The specter of organized opposition figures to make what might have already been a tough task even more difficult. A two-thirds hurdle was a high barrier to climb, and in fact that was a good reason why the council, back in 2014, decided not to put a second revenue measure on the November ballot.
In June of 2014, the city was able to pass a half-cent sales tax with 58 percent. That was a comfortable victory in an election that required a mere 50 percent plus one to win. But it contained some signs of warning. First, it had no organized opposition. Second, while the threshold of majority vote allowed this to be a comfortable victory, it fell well short of what would be needed in a two-thirds vote.
That information was coupled with polling – something that the council did not do this time – which showed the various levels of a parcel tax failing to receive a two-thirds vote and one ($150) failing to reach a majority.
As a result the council at the time opted against a second revenue measure. The sales tax achieved one purpose – it closed the immediate $5 million structural deficit, but the reality is that the city is facing between an $8 and $16 million shortfall in revenue. That shortfall is manifested through deferred maintenance on infrastructure including roads, bike paths, and parks – and also on unfunded liabilities for retirement pensions and medical coverage.
Even with opposition, the Vanguard believes there is a solid case for the city to make for the taxpayers to pony up. The city has managed to cut – largely through attrition – its number of employees by
over 100. They have passed two rounds of MOUs with systemic reforms – although in the last round of MOUs the Vanguard believes the council made a mistake in granting cost-of -living increases – and for the most part the city is on better footing.
Second, the Vanguard believes that the council should deliver a strong message for cost containment for the foreseeable future. Some in the past, like Rich Rifkin, have suggested capping the rate of total compensation growth perhaps to two percent, which would do no worse than hold compensation in line with inflation. And it would automatically trigger cuts when revenue decreased or unexpected costs arise.
Without cost containment, we face the real danger that any revenue stream will be swamped by increased costs down the line. Cost containment also avoids a repeat of what happened in 2005 and to a lesser extent in 2015, when tax increases were followed by salary increases. In 2005, it was particularly egregious as the council passed a sales tax measure under the guise that it was needed to fund emergency services and parks, and then turned around and passed huge salary increases (36 percent for fire and 15-20 percent across the board).
Third, the shortfall represents between 15 and 25 percent of the city’s general fund budget. Given the level of deferred maintenance, the cuts that have already occurred, and the fact that a lot of the cost increases are out of our hands, it is unlikely we will make substantial progress by cuts alone.
The Vanguard still believes that the best strategy is a mixed one, where the city continues to look at ways to contain costs and looks toward economic development as a long term way to bridge the fund gap, but still looks at tax revenue as the immediate source to close that gap.
Without passing this tax measure, the city will have to continue to defer maintenance. That’s part of what makes this situation more tricky. The city doesn’t have an immediate budget gap. Some of the impacts of deferred maintenance may not be immediately evident. But down the line the costs for deferring maintenance could be substantial and measured in the millions.
The city is currently funding road maintenance at a rate of about $4 million a year – this was achieved through a lot of work on the part of the current council. But the actual amount we need is closer to $8 to $10 million, which means that, while we are fixing some roads, we are actually falling further behind with each passing year.
The council has other options at this point as well. Our preference is for a two-thirds required parcel tax. The advantage there is that the city would have to lay out exactly how the money would be spent, and, like the school district, they would appoint an oversight board to ensure that they are spending the revenue as required by law.
However, there is no reason that the council has to go that route. They could, during a council election year, put a majority ballot measure on, which would make it much more difficult for the opposition to defeat but it would also make it much more difficult for the voters and public to hold the council accountable.
Unlike a two-thirds special tax, a majority tax has to be general. It cannot have funds specifically devoted to a specific purpose.
So, ironically, a group of citizens opposing taxes for accountability reasons would make the tax less accountable.
The most likely outcome if the tax fails is that they would come back not in November for another parcel tax of two-thirds requirement, but rather a general tax (sales or Utility User Tax for example) that has only a majority requirement.
The downside then would be obvious – the costs of deferring maintenance would again go up over the next two years. We will continue to have the fund gap. And the next vote would almost assuredly be a majority vote, as the council will not want to risk losing another two-thirds vote.
In the meantime, the city’s infrastructure will continue to decline and services and infrastructure are likely to face cuts in the coming years.
It will be interesting to see how the council wishes to approach this. Our preference is still to go the two-thirds tax route, but in the face of organized opposition that would be a roll of the dice.
