, cutting one’s budget) or additional income (ie, work a second or third job), the choices aren’t easy. Singling out a particular line item in the budget (ie, employee compensation) and pretending the rest can be had like a free lunch is an incomplete and frankly unhelpful analysis.Just my $0.02.
Dear Look Around-I think that what you said makes sense and would agree but for one problem… The city’s budget is almost entirely made-up by salaries to employees. Its not like we can cut defense spending or foreign subsidies.
Mike:You have right. The exactly position I am taking is that unless the city fixes the fiscal problems associated with PERS and staffing, I will not support even a renewal of the current taxes.Just to be clear this is not a tax increase, it is a a renewal.
Tax increases in a down economy can be self-defeating. Money that consumers would have spent at Samira’s or Bogey’s Books goes instead to higher taxes. Then local businesses, without those custumers, go bust. Then local jobs are lost and tax revenues and spending fall more.
Dear Mike:You’re right, of course, and that is because public services are by their nature labor-intesive: cops, fire-fighters, parks maintenance folks etc. One approach is to reduce the number of employees providing services. You suggest the other approach which is to reduce the cost per employee. Both work from a budgetary perspective.My point is simply that both approaches have consequences to the level of public services provided — quantity and quality. Some here seem to think that reducing employee compensation will not affect service levels. I think that is wrong and belies the notion that there is still a free lunch to be had.
Let’s be honest here.First, as David pointed out there is no tax increase proposed. All they are possibly (and may not) are talking about doing is shifting a parcel tax to a sales tax, and Greenwald and Saylor were against that idea.Second, a quarter cent sales tax basically means for every $100 purchased you pay 25 cents more. So to say that money that would be going to Bogeys or Samira’s would suddenly be going to pay taxes is blanketly false.
I understand your point and agree that in most situations, reducing compensation to public employees may create the risk that they will go elsewhere.In the current market- where are they going to go? Vacaville? Woodland? Sacramento? There is a broad decline and Davis has unusually high salaries and compensation to begin with. We can go a long way down before I think any of our key employees would suddenly decide to start working in Fairfield.Is this fair? Yes. They negotiated their contracts using improper leverage and political influence. ASS did nothing to protect the public’s interest. The fact that they have the contracts is nice for them, but a detriment to the public. We need to renegotiate or terminate the agreements and change our level of financial commitment.Turning the Fire Department into an all-volunteer organization would be a great first step. By eliminating their incursion into the ambulance first-response business would reduce the number of trips where you see a ladder truck responding to a skinned knee injury (sorry, I meant to say three fire engines and a ladder truck). Let the appropriate entities handle the response. This can free up our fire resources to respond to fires and potentially eliminate the need for another station.
This is just one more example of Bill Emlen’s style of leadership. The CBO of Davis, Paul Navazio, declares a balanced budget for the convenience of Souza and Vergis’s campaign, Saylor joins in, and voila – no problems. Then a year later there is hand wringing by Navazio, saying we have critical unmet needs that cannot be addressed – the same critical needs that couldn’t be met last year when the economy wasn’t as bad. This is quintessential Bill Emlen gov’t – irresponsible, creative bookkeeping to further someone’s political agenda. Typical of Davis politics. Until we get rid of Emlen, I would never vote for a tax increase…
Mike at 1034am has said it ALL(and correctly too…)WE can all just stop here now. City employees can only hope to go elsewhere-but they’re stuck-no local government is hiring. And they all know; less work and more money here.
I know it’s hindsight, but l have felt this since the ‘designer sidewalks’ were put in place downtown…..what did that cost and couldn’t that money have been better used on unmet needs?This is just an example….
Good thing we renewed that Bill Emlen contract. He is so awesome.. not.Can we recall Souza, Saylor, and Asmundsen? Lamar, I am indifferent to. Sue seems like the only city council member who thinks ahead.I am not voting for ANY tax renewal or increase. I am NEVER voting for Souza, Saylor or Asmundsen. I hope they don’t run again. This budget situation is a joke. I hope they don’t think they can blame the economy for all these problems.
Lamar has been very good on this issue as well.
I agree, Councilmember Heystek has been very consistent on this issue. He didn’t have the perfect quote a year ago like Sue, but he said similar things:…Councilmember Lamar Heystek remains very concerned about the structural deficit and is reluctant to support new taxes without a demonstration up front that we have improved things with current funds before we ask for additional funds….
