Back in February, about a month ago, I came out against the sales tax measure in June. There were a number of reasons I stated for doing so that I still believe are true.
First, the process was problematic. Last June, the Davis City Council was told by City Manager Steve Pinkerton of the impending and growing structural deficits. At that time, there was brief discussion about the need to pursue a tax measure, but for reasons that still do not make a lot of sense, the council really did not start this discussion in earnest until December.
The timeline for placing it on the ballot meant that when the council approved the sales tax on February 11 that was the last possible date to act and still get it on the ballot. Due to state regulations on taxes, if they missed that timeline, they would have to wait until June of 2016 to proceed.
As we have discussed, the council made after midnight decisions on the “ask” – how much of a sales tax rate we would put on the ballot – as well as the fact that there would not be an advisory measure on the ballot to let the voters express the purpose of the tax increase.
How sloppy was this process? The ballot language itself was practically unintelligible and after a number of complaints, the council this past week had to spend time to clean up the ballot language.
My bigger concern is not with the sloppiness of the process but the mechanics of it. The council reduced the tax rate from three-quarters to a half cent. By going with a revenue measure that only raises about $3.6 million of the needed $5.1 million (which we had all agreed was actually far too low), the council has once again pushed off the discussion and the placement of funds needed for road repair for at least six more months.
This reduces the amount of money going to roads from about $2.5 million to $1 million. Yet again, maintenance on roads are deferred.
The council believes it will put a parcel tax on the ballot in November to cover those infrastructure needs. The council has – as Councilmember Lucas Frerichs pointed out – not done any polling. They somehow believe they can get a revenue measure through with a two-thirds vote requirement after raising the sales tax and after raising water rates.
I have serious concerns as to whether the council is going to be able to get two tax measures passed. At least had they left the tax rate at 0.75 percent, we would know we will have annually $2.5 million for roads. That may not really fix the problem, but at least it is sufficient resources to prevent the problem from getting worse.
During the run-up to the tax measure, I made it very clear that my support for the tax measure would heavily depend on the degree to which the council could commit that new revenue generated by the sales tax would go to structural shortfalls and deferred maintenance, rather than to increased employee compensation.
There is a history here, as I have recounted many times – in 2004 the council passed a half-cent sales tax that was supposed to keep parks open and prevent the city from having to lay off city employees. Somehow, though, the council turned around in 2005 and gave away the store. The firefighters got a 36% salary increase and other bargaining units got 15 to 18%.
The city has limitations on what they can do with a general use tax. The city cannot bind itself to spend the money a certain way, because that would require that the vote be two-thirds.
I pushed for the council to reconsider their approach. They had until March 11 to pull the sales tax measure off the ballot. I would have preferred their putting it all into a parcel tax where every cent of money could have explicitly been assigned, all the money they needed could have been collected, and they only had to go to the well once.
I got no traction on that and considerable push back. I can state unequivocally that there is no appetite in City Hall for additional cuts that would be required to postpone the tax from June to November.
In a few weeks, we are going to see the list of cuts if the sales tax measure does not pass. It will be ugly. There will be at that point little discussion and no way to avoid huge cuts to services.
As I analyze the situation now, I realize that the perfect solution cannot become the enemy of the lesser of the evils. I thought we could get a better tax measure if we waited and I still have concerns that two taxes on the ballot will mean that we do not deal with the very troubling problem of roads down the road.
However, as I analyze the situation in an all-cuts scenario, more staff cuts will mean serious reductions in services – especially to parks and city events. Those may not be core services, but they are part of what make Davis what it is.
I would rather keep the current level of service and take a chance that we can get a second tax passed in November.
My problem was never the sales tax increase per se. We are still talking a level of tax increase that isn’t going to make much difference to people’s bottom line. You are talking about an extra half cent on the dollar, an extra five cents on the ten dollars, 50 cents on the $100, $5 on the $1000 and $50 on the $10,000. Even if you spent $1 million on taxable products in Davis, you are still only talking about $5000 in additional taxes, you’re just not going to notice this.
My worry remains the same, however, in that putting two taxes on the ballot may well mean that we won’t deal with the roads issue down the line.
The roads are a bad issue, but as I noted earlier this week, roads can continue to deteriorate in Davis for another five to seven years before they get to the point where all of the roads look like Olive Drive.
At that point, we just end up like your typical east coast city where only the major arterials get fixed. We can survive with bad roads. However, that is not really the ideal scenario. If we wait too long to fix them we will never, ever catch up.