—David M. Greenwald reporting
David writes,
“the city looks toward economic development as a long term way to bridge the fund gap,”
Really? Other than as a logical conclusion when spending is beyond ones means, what does this statement really mean? What does it look lke? Why do you believe it is necessary, realistic or desirable? What will be the drivers of new investment – beyond more apartments? How could or should the university participate? Who will be the drivers of those investments? Why will they select Davis over neighboring communities? When should we expect the story and its discussion to begin appearing in commission and city council discussions?
It means that as a long term strategy the city’s current revenue scheme is not working and they have options to change that.
So now we’re being threatened if we don’t pass the 2/3’s parcel taxes?
Threatened by a columnist?
Words and tone can be threatening.
I don’t have a vote
You have a vote even though you don’t have to pay.
What I meant is that I don’t have a vote on council as to whether to put which tax measure on the ballot. Therefore I cannot make a threat (or at the very least cannot act on it).
The city of Davis has one spending problem… that is that we pay more for our city employee labor than we should based on a the labor market for comparable jobs. The primary overage in compensation is the cost of healthcare and the full cost of city employee retirement benefits.
But this is a common state-wide problem. Davis is not unique in that respect. We can lament the situation and seek to tweak what we can, but there is a more systemic issue that must be resolved before any real progress can be made. There are some SCOTUS cases coming up that might help in setting new legal precedent for governments to be able to change retirement benefits post hiring of employee. However, in my opinion, the issue really cannot be resolved until and unless we prevent government employees from unionization so that they 1 – stop being a permanent PAC for political candidates that then increase their member’s compensation; 2 – stop allowing them to collective bargain where they can export compensation increases from threat of strike. City employees would be plenty well served (I think better served) with professional HR… like 98% of the rest of the working world.
But while we hold our breath and turn blue waiting for something like this to happen, it is irrational to look toward city spending as the solution to our budget shortfalls.
The problem with Davis is that it lacks the commercial component when compared to all other comparable communities. Our sales per capital is 50% of the state average for all communities, and 1/3 of the level for places like Santa Cruz, Folsom and Palo Alto. The number of firms per capita is also significantly lower than the state average and these communities. Yes, some Davis people will scream about this claiming that they don’t want to be like Santa Cruz, Folsom and Palo Alto… but that is just a deflection from the point. Despite what some Davis residents might believe, the city is not more sophisticated in its vision and planning. We are not somehow more brilliant about these things. On the contrary, we are imbeciles by comparison to the sophistication that these other cities apply to their future vision that drives their city development plan. And if they have significantly higher sales per capital and firms per capita, then it is a clear indication that we are broken there.
Palo Alto has about the same population as Davis, is home to a world-class research university like Davis, but has a general fund budget that is almost 4 times the size of Davis’s ~$50M general fund budget. Davis residents need and want the same services that Palo Alto residents need and want. Where is the money to pay for those services to come from?
Previously there was work done to make the point that each 200 acres of commercial development, when fully populated, should derive another net $8-10 million in annual tax revenue to the city. Davis is 10 square miles. Palo Alto is 26 square miles. We could develop another 1000 peripheral acres and still be less than 12 square miles. That would conceivably add $40M per year to our measly $50M annual general fund. Think about how much that would help fund homeless solutions.
Jeff
“with professional HR… like 98% of the rest of the working world.”
This makes the ( unfounded in my opinion) assumption that the rest of the working world is adequately and effectively represented by professional HR alone. I would assert that with the number of companies willing to pay their workers less than subsistence wages ( Walmart) and or manipulate their hours so as to prevent having to provide benefits, this is simply not the case.
“that is just a deflection from the point”
No. It is not simply deflection. It is the expression of a related but separate point. In a conversation over the New Year weekend with an in state but not local developer, we arrived at an interesting observation. When he used the words “property value” he was referring only to the monetary value of the property. When I used the words property value” I was referring to not only the monetary value, but also the lifestyle value and meaning of community inherent in the use of the property. My usage was not a “deflection” from his point, but a more balanced interpretation of the value that a given property might have to an individual.
“We are not somehow more brilliant about these things. On the contrary, we are imbeciles by comparison to the sophistication “
I don’t believe that this has anything to do with intelligence. I think it has a great deal to do with a difference in values as noted in my weekend conversation.
“Think about how much that would help fund homeless solutions.”
I think it might have been more accurate to say “Think how much that could help fund homeless solutions.” There is no evidence that these additional funds would be used to aid to the homeless. There is even a local opinion which I do not share that we should not aid the homeless so as to not attract more. If such aide were to be directly tied to development, I would likely agree. However, I do not see this point as any more meaningful than was Councilmember Frerichs comment justifying Trackside ( luxury apartments with no affordable component) in part by citing his encounter with a homeless student.
“This makes the ( unfounded in my opinion) assumption that the rest of the working world is adequately and effectively represented by professional HR alone.”