I know it’s hindsight, but l have felt this since the ‘designer sidewalks’ were put in place downtown…..what did that cost and couldn’t that money have been better used on unmet needs?This is just an example….1/30/09 11:23 AMYeah, and all the crazy tree-trimming and bushwhacking that’s been going on needlessly all over town could be trimmed from the budget in future…cut those jobs from the budget and you’ve got the beginnings of savings. When absolutely necessary, on the advice of volunteer arborists, let supervised community service workers do this job once in a great while…
LOOK AROUND SAID 9:39 AMWhat a breath of fresh air , your insight is marvelous .To pin this whole budget shortfall just on the employees is very short sided .This blog seems to have a one track mindset when it comes to city employees , and treating them as hungry ,rabid wolves.Thanks again for your kind words .
Laura:I don’t know who …this blog… refers to.If it is me, my concern is primarily with fire and upper management. If it is the blog in general, then I’d suggest there are a broad range of viewpoints expressed on here. I’m very sympathetic to the plight of the vast majority of employees by the city.I am concerned about down the line impacts of the 3% at 50 and 2.5% at 55 for people making over 100K. I’m also concerned about the upper end salaries.Salaries are a very high percentage of the general fund budget of the city. So I’d like to hear how in the short term you plan to manage the fiscal crisis without having employees be impacted.
May I suggest we do what Yolo County did and other counties and cities gave done: retain phil batchelor, retired Contra Costa exec officer, to come in for 60 days and review the city’s finances, budgets and policies. He will then make a list of recommendations to the council. It can adopt or ignore them as they see fit but at least we will have outside expertise , accurate data and blunt unbiased recommendations. Our homegrown staffers are willing and dedicated but insufficient to the task. Many other cities have endured our problems and we need expertise from those who have survived and transcended them, not from those who apply the same short-term fixes and wonder why they don’t work.If not Phil, there are others similarly qualified. As a community we need to face up to the fact that we can’t have champagne tastes on a budweiser budget. We get what we pay for and we have to decide what we are willing to pay for.That said, no one I know will be voting for new Davis taxes.
That’s a good idea.
Speaking of city expenditures, does anyone know what is going on in Nugget Fields and at the corporate yard on 5th? Looks like they’re puttin in missle silos.
George (and anyone else who cares)… yes they are missile silos, where the missiles are aimed at any public trough employees, be they professional or upper management… in reality, it is a ‘test’ well (to determine if it is a viable site for a production well) to improve the capacity to have the City’s water system to meet peak flow and fire demands. Wells age, need to be taken off-line (and destroyed, to protect the aquifer) over time… a endeavor to preserve service levels brought to you by by professional employees who are …grossly overpaid/compensated… and ‘feeding at the public trough’… enjoy your next shower…
Anonymous: I’m having trouble distinguishing sarcasm from your serious points.
an attempt at levity… sorry it failed… should have just left it to …facts…, as you and many other contributers do… let’s just agree that public employees are overpaid/overcompensated, couldn’t find other work in this economy, be it public or private, and should have their salaries/pensions cut back, big time…
…it is a ‘test’ well (to determine if it is a viable site for a production well) to improve the capacity to have the City’s water system to meet peak flow and fire demands….There is a little bit of info on the project from the City:http://cityofdavis.org/pw/CIP/cip.cfm?cip=29FA7B75-1143-EEBD-B06C362F3ADC582B
a endeavor to preserve service levels brought to you by by professional employees who are …grossly overpaid/compensated… and ‘feeding at the public trough’… enjoy your next shower…*******************************Just so the point above isn’t lost amid all the praise we should have for super-dedicated city employees, this …test well… was being constructed or dug/drilled by a private contractor. I should know because I live on Colgate and I dragged my lazy ASS out of bed at 3am one morning and drove over there to investigate. Not a single city employee was seen! They were at home, I assume, snug as a bug in a rug. Now you know who was doing the REAL work!
Unmet needs for road construction and repair have always been there, even with the current budget situation. The fact is that fuel excise taxes have not been raised since the early 1990s and as a result, the buying power of the fuel taxes local jurisdictions receive has continually eroded. To consider this a component of the City’s structural deficit is erroneous. If fuel excise taxes were indexed to inflation, it would not be as much of a problem and cities would be able to meet more of their …unmet… road infrastructure needs.