We will end up with most of the town looking like Olive Drive. At the same time, we have plenty of folks driving on Olive Drive. This isn’t a world-ending scenario, it will just mean that the car repair shops will do quite well.
The bottom line, given what most people in this community want to see, is we need to bite the bullet and put through the sales tax. As some have suggested to me, the $3.6 million revenue is unlikely to turn into employee compensation increases as it was a decade ago.
Unlike then, we face too large a shortfall of money in the short term and, in the longer term, the sales tax measure is likely to expire.
So, while I still do not like the process – the lack of early discussion and civic engagement with the voters, I plan to hold my nose this June and vote for this emergency tax measure.
—David M. Greenwald reporting
No new news here, I think anyone who reads the V already knew you have been backtracking from your ealrlier stance.
I suppose this is as good a place as any to note that the city staff has never provided the sales tax data that I requested in 2010, 2012, and again this year. The most recent promises, if I recall, were from Rob White. But I guess they don’t want to provide the data for some reason. I wonder why.
What type of data were you seeking? As I understand it, sales tax data regarding any particular business (or class of business, if someone could reasonably ascertain a particular business, based on its class) is not permitted to be released, and as it was explained to me, for good reason. Let’s say there are two nurseries in town. Owner A could figure out the gross sales of owner B, and use that for business purposes., to the detriment of Owner B. If that’s OK with you, perhaps you are willing to post most, if not all your books on the internet, to share with the public and any actual or potential competitors.
As noted, I have requested this repeatedly, and been assured that it would be available. I was requesting aggregate data. The Board of Equalization uses retail codes that are general enough that it would not identify specific businesses. More to the point, if they were concerned about what you’re saying here, they shouldn’t have promised repeatedly that the data would be available.
My most recent concern was that staff (Rob White in the instance I recall) used a single data point of one quarter being lower than the same quarter previous year — in arguing on behalf of the need for broadening our economic base. So my question was: what is the trend in sales tax receipts? I looked through various budget reports, and couldn’t find the information. We need to know, if the voters are being asked to increase the sales tax, what is the current trend in income from taxable sales. Is it tracking with the state as the economy recovers? If it is, then Davis may not be in as dire a fiscal situation short-term as the budget suggests. Pinkerton and staff were using rather conservative sales tax projections (which is good — you want them to be conservative). But without the data, broken down by category, we can’t make an intelligent decision about the sales tax measure. I asked for that information before the council acted on the sales tax measure. If the council didn’t have the data about our current sales tax revenues and reasonable projections, they were making that decision without being fully informed.
It leads me to the inescapable conclusion that staff does not want you or me or the council to have the actual figures. And I don’t like coming to that conclusion. I have thought they were overworked and gave this little priority. I prefer not to assign ulterior motives to the absence of information. But it’s a glaring trend.
I don’t know how anyone can say we need the sales tax increase if they don’t know how much money sales tax is generating, in what categories, and what the near-term future is likely to hold in that regard.
Thank you for clarifying what information you seek. I absolutely agree that you should not have been told that the information would be given, if the City had no intent to do so. That is definitely a problem.
Two suggestions… remember who deceived you, and don’t trust them again. Try to get the info directly from the State Board.
Is there a reason why they would not want us to have these numbers?
I get the impression that staff has bitten off more than they can chew. Pinkerton told me in January that he would get that data to me, I think he meant it.
I’m pretty sure Paul Navazio meant it when he told me that, too.
They promised me this data, I’ll follow up
“We are still talking a level of tax increase that isn’t going to make much difference to people’s bottom line. You are talking about an extra half cent on the dollar, an extra five cent on the ten dollars, 50 cent on the $100, $5 on the $1000 and $50 on the $10,000.”
I always laugh when new taxes or fees are presented this way, that it’s really not going to hurt anyone or
“it’s only a latte a week”. Well all of these it “isn’t going to make much difference to people’s bottom line” taxes and fees add up to the point where Californians pay the highest taxes in the nation.
http://portal.kiplinger.com/slideshow/taxes/T054-S001-10-least-tax-friendly-states-in-the-u-s/index.html
It’s still a small impact on people’s bottom line.
I’m sure almost everytime there’s a tax increase it’s presented as a small impact. All those small impacts eventually turn into one big impact on one’s wallet.
What I have never seen from you GI is what you believe is the “right amount” for us to be taxed.
If you have not that out, how do you know whether we are being taxed too much, too little, or just the right amount ?
For example, what do you think California’s ranking for taxation “should be” amongst the states. You don’t seem to like being at the top. What would your goal be ? The bottom ? The half way mark ? What is it worth to live in California vs some other location given the current tax status ?
