Bottom line: We Have No Idea What the Budget That is Due Next Week is Going to Look Like –
Included in that was the restoration of transportation funding to the one million dollar level, the allocation of an additional half million in anticipation of potential CalPERS rate increases to be effective fiscal year 2012/13, and the assumption of Tier 1 and 2 cuts with the exception of the restoration of funding for the ombudsman, recreational programming and public safety reductions.
By September 30, 2011, the end of the first quarter, the staff was then to return to Council with $2.5 million in personnel cuts.
Clearly, it was the issues of personnel cuts that had the employees up in arms on Tuesday night, and for good reason.
The council clearly needed to reemphasize the point that was made earlier when a ten percent across-the-board cut was pondered for department heads and other managers – that is, that the chief focus on savings should not fall on the shoulders of the rank and file.
Personally, I would have left in a provision urging that all department heads and those in the management bargaining group voluntarily take a ten percent pay cut. I personally think that we need to shed some in the upper management including some planners and a deputy city manager, as well as a reorganization of the leadership.
All of this can wait until a new city manager is hired – we have no idea who is in the pool, but it appears increasingly unlikely that the Interim City Manager will become the permanent one.
In part that is because he appears somehow tone-deaf to the demands of this city council. He can be somewhat forgiven for trotting forward the same old budget with the same old tier cuts from the first go-around, but as council specifically laid out what they wanted to see, there was no excuse on Tuesday night.
The fact is, the city manager sent the council the new plan the night before. The public never got a chance to see it until the meeting. This does not break the letter of the Brown Act but it certainly bends the heck out of it.
What is more is that the city manager spent most of his time working on something that the council did not ask for until September 30, an evaluation of staffing reductions. This meant that, in part, the city employees were angry prematurely.
The city manager had nine PowerPoint slides in his presentation, one being a title page.
We see the problem almost immediately on the second page.
He put the one item that was supposed to be evaluated by SEPTEMBER 30 up FIRST.
And he gave it the most prominence. Four slides were devoted to the September 30th issue, while he had one slide for transportation funding, one slide that dealt with the restoration of the tiered cuts, and one slide on the closure of the Community Pool and what the options were.
So the three action items that were supposed to be done this budget were treated secondarily to the $2.5 million in cuts due September 30.
Moreover, nowhere did he create a budget based on council direction. So, we have to pass a budget next Tuesday – a budget that the council has never seen and will probably not see until the day before they are to pass it. The public will never get to see it until the day it is to be passed.
City employees will have limited time to evaluate it. But June 30 is the deadline.
How can you run a city like this? No wonder we are in a mess.
Councilmember Stephen Souza did not help things when he talked about 33 layoffs. That talk is premature, and he was playing to the audience. That much is clear.
He had a bit of a point saying that we only had a to pass a budget now that is balanced, and we could deal with the later issues this fall. On the other hand, that is kicking the can down the road.
Regardless, we needed to see a budget so it could be critiqued, criticized and evaluated.
The Council has to be frustrated, the city employees ought to be frustrated, the public should be frustrated, and really there is no excuse here. The Interim City Manager simply failed to follow council instructions.
The Council held firm, even in the face of strong opposition on Tuesday, but the City Manager needs to do his job better or he will find himself not being the city manager in the near future – interim or not.
—David M. Greenwald reporting
[quote]In part that is because he appears somehow tone-deaf to the demands of this city council. He can be somewhat forgiven for trotting forward the same old budget with the same old tier cuts from the first go-around, but as council specifically laid out what they wanted to see, there was no excuse on Tuesday night.[/quote]
I’m not sure I’m following you here. My take on it that night was Paul was trying to give the city employees a heads up on what was to come, to get them discussing ideas for where to make budget cuts. If I remember correctly, Mayor Krovoza specifically gave direction to Paul Navazio the week before to start the discussions with the bargaining groups ASAP/sooner than later.
