I have floated this idea the last few weeks. I have solicited alternative suggestions. But to this point, I have not seen a realistic alternative to a short term sales tax increase as a means to cut the city’s projected $5 million deficit for the fiscal year 2014-15.
I understand some of the objections and fully agree with attempting to mitigate misuse of funding. If we can pass the sales tax increase with the prohibition against employee compensation increases larger than inflation over the period of time of the tax, I am agreeable to that.
If people want the city to commit to long term economic development, I am agreeable to that.
One person emailed me a few weeks ago, appalled that the Vanguard would support a tax increase. They see it as akin to bailing out the bad past policies of Don Saylor and company.
I get that point. I would argue the following however. First of all, Don Saylor is not an elected member of the city council anymore. We are where we are. The city needs to be bailed out of past failed policies and the way we do that is not by destroying city services, cutting public safety, closing parks and greenbelts.
The way we fix this problem is we find sources of revenue to preserve the programs that we need while we put good sustainable policies in place.
The city has gone as far as it can, I believe on austerity. We have reduced the number of city employees by over 100 over the peak. We are now at 20 year lows in employees.
We have now agreed with five bargaining units and imposed on two others a package that does the following: cuts cafeteria cashouts to $500 per month, reduces retiree health care costs, ensures that employees pick up their share of pension increases.
We have cut the number of firefighters on staff and reduced the shift size from 12 personnel to 11. We have looked into cost-sharing and partnering with UC Davis on fire management. We have done this while increasing safety through boundary drop and other reorganizational models.
We have created a second tier of pension costs and with state mandates coming down in 2018, fire pensions for new employees will drop from 3% at 50 to 2.7% at 57. If Chuck Reed’s measure passed, we might be able to further reduce costs for current employees, but Mayor Joe Krovoza and Mayor Pro Tem Dan Wolk have opposed such a measure.
Last week, we solicited options for alternative cost cutting, but right now, the only way to cut costs would be to lay off additional employees, cut emergency and other services to the bones, close parks, close green belts, cease working on road repair and other critical infrastructure needs.
I am not a fan of increasing taxes. We are six years into these cost-cutting mechanisms and this is the first time I have called for revenue increases. I understand the burden on the tax payers – the increased water costs are already hurting my family’s bottom line and for many the parcel taxes are burdensome.
But I see no other way. In my view, we are not bailing out bad past policies, we are changing bad past policies but in the meantime we have to live in the present. The quality of life in Davis will be hurt if we are forced to balance the budget through $5 million in cuts.
Even with a tax increase, we are probably looking at 10% to 12% cuts in city departments across the board and we have no low hanging fruit left to pick. Every cut will be a painful. A city service that someone relies on.
Others have argued that sales taxes are regressive, that they disproportionately harm the low income. I don’t disagree. At the same time, it seems the only viable alternative is a parcel tax. A parcel tax is even more regressive.
Everyone has to pay the same amount on a parcel tax whether they own a $200,000 home or a $2 million home. It is a flat amount tax, not even a flat rate.
I do not see any other alternatives.
Attached is the current sales and use tax rates by County and City as of October 1, 2013. Looking at the sheet, Davis’ rate of 8% is on the low end of most municipalities, but higher than most counties. Raising the rate to 8.25% would put Davis on par with Woodland, raising it to 8.5% would put it slightly above that of Woodland and West Sacramento but below most cities in Solano and on par with Sacramento.
We would be talking about the increase of about half a cent on the dollar. 50 cents increase for every hundred dollars you spend.
I fail to see how this is going to negatively impact the city of Davis, when most other areas have comparable rates. Are you really going to drive to Woodland to save 25 cents on your $100 purchase when the cost of gas and wear on your car far exceeds that?
A half-cent sales tax can produce revenue near about $3 million according to the city figures from the renewal of the sales tax back in 2010. That is not enough revenue to balance the budget, but perhaps enough revenue with other cost-cutting measures to get us close.
We have six months before an election so if people have alternative revenue generating ideas, we should consider them in the discussion. But it seems the biggest questions should focus on ensuring that the money is used to balance the budget rather than as it was in 2004, used for employee salary and compensation increases.
—David M. Greenwald reporting
Click here for Attachment: Sales Tax
David, you wrote: “Even with a tax increase, we are probably looking at 10% to 12% cuts in city departments across the board and we have no low hanging fruit left to pick.”