Ms. Will, I certainly don’t like being the highest taxed, do you? That also tells me that if other states can function with less taxation per citizen what are we doing wrong in California?
GI
I honestly don’t know whether I like being at the highest or not. I have never calculated what I consider the “right” amount of tax.
It may be that we need to pay more to maintain the lifestyle that I have decided is desirable for me. I have lived in four states and in many different communities.
Davis is by far my favorite and I am willing to pay much more than I currently do to continue living here. Do these other states that you are citing face all the same challenges and have all the same amenities that we enjoy ? I don’t know the answer, but you seem to have decided upon it so I am asking you how you arrived at your decision.
My point is that I cannot see how we can come to a conclusion about taxation, good, bad, or indifferent without some kind of assessment of what we think is the right amount. That is the question that I am putting to you since you post negatively with regard to taxation on a regular basis.
Tia wrote:
> It may be that we need to pay more to maintain the
> lifestyle that I have decided is desirable for me.
We are actually paying more so the staff can get more in pay and benefits (as Rich has written about).
How would your “lifestyle” be any different if all the firefighters got paid ~25% less (what the UCD firefighters are paid and more than ~80% of Americans make).
P.S. And is your “lifestyle” and different now that the city has given ~$1 million to their politically connected friends to “study” public power?
This statement is ambiguous, Yes we pay more in taxes so that we can pay staff. We could cut their salaries by 50% and still say by not cutting more we are paying them more. Or we could give them a 50% increase in pay and say we are saving money because we did not give them more.
I’ve asked this question below but I’ll post it again here. Did contracts negotiations result in an increase in staff take home pay?
MICHELLE: “Did contracts negotiations result in an increase in staff take home pay?”
Yes. But only by about 6% over 3 years. The thing you need to understand–without making personal attacks against me for stating the facts–is that ‘take home pay’ is only one part of total employee compensation.
The City of Davis also pays its employees with a very generous medical benefit now worth up to about $23,000 per year per employee. This benefit increased in cost this year by 11.1% over last year. City of Davis revenues are projected to increase by less than 2%. Therein lies the problem.
The City of Davis also pays its employees with a very generous post-retirement medical benefit. In present value terms, that OPEB can be worth more than one-half million dollars. Note that it not only covers the retiree, it covers the retiree’s spouse and his dependents (with no limit on how many dependents) up to age 26. So imagine a 50 year old retiree who lives to age 93. He will get OPEB for 43 years. His wife, who is 35 when he retires, is also covered as long as her husband lives. And say they have 4 kids, aged 1, 3, 5 and 7. Davis will pay for their medical care for 25, 23, 21 and 19 years respectively. This benefit increased in cost this year by 11.1% over last year for current retirees. It increased even more for future retirees, because actuaries recalculated life expectancy data. City of Davis revenues are projected to increase by less than 2%. Therein lies the problem.
The City of Davis also pays its employees with a very generous pension benefit. For the $100,000 per year police officer or firefighter, it costs the taxpayers now roughly $25,000 (police) and $28,000 (fire) this year. Those numbers have been going up rapidly. We now expect by 2020 the public safety funding for the City to cost 55% of salary. In other words, our costs will double. It’s not quite as bad for non-safety, but the costs are going up there even more rapidly. City of Davis revenues are projected to increase by less than 2% this year. Therein lies the problem.
One more thing: I see you are a leader in the Robb Davis for City Council campaign. I know, based on speaking with Robb and many times exchanging emails with him, that your views on labor contracts are not his views, and it is his views which count, in terms of his campaign. That said, since you seem to hate me–or at least you are happy to defame me, without facts, and unwilling to apologize for your vitriolic attacks against me–I suggest you discuss what I have explained to you with Robb. Hopefully, he can screw your head on straight.
Rich, I found your statement above somewhat surprising, since Michelle very clearly and openly has apologized. The link to her apology is https://davisvanguard.org/vanguard-analysis-should-voters-trust-the-council-with-more-money/#comment-219510 and the text of that apology is
Thanks, Matt. I never saw that.
My partial excuse is that I rode 60 miles on my bike yesterday with a group of old guys who were much faster and better riders than I am. It wore me into the ground. They stopped and waited for me to catch up many times, but they were just too darned fast. I mistakenly thought the average pace was supposed to be 16-18 mph. But they had no problem averaging 21 riding in a crosswind and 25-27 with a tailwind. Uphill (on Cantelow Road), they were awesome. I was the opposite. And compared to most guys, I am not terrible.
