The city of Davis now faces a large and growing budget deficit. Due to the continued decline of the economic conditions in Davis, the current year’s budget deficit is projected to grow from the November estimate of $1.54 million to $2.37 million. Next year the budget deficit will range from between $3 million to $3.6 million depending on the city’s negotiations with the employee bargaining units.
From the city staff report for Tuesday’s City Council meeting:
“Despite the potential to manage the FY2008/09 budget through aggressive cost containment measures, the budget outlook for FY2009/10 and the out-years of the five-year forecast pose significant and growing challenges. The baseline General Fund forecast for FY2009/10 now reflects a $3.6 million deficit under our original expenditure forecast assumptions, and a $3.0 million deficit assuming no changes in personnel costs beyond those provided for in current labor contracts.”
Part of the cost containment strategy calls for most departments to develop a 7 to 10 percent budget reduction scenario with pulbic safety developing 3 to 5 percent reduction scenarios. The city hopes that this would provide up to $3.1 million in budget reductions.
Here are some further notes from the city staff report:
“As of February 1, the City has documented a current vacancy list of 21 regular full time and 1 (75%) regular part time positions. These vacancies represent a 4.7% shortfall in our current work force, in relation to our 464.25 budgeted Full Time Equivalent permanent positions.”
Revenues are project to end the year at $2.37 million below the adjusted revenue budget.
“Property Tax revenues now reflect approximately 2% growth in assessed real property valuations and reflect reassessments by the Yolo County Assessor’s Office, as well as a slowdown in the rate of turnover of property in general.”
Sales tax has taken a big hit.
“Sales Tax receipts through the first half of FY 2008/2009 indicate a decrease from FY2008/2009 results. While we had originally predicted 2.5% growth in this revenue, we are now estimating a decrease of 7.8%.”
The news gets worse when you look at Automotive and Restaurant figures.
“Our core categories of Automotive and Restaurant, which together account for approximately 60% of direct Sales Tax collections, reflect decline of 14.6% compared to the same period last year.”
Transient Occupancy tax has also declined.
“Transient Occupancy Tax receipts for the first two quarters of the fiscal year indicate a 10% decline from FY2007-08 results due to a 3.5% decline in tax receipts from hotel operators, and the closure of one business. This results in a reduction of $133,000 from our original budget estimate.”
Department revenue is also down.
“Departmental revenue estimates are being reduced due to declining Public Works inspection activity and declining participation in recreation programs. Community Development revenue is increased due to billable planning activity for private developments. Combined departmental revenue estimates have been decreased by roughly $150,000 for the current year.”
The Vanguard has made much of the overtime expenditures by the city. The staff report notes that the total overtime budget for the current fiscal year is $1.38 million which represents 2.6% of the human resources budget.
The staff report also looks at the excess fund balance over the 15% reserve target.
The good news is that the excess fund balance for last year was $723,325, however, the current budget situation will deplete most of that even with the budget cuts. By they are now projecting an $86,705 fund balance at the end of this year.
Commentary
We have discussed the issue of unmet needs multiple times here. The bottom line, the city has to take steps to make the city budget sustainable in the short term by cutting costs and in the long term by negotiating fiscally responsible deals with the city’s bargaining units. All of the key bargaining units have the contracts up. The city cannot simply rollover the existing contracts in hopes that they can buy time until the next cycle when the economic outlook could be more favorable. There are structural issues that must be addressed.
The city has to hold the line on the top salaries. It needs to allow inflation to bring them back toward a more manageable level. It also needs to deal with the runaway train of retirement pensions. The current CalPERS situation is going to force some of this because CalPERS is going to forced increased contributions from cities that need to be taken up by employees.
The bottom line is that the city of Davis like the other cities in California has increased its employee salaries at an unsustainable rate during this decade. We are now about to pay the price for this rate of increase. We have the opportunity to fix that if we are proactive and act now. We are not in the calamitous situation that other cities find themselves in. But we could get there if we do not fix things now.