The City Manager’s December 17 report says: “Without new revenue, a reduction of approximately 12 percent for all General Fund and Internal Services Fund departments will be necessary in order to close the $5 million General Fund gap. If Police and Fire are held harmless, the reduction for the remaining departments will increase to 25 percent, each.”
I never like to add any new taxes as many are near maxed out but if we do I agree with David and think a sales tax is the best and fairest way to implement one. Why should homeowners bear the burden through a parcel tax when everyone that lives here benefits from city services? Also a sales tax garners revenue from visitors to our city. But we must have assurances that any sales tax increase will only be used to pay down the deficit.
I’m understanding your point, my question is, how do you balance the budget without new revenue?
Given that the sales tax would provide about $3.5 million, it would probably be necessary to also submit a property tax increase to the voters. Either an assessed-basis or a per-parcel tax basis, sufficient to raise the remainder of the structural deficit for 3 – 5 years. If that amount is higher, more of the revenues could go the the road maintenance backlog.
“with the prohibition against employee compensation increases larger than inflation”
Are cost-of-living (inflation) increases locked into existing contracts?
Sort of…. inflation costs for medical is basically shared by employer/employee. Regular compensation is not tied to any inflation index. With inflation less than 2 percent it is not as signicant as in previous decades.
I’m wondering about the effect of cost-of-living increases. The budget projections call for 2% in 2014-15 and 1% thereafter. That might be a lot and it might be a little, but I don’t find anything in the budget documents that breaks out salaries — everything I’ve looked at so far bundles salaries and benefits together.
Given the percentages of medical insurance, compared to salaries, particularly for the median employee, one percent per year might pay for the city’s share of that, but probably means salaies are flat (@ best). Med insurance increases vastly has outpaced general inflation. City employee take home pay will tend to decrease.
The budget assumption specifically calls for salary increases of 2% for FY2014-15 and 1% thereafter. Health/life plan increases are projected at 4% per year for the city’s share. What I’m curious about is the dollar amount of those projected salary increases.
For the past five years, at least, our elected leadership has known it has a serious revenue problem and yet it has done nothing besides make cooing sounds about the potential merits of economic development as a valid tool to generate essential revenues to the city. And, now it’s most creative idea is a request to increase sales tax revenues?
We still have a City Finance & Budget Commission that is not supportive of the findings and recommendations of the Comprehensive Economic Development Plan published two years ago by the Business & Economic Development Commission and doesn’t believe Economic Development holds any significant potential to help improve the balance of revenues to expenses.
Virtually all of the new costs entering the 2014 budget expenditures have to do with the need for “accounting recognition” of the legacy costs and inaction passed on from past City Councils without any discussion of how or why this could have happened and whether there are other options to help reduce these legacy costs or more appropriate taxes to help pay for these legacy costs.
For example, what if the city were to follow the lead of other cities around the country and seriously explore options to help better control the cost of Other Post Employment Benefits? Alternative, what if the City were to seriously discuss the option of offering Defined Contribution programs, or some mix thereof, for all new incoming hires? How would such actions affect the current and successive budgets over the near term?
To simply increase the current sale tax rates – without some requirement for a more public discussion with all the options on the table – seems not much different than the actions of previous councils which have led us to where we are today.
to
How do you propose having “a more public discussion with all the options on the table?”
For starters, maybe we could have a brief explanation of how our city has fallen so deeply in debt to its employees over things like underfunding of pension contributions and a complete failure to fund any contributions towards their Other Post Employment Benefits. Seriously, how does that happen?
With the additional perspective thus obtained, perhaps it would be easier for us to discuss how these problems are most equitably resolved today. Same for water, same for roads. Maybe this would help us all ot understand the notion of legacy debt. Then the question or who should help pay for/ who should be “responsible for legacy debt”? Should it be the population of taxpayers who have enjoyed the fruits of the services for the past 15 years during which there were no collections to match the accruing benefits? Should it be our children or grandchildren? Should it be all citizens in the form of a sales tax increase? It’s really a discussion about matching sources and uses of funds – a basic accounting concept. Or, another way of looking at it, do you relish the notion of paying off your neighbors credit card balance?
With respect to the taxing option itself. As we migrate increasingly to a “services based economy” (and if a university centric community isn’t a services based economy then I don’t know what is) – how about exploring and discussing the notion of a “local tax” component on the value of service rendered in our local Davis economy. No, I’m not talking about taxing the university or our K12 schools – I’m talking about the doctors, lawyers, accountants, consultants, realtors, hair & nail salons, etc. Why not consider the option of “broadening” the base for collection of local fees to help sustain our local municipal infrastructure?