Michelle wrote:
> I’ve asked this question below but I’ll post
> it again here. Did contracts negotiations
> result in an increase in staff take home pay?
And I’ve asked: How many people can retire at 50 with a pension and health care for life?
I just read that since Vallejo went BK the “average” pension is over $100K (see below) and will probably go BK again. Is it “fair” (can you say “regressive tax”) the many people in Davis trying to make ends meet pay more so many that work in public safety in Davis can retire at 50 and get paid $100K while they relax (or make even more working another job) and the rest of Davis workers can retire when they are a little older making a little less.
http://money.cnn.com/2014/03/10/pf/vallejo-pensions/
My question is a relative one, after the contract negations are employees bringing home more money, are the paying more into their retirement accounts, has the cafeteria medical insurance buy out amount they receive gone up or down?
Was this one ever answered by anyone? It total compensation more or less now than before the contract negotiations?
How to Become a (Public Pension) Millionaire
In five states, an average full-career retiree receives a retirement income higher than his final salary.
Detroit and San Bernardino and Stockton, Calif. are in bankruptcy, and across the country the costs of maintaining pensions for city and state employees more than doubled to nearly $84 billion in 2011 from 2002. Yet the American Federation of State, County and Municipal Employees (Afscme) declares that public pensions are “modest,” noting that its average member “receives a pension of approximately $19,000 per year after a career of public service.”
The facts don’t agree. Data compiled from all state pensions show that, for employees who spend a career in state government, generous pensions put retired public workers among the highest earners in their state.
It is true that average public-pension benefits rarely seem extravagant. But these averages are reduced by two groups: older employees who retired many years ago and whose benefits are far less than those of an employee retiring today; and by short-term workers who often receive tiny pensions but almost surely have retirement savings from another job.
http://online.wsj.com/news/articles/SB10001424052702304360704579415173512940990?KEYWORDS=pensions&mg=reno64-wsj
Mayor Drops Bid to Put Pensions on California Ballot
San Jose’s Chuck Reed Retreats After Losing Legal Challenge to the Proposition’s Wording
The mayor of San Jose, Calif., said on Friday that a group he is leading is ending its effort to place a measure on the California ballot this year that would give jurisdictions the power to renegotiate pension benefits with employees in the public sector.
The efforts led by Mayor Chuck Reed, a Democrat, were the subject of a Wall Street Journal story on March 11.
Mr. Reed made the announcement after a state superior court judge in Sacramento on Friday ruled against him and some other local officials in a suit that they filed in February, which challenged the official wording of the proposed initiative used by Attorney General Kamala Harris.
The suit contends that the Democratic attorney general used “false and misleading words and phrases” in a title and summary for the measure that argue for its defeat.
Pending the litigation, Mr. Reed’s group had put on hold a drive to gather the 807,000 voter signatures that would be needed by mid-April to qualify the measure for the 2014 ballot. He said Friday that there now wasn’t enough time to gather those signatures.
http://online.wsj.com/news/articles/SB10001424052702303546204579439710608127186?KEYWORDS=pensions&mg=reno64-wsj
Frankly, our city has important fiscal issues to address. I would like people to have a clear understanding of how their tax dollars are being spent. While this is an interesting article and brings up legitimate concerns, I am seeking answers to questions about how are city has recently made decisions regarding employee compensations packages.
The focus on whether take-home pay changed is misguided. You need to look at the whole package. If take home pay went down $100 a month but employees gained an increase in paid time off with a value of $200 a month, then their compensation package increased. The same is true if, instead of extra paid time off, they now have medical benefits worth an extra $200 a month. Someone actually pays for that, so their compensation package has increased. Employees in the private sector (and in many other public employment jobs) – including many citizens of Davis who are paying for these increased compensation packages for Davis employees – are not seeing these kinds of increases in their own income.
Rich, you also mislead in your example of the retired worker with a spouse and 4 children. The premium paid is the same for a spouse and one, or a spouse and 30. An inconvenient truth?
HP, I think you are wrong. I believe the City pays for its OPEB based on actual costs. That is why it is twice as expensive to cover the OPEB for someone 65+ than under 65.
More importantly, I have never once tried to mislead anyone. Your accusing me of doing so is just as wrong as it is when Michelle Millet does so. I may be wrong on something I have said. However, I have never intentionally said anything wrong or ever shaded what I have said in order to mislead. My intentions are honorable. Sadly, the same cannot be said for those who accuse, and even worse for those who accuse while hiding behind a fake name.