This is a nonsensical challenge. It is plenty good enough otherwise that 98% of the working world would be using a different model. I don’t know why anyone with a reasoned mind and armed with experience and facts on the topic of employee management and advocacy would argue that employee unions are required because professional HR is inadequate.
The simple fact is that every industry or business that is unionized is plagued with too-high operating costs and has a an expense trajectory that is unsustainable. Education, healthcare, government. The US automakers had to be bailed out by the federal government. Union workers recently drove Hostess Corporation into the ground.
Unions formed primarily to protect workers from unfair business practices from the owners… not to be a wage and benefit extortion scheme. Today the book of labor laws and regulations is several feet thick and with armies of professional HR managers, and copious under-employed attorneys, employees are significantly well protected and have plenty of resources at hand to combat harm from unfair employment practices.
But even FDR, the President that really launched the growth of labor unions, opposed allowing government workers to unionize. He saw the problems that manifest today… corruption of the democratic political process that controls the purse as politicians and unions collude to keep scratching each other’s backs.
“I don’t know why anyone with a reasoned mind and armed with experience and facts on the topic of employee management and advocacy would argue that employee unions are required because professional HR is inadequate.”
I do not know anyone with reasoned mind who would argue that HR and employee unions perform the same functions and provide the same employee protections within an organization. And yes, I have as an assistant chief for a department of 70 + members worked closely with both HR with regard to non-unionized employees and with union reps with regard to unionized employees. The two are simply not the same, as I am sure you are aware.
I completely agree with this statement by Jeff: “The problem with Davis is that it lacks the commercial component when compared to all other comparable communities.”
David and Jeff
I also agree that this is a major, although not the only issue for Davis.
David,
Well then, why not stop the hand-wringing, tally up the required taxes to support the city and the school district, divide it up so that all the adults are participating equally, and put it on the ballot? I think that’s what the Council is advocating. What else are you gonna do?
I’m not understanding your comment. The handwringing has to do with the amount of taxes people are willing to support in a ballot measure. I would like to see the city put out a list of cuts to show the public the alternative if we end up not getting the needed revenue.
There is the false story that City Staff and the CC majority want the public to believe, that without the new taxes our services will have to be cut. It is this fear of austerity that is used to drive the incessant demand for greater and greater taxes.
My question for you David (and others), is the purpose of City government to provide job security for our roughly 550 (FTE) public employees or quality services for our roughly 70,000 residents? If we prioritize services for residents above job security for employees, we can provide the same services at a much lower long-term cost. We don’t have to continue on our current course, especially when that course is destroying the economic health of the City and community. We have alternatives, we just need a CC majority that has the will to support a City Manager who is capable of identifying and utilizing them.
David,
As if existing conditions (particularly of our roads, schools, homeless) – as observable with the human eye are insufficient…………
What more are you going to cut?
If there is no appetite to discuss “other, viable sources of new revenue” (and a higher sales tax certainly isn’t a source of new revenue), then let’s get on with the discussion so there everybody has an honest sense of what we’re talking about and what it will take to run the city now and into the future with no consequential new economic growth.
As to “job security” that is a bit of a red herring… the turnover of city staff is much higher than I’ve seen in many years… except for City Mgr, and perhaps some dept heads, today there is no unexpired MOU with any employee group… like the teachers have pointed out as their situation.
I agree that some changes/reductions in staffing could be appropriate (though the 550 FTE’s I’m very skeptical of, as I am your population estimate), but should be done, if appropriate, not by attrition, nor by a chainsaw… scalpel might be a useful tool…
Some positions could be out-sourced… whether that would result in real savings is a question… others would be outsourced as a real detriment to community… there is a value to “institutional knowledge” and to actually caring for the community rather than just “meeting specifications” of a contract for services… intangibles… but real…
I believe we need to find a “balance point” which would best be done by an evaluation of services/staffing as suggested by John Meyer’s report. It is, a bit, ‘rocket science’, but, at least, not ‘simplistic’. The advocacy for such a study would lead me to support a CC candidate, if they were open to whatever results might be obtained…
“What more are you going to cut?”
That’s my point
Robb Davis suggested just this sort of analysis but it didn’t happen. You cannot find the best ‘balance’ if you are unwilling to consider the opportunities.
We have already outsourced some services, including the regular maintenance of many of our parks which were outsourced to private business, and our water delivery, which was outsourced to a newly formed Joint Powers Authority with different standards of employee compensation and benefits. These aren’t new ideas, we just need to be willing to evaluate each service to determine if it is necessary or beneficial (to residents) to use City employees to provide it. That evaluation, however, needs to include all of the costs, including benefits, work rules, pensions, and retiree healthcare obligations, and not just the annual cost listed in the budget.