Would you like some examples of cities across the state and country that have taken a serious approach to models? There are quite a few. Walnut Creek, CA, for example, has zero liability for Other Post Employment Benefits – why, because they never offered that benefit due to the fact that they couldn’t identify a means to properly fund it.
And, surprise surprise, they are still able to attract qualified new applicants when they have new job openings.
This is just a sampling of what we could be talking about – but it would require that somebody bring it to the table.
You’re discussing that right now, right here. Is there some other venue or method you would prefer?
Don,
I just proposed a couple – broadening the tax base to include services and revisiting program options for city’s OPEB program, and considering other forms of taxation (parcel tax anyone? – we do it for parks) to liquidate the legacy debt component.
Notice any posters when we talk about something beyond vague generalities?
realchangz – Can you help me understand a bit more what you mean by “revisiting program options for city’s OPEB program”? Thanks.
Also, in the staff presentation on December 17 both a parcel tax of $135 per year (yielding an estimated $3.7 million per year) and an “ad valorum” tax of $0.55 per $1000 assessed value (yielding and estimated $3.6 million per year) were placed on the table for discussion.
Rob,
Unlike Pension Benefits, OPEB benefits are covered by the same protections. Perhaps an oversight by the programs sponsors, but more likely that it would not have passed muster in the first place – i.e. a defined benefit with no actuarially supported source of funding and no mandate for necessary, annual contributions to support such future benefits.
At the extreme, for example, it is my understanding that the City of Stockton took a magic wand and simply wiped it away.
Clearly, such an action by a wealthy community like Davis wouldn’t be appropriate. By the same token, however, there is a very broad spectrum of types of benefit programs (besides the Bay Area Kaiser Plan) which might offer significantly more competitive premiums or other alternatives, which when combined with a city-borne stop loss or reinsurance program might yield some tangible savings. I’m not any kind of knowledgable on this issue, but there are resources available who could shed more light on this issue.
It is one of those very “awkward” subjects given that historically our City Council members, themselves, have been eligible for participation in the program after two terms of service (if I have understood correctly). In such circumstances, who is to be expected to bring this issue to the fore? Do we expect an aggressive push by the City Manager – obviously that would do wonders for his popularity with staff. Should we be expecting such recommendations and suggestions from members of the Finance & Budget Commission?
Interesting and vexing at the same time, but a program that was instituted with absolutely no plan for how it was to be funded should at least be worthy of some further study.
Sorry,
That should have read “not covered”
For those of us who are acronym impaired, what are OPEB benefits?
Ooops. Sorry about that. OPEB stands for “Other Post Employment Benefits” which, in this context, generally refers to lifetime post-employment healthcare benefits – as in all of your health insurance premiums will be paid by the city for the balance of your life following retirement from the city (it used to be that you could qualify for this lifetime benefit if you retired with as few as 5 years of service to the City of Davis at the conclusion of your public service career.)
Thanks for clarifying, I appreciate the info:-).
Like the Vanguard is the forum where serious policy discussion is hashed out. LOL!
“As we migrate increasingly to a “services based economy” (and if a university centric community isn’t a services based economy then I don’t know what is) – how about exploring and discussing the notion of a “local tax” component on the value of service rendered in our local Davis economy.”
I want to make sure I understand this concept of service base tax. If I went to get say a haircut I’d pay the cost of the haircut plus a “service” or “sales” tax. Is that the idea?
I don’t think state law allows taxing of services. I also don’t think local governments can tax things like that on their own, and I seriously doubt a general law city could do it.
Why not? Because all the legislators are attorneys?
Sorry, that should have been “Transient” occupancy tax.
Then we’re just talking about the definition of transient.
Is that so difficult a term to parse?
It’s time to start thinking outside the box that got us here.
I’m pretty sure there was a bill 2 – 3 years ago that would have allowed taxing professional services, but it died in the legislature. I’d have to google it.
Ever heard of a General Occupancy Tax for hotels? If that’s not a service, I don’t know what is.
Yes, B.Nice,
That’s it in a nutshell. Particularly when we talk about the notion of the regressive nature of the sales tax – well – those able to afford the services of many service providers are not necessarily “among the population of those least able to pay”.