—David M. Greenwald reporting
DPD: do you know if the city has decreased its Planning Dept staff over the last year or so since the new home and permits have undoubtedly decreased? This is the type of cutting that needs to be done, rational and reasonable. Not to be insensitive to staff cutting, BUT where it makes sense. To this same point, looking at changing some of the East/West Davis greenbelts to more natural and less grass to cut (more like the South Davis belts) to save on maintenance. Hopefully these decisions based on logic, are and have been done by the city…rather than just continuing to do things the same way we always have by asking for more money or just cutting and not changing. Thanks!
Tomorrow at 5:30, the city council is going into secret session with all 7 bargaining units, including the cops, whose contract is not up for another year. The city manager has asked each department to come up with cost-cutting measures, and I guess these will be presented to the unions (and non-union negotiators) behind closed doors.In some respects, this is like what is going on with the school district. The unions will have to either make concessions; or large numbers of the people they represent will be fired.
Hold on there…I'm as critical about the city's fiscal decisions as anyone, but let's not morph this into anti-employee animosity.These are still people's jobs, people's livelihood, people with families, bills to pay, etc. Let's not be so cavalier with them.Wishing for someone to lose their job, especially now, is wrong. I don't want this blog to be about that.We can make sound fiscal decisions in this town without being disrespectful to people and without wishing for people to lose their livelihood.All turning on emotion does is turn on emotion in the other direction. That's the last thing we need right now. We are facing a crisis in this nation, in this state, and here at home. We never level-headed thinking not visceral gut reactions to get through this.And I believe we can get through it if the city acts responsibly, if city employees do as state employees and county employees have done, and if we work together toward solving the long term problem.
Lexicon Artist wrote: …Tomorrow at 5:30, the city council is going into secret session with all 7 bargaining units……Perhaps author meant that CC is meeting in closed session with its Labor Negotiator (HR Staff) to discuss approaches to upcoming negotiations with the 7 groups. If so, Lexicon should have said so. As it stands as written, Artist is either misinformed or not telling the truth. I expect the administrator to delete this… but facts seem to be loose on this blog unless they …jive… with the conclusions sought…
Anonymous @ 5:59 wrote: "If the cops got a 20% increase over the 4 years of the last contract-this time, we should offer HALF that over 4 years"Ok… does this mean the City should give police (& other employees?) 2.5% per year for next 4 years?
Anonymous as many have said before, the strength of this blog is that a lot of people who are well-informed post. When information is erroneous it gets corrected.
Refer all to the Amended CC agenda for Tuesday… closed session has been eliminated… see: http://cityofdavis.org/meetings/councilpackets/20…
People sometimes make mistakes. People sometimes misread stuff. The important thing is information gets corrected.
Ok… does this mean the City should give police (& other employees?) 2.5% per year for next 4 years?*************************YES! That's what I meant..but that's the BEST contract(in terms of pay increases) WE give out; ALL the others get less…Let them battle each other over how much Fire and the 5 other employee groups get…AND, patrol at the PD loses the 12 plan and goes back to 4-10's…no more of this 104 hours of guaranteed OT per officer, per year. Way too expensive and from experience productivity would increase if 4-10's were enacted. The 12 plan is a luxury. Patrol, as a whole has never done the 10 plan.
This is ubelievable! Our City is at risk, due to the State's budget impasse, but NOT due to any of us here in Davis not paying enough for our schools or City services.If you look closely (and read between the lines) at the City's budget, you will see that we are paying out more and more each year (far beyond our personal COLAs)to increase the City's revenues. The real problem is that City spending (not even including such needed improvements as roadways)is increasing at a much faster pace than our increased contributions to City revenues. And now,our City Council is trying to guilt us into paying even more by renewing sales and parks' taxes.I don't know about you, but I will not vote for renewal of any extra taxes until this Council addresses the real problem: out-of-control expenses that are putting the City in a hole, even though we each pay more & more each year.