Hold on a minute… if the medical insurance rates increased 11 + percent, didn’t half of that come out of the employees’ paychecks? That’s how I recall the most recent contracts provided for. Did that not happen, or are you ignoring some facts to make your point, Mr Rifkin?
Even if that is correct, so what? Those of us who pay for our own health insurance (don’t get it from our employers) pay for 100% of the increases in premiums rates. If city employees have to pay for part of the premium increase that is the same as prices going up in the supermarket.
Ok.. my main point was that Mr Rifkin mislead. If your point is that employees should pay for 100% of medical [or at least 100% of any cost increases], no matter what, fine. I may disagree, but will not argue.
I have an adult child, whose private sector employer pays for employee only, but thus far picks up premium increases. Is that too generous?
You are correct. The increase in medical after the first 3% is shared 50-50 (though I am not sure if that applies to DCEA and fire). Still, at 5.5%, that is more than double the new revenues coming into the city on a percentage basis.
HP, I think you are wrong. I believe the City pays for its OPEB based on actual costs. That is why it is twice as expensive to cover the OPEB for someone 65+ than under 65.
I simply so not believe it cost the city more to pay the full cost of a 65 year old’s Medicare supplement which is 20% than it does to pay 100% of a 64 year old’s medical insurance. Our cost at age 65 should go down at least 80% and given the cost of Medicare supplemental insurance, it should be more than 80%.
Rich, I’m going to play a bit of devil’s advocate with your dialogue with Michelle. Just as you criticize her “take-home pay” assessment as too simplistic, it can be reasonably argued that your sliding scale valuation of the medical benefit is too simplistic as well. Public sector and private sector employees (and where applicable their bargaining units) have always valued healthcare in terms of what they receive, not what their employer has to pay. It is very much like an outsourcing agreement, where a “level of service” was long ago defined, and employers simply provided that level of service.
The DBO contract between CH2MHill and the JPA is the same kind of contract. If the costs for CH2MHill go up, that is a business risk that the “level of service” contract places squarely on their fiscal shoulders.
With that said, if the JPA decides that it desires a higher level of service than is defined in the DBO contract, then CH2MHill will set a price for that incremental addition, and the JPA will then have to decide if it really wants/needs that increased level of service at the price quoted.
Unless I have missed something, the City employees have not requested any incremental level of service in the healthcare they receive. On that basis, how is it that you can argue that the level of their healthcare benefits have increased?
Here too you are confusing the benefit, which for the employees is continuing at the same “level of service” and the cost of providing the contractually defined “level of service.”
That contractual reality doesn’t change the impact of the increased costs on the fiscal health of the City, but increased cost for the City does not mean increased value for the employees.
Indeed, therein lies the problem for the City, but again you are confusing costs with value. The value of the pension benefit has not gone up. it has stayed level.
Matt-I’m not making claims, I don’t know enough about the situation to do so, I’m questioning claims to gain a better understanding of the situation. As I’ve repeated many times, I want the public to make decisions based on an accurate assessment of the city financial situation, I hope others share this goal, regardless of their own positions.
Understood
SouthofDavis
My life style would probably not be any different based on this study. But one of my children has expressed an interest in coming back to Davis to live and I can foresee how moving to different model of energy might translate into improvements in his and his children’s lifestyles.
If it were not for the fact they the roads are going to get a lot more expensive to fix the longer we wait to do so, I’d say, besides main ones, put fixing them on the bottom of our to do list. Given the increases cost associates with waiting I’m not sure this a fiscally wise decision.
Kicking the can down the “road” is not a fiscally good idea. You are correct.
That was a point I had intended to make.
Just reiterating it. If the cost weren’t going grow exponentially higher so quickly I’d say let all the roads get as bad as Olive Drive, or worse, before we spend money to fix them.
Please, Olive Drive is a ‘special case’, an outlyer.
Just using it as an example to make a larger point.
Can someone explain why Olive Drive is a special case? I know PGE replaced gas lines for what seemed like most of last year but I don’t recall the road being in great condition prior to that.
I’m not really familiar with the road conditions on Olive Drive. I can say that Cowell between Drummond and Pole Line have some pretty big pot hole that I regularly avoid. Not sure how it compares to Olive conditions.
Olive Drive is the old “Lincoln Highway” (Route 40) built about a century ago. Modern attempts to ‘maintain’ it were AC overlays of PCC pavement. Not effective due to shifts in the PCC (Portland Cement Concrete) slabs.
The only true way to improve Olive Drive is to completely tear it out and start over. VERY expensive, particularly for a low volume road.