No matter what, this is going to be a difficult process. The changes Mayor Krovoza is proposing are stark, gargantuan, tough, and will be difficult to digest. I think it is appropriate to give all sides, including city staff, time to digest what is coming. If Navazio stumbled a bit, and I don’t necessarily concede that he did, I think it incumbent to forgive a bit.
What is particularly important is for the City Council to stand firm, stand fast, to do what is in the best interests of everyone – to get this city on a firmer fiscal footing for all concerned, including the city employees. No more creative bookkeeping, where basic service are put in the “unmet need” category and the budget declared balanced; where the fiscal can is kicked down the road to be grappled with another day. Another day is here, and has to be dealt with.
Bravo to the “new kids on the block” (Krovoza, Swanson, Wolk) for leading the way to a new era of fiscal responsibility…
[i]”Bravo to the “new kids on the block” (Krovoza, Swanson, Wolk) for leading the way to a new era of fiscal responsibility …”[/i]
I recommend everyone hold their applause.
No matter what is put in the budget for 2011-12 next week, it is not yet possible to change the wrongheaded course we have been on for the last 10 years. No material changes will be made by July 1.
We can, in theory, restore funding for street and sidewalk maintenance by going back to our old fire department staffing model of 3-men-on-a-truck. But moving back to that model, if the council has the courage to do so, will not take place in a week. It will take months. I would be shocked if they take this course of action before January 1 of 2012. I would not be shocked if they have not yet made this change by July 1 of 2012.
Otherwise, the real changes which need to take place are [i]in the labor contracts[/i] which don’t expire for another 12 months. The City needs to cap the growth of total comp and tie the growth of labor costs to revenue gains in every contract. The fire contract currently does this. It has to be the model for all contracts.
The last round of contracts made a significant change in cashouts for new employees who get medical coverage through the City. No longer can a new hire take a $6,000 plan and convert the extra $12,000 into cash. (Old employees can still do this.)
It also seems like a good idea to reform cashouts for those who take no medical benefit from the City. I would recommend at this point making it roughly what a minimum insurance plan costs–somewhere around $6,000 per year. Those getting full cafeteria cashouts now get substantially more than that.
The next long-run savings reform needed for new hires is to do what most other cities are doing to their pension plans: revert them back to 2% per year. For public safety, new hires should get 2% at 55; and miscellaneous should get 2% at 60. That would represent a significant change down the road. We cannot legally reduce the formulas for current employees.
Another big reform we need in the next contracts is with retiree medical. Our unfunded liability for this is now estimated to be greater than $50 million. (The actual amount is determined based on what you assume medical inflation will be over the next 30-40 years. So the specific number you say we owe is not precise.) My suggestion is that we no longer pay for retiree medical for any of our retirees (save the disabled) who are not yet age 65. That would accomplish quite a lot: it would lower our liability by around 3/4ths; it would discourage employees from retiring prematurely; and it would reduce employee turnover. Those who want to retire young still could do so. They would simply have to pay for their medical plan (through PERS) until they reach age 65, when the City and Medicare would pick up the tab.
An interesting point about the next round of labor deals: the new contracts will not start before July 1, 2012. We will have an election in June, 2012 for the seats of Souza, Greenwald and Wolk. If all three of those seats change owners, then a majority of the council which approves the next contracts is not on the council right now. I don’t expect all three seats to change. But I do expect some change, and that might affect the dynamic, and that change might lead to a substantial delay in action.
Elaine: We don’t even have a budget
[quote]Bravo to the “new kids on the block” (Krovoza, Swanson, Wolk) for leading the way to a new era of fiscal responsibility… [/quote]
While you’re applauding Council members for this, it would be unfair not to include Sue Greenwald.
Sue has been fighting for fiscal responsibility for years – usually with the support of no more than one other Council member. Sue recognized the sham that has passed for a “balanced” city budget for the last several years as exactly that – a sham. However, without two votes support her, and with a Council majority that did everything within its power to stifle her, Sue’s warnings were treated with disdain – or ignored completely.