I’d also favor supporting an internet sale tax component based upon the zip code of the purchaser. As matters stand, communities like Patterson, CA – now home to Amazon’s newest distribution center – stand to reap all the benefits by hosting a mega, mega, big box.
Thoughts?
So far I am in at least partial agreement with all of the points that you have made. Unfortunately, many of the changes that I would like to see are not currently possible.
I would favor a “luxury” or tiered tax on purchases assessed by price. If I can afford to pay $1500.00 for a designer handbag, I think it reasonable that I should contribute more in tax than someone who can only afford$25.00 for a handbag. Same for houses.
I would happily pay much more tax on the parcel for my
$600,000 dollar home than I would see assessed on someone
whose home is valued at $300,000.
I would also like to see still higher taxes on cigarettes, alcohol and when it becomes available, marijuana.
Unpopular I know, but you did say that everything should be on the table.
Again: set at the state level, not the local level. We are rather limited as to what types of taxes can be implemented.
Another clarifying question on how a service tax would work. Let’s say a Davis based consulting firm wins a 2 million contract. Would the client pay a service tax on that amount.
That’s one way to look at it. Or, you could say that the consulting firm was required to collect to tax in order to pay for their fair share of municipal services they consume – fire, police, streets, sidewalks, lights, etc – and then pass that cost along to the client in the form of a “transfer tax”. Here we are only talking about the 1.5% city tax – not the 8.5% full boat tax require on retail sales.
FYI-Wasn’t trying to imply judgement about this type of tax in my question, just gathering facts.
I was surprised to learn recently about limited number of ways that service providing business’ in Davis generate tax revenue. I would have assumed that there was a tax on profits that went to the city, but apparently this is not the case.
IMO, exploring a service base tax is an idea worth exploring.
Apparently we have two weeks for that discussion.
Tax increases will be just another Wall Street-style bailout. Bad business decisions backed by money-greed and determination to retain power despite long-term mounting risks… it fits the label very well.
And like our famous Wall Street bailout, we will end up maintaining much of the structural and operational norms that were at the source of the problems. We will because of the tendency for people and organizations to move toward denial as a way protect the status quo and feel better about themselves.
And, like the Wall Street bailout, the primary long-term impact will be the kicking of a larger and larger can down the road for future generations to deal with. And at the same time, since the adults have also failed to implement adequate corrective measures, these children of the next generations will continue to face the risk of the next great fiscal calamity. Only the next time all levels of government will be fully-leveraged and unable to tax and borrow its way to a short-term resolution.
Irresponsible adults requiring yet another bailout.
Bailing out bad decisions is sometimes of necessity. The key is whether you can make good decisions going forward.
There is so much denial and opposition to economic development in the posts of many highly-educated and high-informed VG participants that projecting this to the Davis voters I see a tax increase as a pressure relief valve. The pressure being their mounting need to accept that their worldview related to Davis has been wrong and needs to change to not only accept economic development, but to join in the demand that it needs to be pursued with urgency.
And my Wall Street bailout comparison provide copious evidence to back this point. After we bailed out these failed companies, they went back to their same practices.
How might this look for Davis? For example, lets say we push the idea of approving enough tax increases to cover the budget deficit, and then push a bond to cover our road maintenance. That will help someone like public employee union-friendly Sheila Allen get elected…. and then the cycles repeat themselves.
So how do you, Frankly, propose the City of Davis deal with the structural budget deficit for the next 2 – 3 years?
Frankly I’m also curious about this answer, I get you don’t want new taxes and that the city needs to focus on controlling cost and increasing revenue. But without some sort of tax how do you propose we deal with situation in the short run?
We should not be talking about tax increases at all until we have begun to execute on our plan to develop the economy.
Tax increase, if needed at all, should be subordinate to and tied to the economic development plan. They should be proposed and implemented with absolute sunset dates.
You keep brining up the point that economic development will take a long time to return results. Hypothetically, what if we started development today on 1000 acres of peripheral land approved for business parks?
And then related to this, what will the passing of a sales tax, parcel tax and bond due to delay economic development?
Pollitics is the art of the possible, not the hypothetical. So your proposal is that there presently should be no sales tax increase, there presently should be no property tax increase, that for the next 2 – 3 years the budget should be cut further? I’m asking, not putting words in your mouth.
Hypotheticals uncover the other side of the half-logic used by shysters and ideologues to get their way.