Yes, but only in the right hands. Bad surgeons are expensive.
Mark…
OK, if you want to go with loggers, fine.
Bring on the chainsaws…
Oh, and yes, I know Robb agreed with the Meyer report, as did I… the lack of ‘traction’ was elsewhere… and I do not understand it… the best of City staff also agreed with it… it scared the hell out of the mediocre/marginal staff…
Palo Alto is also outrageously expensive to live in. Davis is super cheap by comparison. For people concerned about housing cost, Palo Alto’s route is not one we want to travel.
That is a regional issue… all of the south bay has expensive housing.
For people concerned about housing costs, Davis’s route is not one we should want to travel.
Also applies to San Luis Obispo… per sq ft, several %-age points higher than Davis, for ‘for sale’ units…
Yes, all of the south bay has expensive housing. Lots of high salary tech jobs have driven the prices up and created a shortage — something that is already affecting us now. But even for the Bay Area, Palo Alto is particularly high.
First point… what do you mean by “unions”? In Davis only the FF’s have a true “union”, as it is generally defined. Most employees were forced into “associations” because the City did not want to deal with individuals. Fact.
By contrast, DJUSD folk are heavily “unionized”, particularly teachers. Fact (and associated with the ‘mother-ship’ CTA where some of their mandatory dues go to… also, fact).
Second point… name one example in the last 30 years where any Davis employee group, other than FF’s, as an organization, or coordinated by an organization, contributed any money or made any endorsement of any local candidate for any local office? There wasn’t. Fact.
Third point… name one time in the last 50 years where any Davis city employee group threatened a ‘strike’, ‘slow-down’, or other ‘job action’, or carried one out (except, arguably, for FF’s). There were no such threats or actions except as I noted. Fact.
Vent on, McDuff, but try to align with facts, when you can… builds credibility…
Association, unions… all the same tiger with slightly different stripes.
The Davis city employee organizations have funded plenty of campaigns… and more importantly have provided a lot of free campaign labor (goes under the radar for the dollar value of the contribution). You might go back 30-years (but I would challenge you to recount the Fire Department Union money spent more recently) and note that the problems caused are still with us… including a guy named Dirk and his friends on the council that made sure our last sales tax increase was given to the city employees.
I believe the city council should move to create joint powers agreements for every department they can… partnering with other Yolo County cities. If we cannot break the collective and the associated democratic process political corruption, we should be outsourcing as much as possible.
However, as I pointed out, this isn’t just a Davis problem… it is statewide… and really nation-wide.
No employee of government should be allowed to form a collective bargaining entity, because it creates a situation where the citizens who are members of the bargaining entity have greater power over the government purse than do other citizens.
Suggest that the Vanguard clarify this statement, to show the amount of existing and expected funding for city road repairs that’s actually received from the state, vs. the city.
Deferred maintenance. This phrase pops up repeatedly in this article and I would like to express my perspective from the medical point of view.
In medicine, it is common to read in a provider’s notes the phrase “exam deferred”. There are two different meanings of the word “deferred”. An example of the legitimate use of “deferred” would be, “I have not done this exam because it cannot be adequately completed at this time, or because I do not have the expertise to do the exam adequately”. In these cases, there is the anticipation that the exam will be scheduled at a time when it can be completed or the appropriate referral has been arranged. What it does not mean is that the exam is simply being ignored. The illegitimate, but common use of the word “deferred”, is “I didn’t do it”. This has major significance since the former usage means that the need for the exam is acknowledged, it has been prioritized, and definite steps have been made to accomplish the deferred action. The second usage is one of neglect and can be dangerous to the patient.
I am concerned that in Davis, both City Councils and the public have fallen into the false reassurance that can be provided by the phrase deferred maintenance, and that we may face more severe consequences than would be the case if we were fully cognizant of the limitations of that term every time we use it. ( Intended as a general comment, not aimed at you David, since I know that you are fully aware of this issue.)
So what do you mean by the last paragraph?
I take deferred maintenance to mean we have road work that needs to be done, we don’t have money to pay for it, so we delay. There is a cost to that delay. The research shows that costs for road repairs increase exponentially as the conditions deteriorate so a simple overly may be relatively inexpensive to repair, but a total repair might be 9 times higher and that does not take into account inflation.