Davis voters would be well advised to consider where the politicians who got us into this mess are now…and to vote accordingly when the time comes.
Hey David,
Thanks for air-brushing my picture!
[quote]”Bravo to the “new kids on the block” (Krovoza, Swanson, Wolk) for leading the way to a new era of fiscal responsibility …”
I recommend everyone hold their applause. [/quote]
Note, I said “leading the way”. Whether we will get to where we want to be is an open question…
[quote]Otherwise, the real changes which need to take place are in the labor contracts which don’t expire for another 12 months. The City needs to cap the growth of total comp and tie the growth of labor costs to revenue gains in every contract. The fire contract currently does this. It has to be the model for all contracts. [/quote]
I completely agree with you here…
[quote]Elaine: We don’t even have a budget[/quote]
But don’t you think it is a step in the right direction?
[quote]While you’re applauding Council members for this, it would be unfair not to include Sue Greenwald. [/quote]
I completely agree…
Sue ,
Nice ! Made me laugh .
Sue: LOL. Believe it or not it’s just a weird angle.
Elaine: What the council has done is a great start. But Paul presented on Tuesday less so. I just don’t know how they get this thing done at this rate.
[quote]Elaine: What the council has done is a great start. But Paul presented on Tuesday less so. I just don’t know how they get this thing done at this rate.[/quote]
As you say, a GREAT START. Remember, Paul is a holdover from the Bill Emlen regime and the Gang of Three, and may have to be brought kicking and screaming into a new era of budget reform. But Paul also has the added problem of having to answer to his constituency, city staff, who don’t necessarily want to hear the hard truth. (This is of course a problem with our form of city gov’t.) I think it is wise to give everyone a bit of time to digest the ugly facts, understand it is hard reality that has to be dealt with, and allow city staff (including Paul) the time to think up creative ways to get where we need to be. It is just as much the employees’ future as it is citizens’.
Up until now, we have not had a CC even remotely willing to address the fiscal mess our city is in. Now we have a tough mayor who gets it, as do a majority of other CC members. What remains to be seen is if the CC has the will to stay the course in the face of fierce opposition that is sure to come from city staff and disgruntled citizens. I actually think this CC just might have the spine to do what is necessary. Will it be perfect? Probably not. But rarely is that the case… I’m willing to settle for less than perfect but large steps in the right direction… and I do mean LARGE…
One final point. It is extremely important to be supportive of the City Council and City Staff right now, to allow them to build a collaborative atmosphere to get the job done. As Dan Wolk so wisely advised, it is not good to make the issue about labor strife or a “we” vs “they” paradigm. Rather I think we need to do a bit of cheerleading at this point, to praise our CC for doing the right thing; but not at the expense of trashing city staff for not liking the medicine they are going to have to accept to heal the city’s and ultimately their own fiscal woes. In short, “you get more with honey than with vinegar”.
Just my thoughts…
Did I miss the 2 areas Joe wanted addressed NOW, e.g. road fund and PERS from Paul’s presentation?? He seemed to ONLY address the 2.5mil personnel reduction target that Joe wanted in SEPT not now. Paul did not address the immediate CC requests.
And the long micromanaging discussion reminds me of Rome burning while Nero fiddled.
[quote]But Paul also has the added problem of having to answer to his constituency, city staff, who don’t necessarily want to hear the hard truth[/quote]
If our City Manager sees himself as a representative of city staff, rather than as a CEO who reports to the Council, then his perception is exactly backwards.
He is the top executive, not a union representative. He does not answer to city staff, but he does have to answer to the Council.
[quote]If our City Manager sees himself as a representative of city staff, rather than as a CEO who reports to the Council, then his perception is exactly backwards. [/quote]
This has always been the problem of how our city gov’t is set up – it is a built in conflict of interest…