Facts:
– Taxes have increased at the federal level (and we have only begun to feel the financial pain from Obamacare… the largest middle class tax increase ever), and the state level. Also, Davis has increased taxes, and our water rates are set to significantly increase. My point was/is that we cannot and should not accept this argument that a half-cent sales tax increase, and a $200-$400 per year per parcel property tax increase are small and insignificant. They are a very BIG deal when considering what people are already hammered with today.
Yes, the budget should be cut further. And if we don’t like the impacts from that, we need to get off our ass and push for urgent and immediate economic development.
You are dodging the question. What is your short term solution to the problem?
We don’t have a short-term problem. We have a long-term problem.
What is your long-term solution?
Were you good at dodge ball? How do you suggest we pay the bills over the next couple of years?
Timing is a critical issue here.
Frankly: … someone like public employee union-friendly Sheila Allen…
Just curious how you peg someone like Sheila Allen as being public employee union-friendly.
I mean, I bet you’ve shared several kind words with liberals here in Davis, and you’ve probably even donated money to the Vanguard, that mother hive of liberal collectivist moochers. Just imagine *your* reputation!
David,
Good point, but similarly, it would seem imperative to first understand the underlying background and policy drivers underlying the original bad decisions in order that we do not follow that same pathway, or fall victim to those same influences, as we move forward – regardless of how good our intentions might be.
Also I think comparing a half cent sales tax to hundreds of billions in bailout for corporations is a bit absurd.
Not really.
First, we are talking about Davis. So you need to do a proportionality calculation comparing the national economy and federal budget to Davis’s economy and the city budget.
Second, you need to factor all taxation.
That is the trick of people that like tax increases. Each one taken alone is “small” and insignificant in terms of the standalone financial pain it causes to a family. However, it is the aggregate of all taxation that is causing the pain.
Just run the hypothetical… you increase sales tax by half-cent every five years. Each standalone impact is small. But at some point the aggregate impact becomes a significant burden for many families.
And let me ask you another hypothetical… why do we never reduce tax rates?
Funny you ask… prior to prop 13 the city of Millbrae did reduce the rate, as assessed values overpaced inflation. Ironically, prop 13 increased the total tax for most Millbrae property owners. Be careful for what you ask for…
So how do you propose the City of Davis deal with its structural deficit in the next 2 – 3 years?
” If we can pass the sales tax increase with the prohibition against employee compensation increases larger than inflation over the period of time of the tax, I am agreeable to that.”
Generally a sensible article, but you still haven’t come to grips with what it means to have city employees that are paid beyond the city’s ability. Inflation and a pay freeze in combination allow the only realistic way to slowly bring city expenditures back to sustainable levels. Yet you propose to throw that option away.
I don’t remember the details, but I was told that a parcel tax that is based on property values was an option.
Not since Prop-13 thank God.
I didn’t think it was a possibility either but I was told it was. I’ll try and check with “my sources” to clarify.
I’m pretty sure voters can increase the local property tax based on assessed valuation by a 2/3 vote.
She wrote “based on property values”. I assumed she was talking about the pre-prop-13 method of resetting the tax liability to the current assessed value of the property. That was what was causing people on fixed income to lose their homes. Can’t do that since Prop-13 thank God.
I meant to say what Don said.
My understanding is an increase in the tax RATE can be increased, but not the BASIS.
By the way, general law cities such as Davis are more constrained as to which taxes they can raise than are charter cities. Davis voted on becoming a charter city a few years ago, since that would have been a prerequisite to enacting choice voting. Charter cities can increase the tax on real property transfer — ie. property sales. Berkeley and Oakland have a huge tax on property sales: $15.00 per $1000.00. General law cities cannot increase it above the state-set rate, which IIRC is about $1.10 per $1000. It is called a transfer tax because it is paid at the time title transfer occurs. The law may have been adjusted since I looked into this during the city charter measure vote (which I opposed).
Charter cities can also vote to impose a local income tax. One idea might be to have a one percent income tax and exclude, say, the first 50k of income.
I am a bit confused about the difference between a “Property Transfer Tax” the one charter cities can impose on real estate sales and a “Documentary Transfer Tax” that any city can impose. Woodland has such a tax but I am unclear how much it brings in and what makes it different from a Property Transfer Tax. I tried to figure out the difference but cannot.
Also, a good introductory source of information on revenue options for cities and counties can be found at: http://www.ca-ilg.org/new-local-public-service
Here are the taxes by county for property transfer: http://www.chicagotitletransfertax.com The additional taxes are in charter cities.