Rich: …the city council is going into secret session with all 7 bargaining units, including the cops, whose contract is not up for another year. The city manager has asked each department to come up with cost-cutting measures, and I guess these will be presented to the unions (and non-union negotiators) behind closed doors….ANO 6:23 …Perhaps author meant that CC is meeting in closed session with its Labor Negotiator (HR Staff) to discuss approaches to upcoming negotiations with the 7 groups….Of course the city's labor negotiators — in this case Bill Emlen, Paul Navazio, Harriet Steiner and Melissa Chaney — will be in the room. However, the city council is not there to …discuss approaches to upcoming negotiations with… Emlen, Navazio, Steiner and Chaney. The council, represented by that foursome, will be there, I guess, to discover where the representatives of the 7 bargaining groups stand, in terms of concessions the workers are willing to make. Take a look at the agenda. It lists all of the bargaining groups which are to be represented in the meeting today:Closed Session: Conference with Labor Negotiators pursuant to Government Code ??54954.5:Agency Designated Representatives: City Manager Bill Emlen, Assistant City Manager Paul Navazio, Human Resources Administrator Melissa Chaney, City Attorney Harriet SteinerEmployee Groups/Organizations: Davis City Employee Association, Davis Police Officers Association, Department Heads, Executive and General Management, Firefighters Local 3494, Police Lieutenants, Professional and Support Employee Association———-I presume, by the way, that the city will be asking for these concessions BEFORE the contracts are up. If o, the talks will not be simply about obtaining concessions in the future contracts.ANO 6:23 …As it stands as written, Artist is either misinformed or not telling the truth….I concede I may be misinformed. This is a closed session meeting, and the agenda (see above) DOES NOT DESCRIBE what the negotiations will entail. However, your implication that I am …not telling the truth… is assinine. I'm simply reporting what I think most Vanguard readers are unaware — that there is a closed session meeting scheduled today between the city council and the labor reps; and that the exact nature of what they will talk about is not prsented on the agenda, but I think it is reasonable to assume, based on comments publicly reported, that they city is seeking concessions from labor BEFORE the contracts expire.
…Refer all to the Amended CC agenda for Tuesday… closed session has been eliminated… see: http://cityofdavis.org/meetings/councilpackets/20… the agenda for the SECOND meeting of the city council, today. The closed session is scheduled to begin an hour before the open session, and it remains on the city website, so if it was …elimintated,… that's news to me.
…I may be old-fashioned, but there I believe there should be a responsibility to 'check one's facts' before stating them as such….I agree. I checked my facts before I posted my comment. Your …correction… was in error.
The irony here is that the banks are supposed to be insolvent too. The progressive economists now recommend bank nationalization:Roubini tells Geithner to nationalise US banks. I don’t understand how insolvent governments are supposed to fix a problem that the governments can’t solve for themselves?Tim Geithner must nationalise some of America’s biggest banks and take the total toll of the US bail-out to around $2 trillion, according to one of the world’s most prominent economists. By James Quinn Wall Street CorrespondentLast Updated: 1:12AM GMT 16 Feb 2009Nouriel Roubini
My guess is that the city is doing not much of anything in the way of cost cutting other than sitting and hoping and waiting things will get better. Remember, Paul Navazio cooked the city books, placing needed items in the …unmet needs… category, and declared a balanced budget just for the campaigns of incumbent Souza and Saylor. What fraud!
The unions will have to either make concessions; or large numbers of the people they represent will be fired.************************NO! No one will be fired–wrong terminology; they can and should be layed off–No employee group/city contract should be renewed with the same pay increases! If the cops got a 20% increase over the 4 years of the last contract-this time, we should offer HALF that over 4 years-and then wish them well if ANY of them hit the bricks for other agencies; No one is hiring so good luck fellas. Smooch my stingy ASS. BooHooHoo…
VG Reader seems to indicate that anyone can say anything, as long as there is the opportunity for …correction…… I may be old-fashioned, but there I believe there should be a responsibility to ‘check one’s facts’ before stating them as such.