“Deferred maintenance”, as used by city staff (and CC?) has meant, “we don’t have the bucks now, but if we did, this is our professional opinion of what we should be doing to keep the ship afloat”… not “enhancements”, rather, maintenance (actual or preventative), to avoid degradation/service interruptions…
CC’s generally did not want to deal with ‘inconvenient truths’, so staff had to phrase it as DM, to keep CC and public placated. Not staff’s “choice”, per se…
My intent was to point out in a slightly different way what you have said many times. This should not be a matter of out of sight, out of mind. This is a mindset that I think is too easy to adopt when that somewhat reassuring word “deferred” is used. It tends to convey the message that something is being done which may, or may not be the case.
Roberta
“For people concerned about housing cost, Palo Alto’s route is not one we want to travel.”
I agree completely, especially in view of my recent real estate adventures competing with Bay Area “refugees” flush with cash and seeking a less expensive lifestyle in Davis and Sacramento.
Don’t compete… collaborate?
“Don’t compete… collaborate?
Sometimes that is possible, sometimes not. With one landlord, I was able to make a collaborative bargain that allowed my daughter and her partner to rent an apartment they wanted. Sometimes it is not. I see collaboration as an aspirational goal as I feel that it works out far better in most instances. However, I do live in the real world and know that sometimes it is simply not feasible. That does not mean that I will not push for a collaborative solution first and only resort to competition when others are not willing to try.
Well, in my opinion, CA should make tax measures 3/5ths vote to pass… not 50%, not 66.66667%. 60%.
That’s how most municipalities do business… for ordinances, including General Plan amendments, etc.
Paul Gann (of Prop 13 fame – the Jarvis/Gann initiative) hated government… (see also Prop 4 and Prop 98)…
Met Jarvis… heard him speak…
Gann found him to be a ‘useful idiot’…
Jarvis was very likeable, well-spoken, and projected like a ‘dear uncle’ in persona (almost a Walter Cronkite). But, as a fellow conservative, Gann recruited him. Had it not been for Jarvis, Prop 13 well may not have passed.
Prop 13 set up the 67% rule, pretty much…
I’d like to see 60% as the threshold for both general and special taxes… but we’ll not be there anytime soon… one of the issues is that those who vote for taxes, are not necessarily those who have to put their money where their votes are. Representation without taxation. Backwards. Getting “theirs” by forcing others to pay for it…
Right now, unlike David, I favor a general tax, but I’d still include an oversight group, if they are honest/impartial. No reason not to choose to do so.
Ok, I’ll bite. Why 60 % as opposed to 50 + 1, or 55% ?
Thought I explained it. Apparently not.
5 members of a City Council is typical. 5 members of a school board is typical.
To pass an ordinance, or a budget, you need a 3 vote affirmation. 3/5 = .60 = 60%.
Let me know if further explanation is necessary.
“5 members of a City Council is typical. 5 members of a school board is typical.
To pass an ordinance, or a budget, you need a 3 vote affirmation. 3/5 = .60 = 60%.”
A recent university study showed that 8 out of 24 Americans cannot reduce a fraction.
https://media.giphy.com/media/1gArwncRlXac8GIhNy8/giphy.gif
I am sorry to be obtuse. I understood the point that it is common practice. That is not the same thing as best practice. I was hoping you would explain why you think it is a best practice, not reiterate its commonality.
Well, I guess best practice would be 100%… true collaboration… no dissenters… everyone “on board”…
50%+1 make some sense, particularly if you are the ‘one’… a little better than a coin flip…
67% came from someone who figured it would never get to that point on taxes.
What number would you posit? For general taxes? for special taxes? Your justification(s)?
Tia, if you hoped I’d explain, please feel free to model the behavior you seek from me… only fair?
I did not see the connection either between the 60% figure for popular votes and the 3/5ths voting rule of the city council, and I’m pretty good at reducing fractions. Thank you, Howard, for the clarification.
No problemo…
It also “works” as a compromise between the 50% +1 and the 67%…
I seem to recall seeing where the legislature has either approved, or will put on the ballot, a 60% number for school bonds… was scanning the paper, looking for Forum, and Sudoku…
Howard
“What number would you posit? For general taxes? for special taxes? Your justification(s)?
“Tia, if you hoped I’d explain, please feel free to model the behavior you seek from me… only fair?”
It has nothing to do with fair. You made the assertion so I asked on what criteria you came to that opinion. I have absolutely no idea what percentage is best which is why I offered no opinion at all but merely inquired.
I am not sure why you seem to feel that every question I ask must have some alternative agenda behind it. You have stated as much in the past. But usually, a question is simply that, a request for information. I have no difficulty stating clearly when I am not in agreement.
Fine… you appeared to not just ask a question, but to question my reasoning. I accept that I was in error.
Yet, I answered your questions… am familiar with one-way streets.