Here is the documentary transfer tax explained: http://www.chicagotitleconnection.com/TransferTaxExplanation.htm
Any other info I have is stored away on a hard drive from the election we had 5+ years ago on that issue. The rate general law cities can charge is limited.
I would support this sales tax hike if it came with a firm pledge to freeze the total compensation of city employees for the number of years the “temporary” tax is in effect. (The money could be used to reduce the City’s long-term debts for retiree medical and underfunded pensions.) If a total comp freeze is not done, and the tax increase effectively generates new revenue flows into the city, then almost all of the new revenue is simply going to go for higher employee compensation–that is, it will fund the increased costs of pension funding, salary increases* and more costly medical premiums.
*For reasons I cannot fathom (despite our dire budget problems) base salaries for employees keep going up every year. Granted, some will have lower cash incomes (beginning in 2015) when their medical cash-out goes down to $6,000. But still, salaries are going up. The next ubiquitous raise comes July 1, 2014. And medical premium costs (borne in large part by the City) just went up by 11.1% 4 days ago. ………… If we capped total comp, we would not be in a fiscal crisis. The problem is that total comp is never considered in negotiations. It is always piecemeal comp with arguments over the various parts of compensation, never the whole.
“The next ubiquitous raise comes July 1, 2014.”
I was mistaken. The pay raises seem to have come January 1. Everyone in PASEA got a pay hike of 3% last year and 2% this year and will get another 2% next year on January 1. Management and most police employees got the same raises in their contracts. It is in part to cover those pay hikes that we “need” to raise taxes on residents of Davis who make less than most City employees.
If my memory serves, the deal imposed on firefighters cut their pay one time by 3% instead of increasing the amount employees pay to fund their (extravagant) pensions by 3%. By contrast, police have paid 3% more to fund their (extravagant) pensions for the last 2 years.
Based on the current MOU’s, if there is an 11 percent increase in medical insurance, the city would pay 5.5, the employees 5.5
I think if and when a tax increase of any kind expire is a key question. If it doesn’t expire we can build a budget based on inclusion of the additional revenue. If it does expire we need to have a plan as to how we balance the budget when it does expire. Despite the unpopular assertions of Frankly there is some merit to his position that raising taxes simply allows us to keep doing what we are doing. Yet, perhaps that is the solution Davis will choose, that we do nothing besides continually paying higher tax rates or cut services. It is really the de-facto position of no growth advocates and I would have more respect for those that advocate for not growing who honestly embrace the consequences of their beliefs. Another vision is one where we embrace economic activity that enriches the community economically, socially and culturally. In that vision we need a temporary bridge to allow that engine of growth to take hold.
To me, an ideal situation would be having a tax increase, a Measure R vote on at least one parcel, and the city council election all on the same ballot.
Well said.
Ah… consensus is a beautiful thing…
“Also, in the staff presentation on December 17 both a parcel tax of $135 per year (yielding an estimated $3.7 million per year) and an “ad valorum” tax of $0.55 per $1000 assessed value (yielding and estimated $3.6 million per year) were placed on the table for discussion.”
For my clarification regarding an “ad valorum” tax based on property value. If someone bought a house 30 years ago for say $50,000 (I’m just making up numbers), and that house is now worth 600,000. Would an “ad valorum” parcel tax be based on the amount they purchased the house for or it’s current value.
Someone will correct me if I say this wrong but Prop 13 capped increases in assessed value at 2% per year. However, when a property changes hands the assessed value becomes what the buyer paid for the property. So, in your example the current “worth” of the house is not the issue if it has never changed hands in the 30 years. The assessed value of the home purchased for $50,000 years ago after 30 years would be no more than about $88,800 (assuming I did my math correctly)
Neither.. it would be the LESSER of the original cost, compounded at 2 percent per year, or the current value.
I really wish we would stop talking about his as a $5 million deficit. If we consider the total pending costs for our gold plated benefits package, and the deferred maintenance of our infrastructure (roads, city owned buildings and parks) the number is considerably greater. How much greater is really the big question, but the information that Matt has supplied indicates that we are looking at something on the order of $10-20 million per year range at least. It is not a $5 Million deficit.
The second thing I wish is that we would stop trying to blame these problems on the CC that gave the excessive raises to the firefighters last decade. That certainly was a boneheaded move, but as Realchangz has pointed out, we had been excessively generous with our benefits package for at least a decade or two before that group ever came into office. Wasn’t it in fact the so called progressive majority councils during the mid to late ’90s that dramatically increased our pension obligations and put 4 firefighters on an engine?
I do not believe we can address these issues with taxation alone, and Frankly is right that there is no short-term solutions. Our discussion should not be focused on this year, it needs to be on the next 20-30 years because realistically that is how long it will take to get out of the hole we have dug for ourselves. We need a total package, including tax increases, expense cuts and economic development. Arguing about one piece or another is a stupid waste of time. We will need them all.
If the analysis determines that we need to bring in an additional $5 Million per year in taxes, then we need to determine the best combination of taxes that will allow us to reach that goal. Those specific taxes could well change over the 20-30 years, starting with sales and parcel taxes that are later phased out and replaced by income or business taxes. If in the end the options we think are best are only available to Charter Law cities, then we need to become a Charter Law city so that those tools are at our disposal.
If the total compensation of our employees is determined to be greater than we can afford, then we need to be finding ways to cut that compensation. No, I don’t think it is fair to blame the City employees, but we have to be honest with ourselves and if we can no longer afford the pay and benefits that they have enjoyed, then we absolutely have to cut it, even if that means that some will choose to leave to new positions or have to take a second job to make ends meet.
If the analysis says we need a 1000 acres of business development over the next 20 years to pay the bills, then finding the space and figuring out how we are going to accomplish the job is how we should be spending our time, not arguing about the difficulty of passing a Measure R vote.
A short-term solution won’t work, so we need to stop talking about it. We need a long-term package, one that allows us to meet all of our obligations both in years 1-5, and years 15-20. Don says that “politics is the art of the possible” so we need to figure out how we are going to make these changes possible, and stop wasting time proclaiming ‘that it will never happen.’
I agree with all Mark West says here.
I would add that it seems highly unfair to raise taxes on a majority of people in Davis who make less in total compensation than City employees make so that the total comp of City employees can keep going up. If we would just freeze total comp, the City could get by without a tax hike. The need for more taxes is almost entirely to pay City employees MORE than they make now in total comp. Most of the rest is to cover retirement benefits for retirees which the corrupt City Council gave away, forgetting that those benefits are unaffordable and they are unavailable to almost all of us who would pay for this tax increase.
Did you pay any attention at all to the City Managers presentation? If you did you wouldn’t make the ridiculous claims you make in your 11:11 pm post.
Again Rich – how do you balance the budget this year?
I am a little confused here. first, i’m confused with how people expect to balance the budget without taxes.
But here are some comments by Mark West that are mostly on point…
“I really wish we would stop talking about his as a $5 million deficit. If we consider the total pending costs for our gold plated benefits package, and the deferred maintenance of our infrastructure (roads, city owned buildings and parks) the number is considerably greater.”
Okay, but we still have to balance a given fiscal year’s budget which is a function of revenues minus expenditures… if you want to argue that we are still not see the full load of expenditures, fine, but we still need the revenues… short term, how do you get there without tax cuts.
“I do not believe we can address these issues with taxation alone, and Frankly is right that there is no short-term solutions.”
Agreed, but we do need to balance the books.
“We need a total package, including tax increases, expense cuts and economic development. Arguing about one piece or another is a stupid waste of time. We will need them all.”
Don’t disagree
“If the analysis determines that we need to bring in an additional $5 Million per year in taxes, then we need to determine the best combination of taxes that will allow us to reach that goal. Those specific taxes could well change over the 20-30 years, starting with sales and parcel taxes that are later phased out and replaced by income or business taxes. If in the end the options we think are best are only available to Charter Law cities, then we need to become a Charter Law city so that those tools are at our disposal.”
OK
“If the total compensation of our employees is determined to be greater than we can afford, then we need to be finding ways to cut that compensation.”
This is where we have a problem — we can’t cut compensation because we just agreed to new three year collective bargaining agreements.
So all we can do is cut services, lay people off, etc.
But at least you are getting us closer to the point.
As I stated DP, it is a 20-30 year problem. We can continue to cut expenditures, even if we cannot do it all in the first year. What I find interesting though is that you have completely ignored the economic development piece, which in my opinion is the most important. When you get on board with that aspect, maybe you too will be able to get ‘closer to the point.’
i agree with you on the economic development piece, the problem is i don’t see it paying dividends for five to ten years. that’s fine as a long term strategy, but not as a short-term one.