We have watched over the years the ebb and flow about the concern of the budget. In fact, the budget discourse may be some of the most telling information about the direction coming out of City Hall.
In the 2008 election, with Don Saylor and Stephen Souza seeking re-election, they pumped home the point that the city had “a balanced budget with a 15 percent reserve.” A technically true comment, however, it ignored the large and growing unfunded liability and what was even then a growing list of unmet needs. Then the Great Recession hit a few months later.
From 2009-10, the council make incremental changes, but mostly it attempted to get through the revenue downturn of the recession by utilizing attrition as well as furloughs. While reformers were pushing for deep changes to pensions, the council likened the city budget to a large ship that has to be turned slowly.
In 2010-11, with a new council in place led by Mayor Joe Krovoza and Mayor Pro Tem Rochelle Swanson, there was a much more aggressive focus on pension reform, figuring out the exact needs for roads, and reforming things like the fire department. The most aggressive changes came in the form of the 2012-13 MOUs.
However, even as late as 2014, the city faced as much as a $5 to $6 million structural deficit. The city pushed through a half cent sales tax, but failed to put a follow up parcel tax on the ballot for that fall, which would have funded infrastructure needs – especially road repairs.
The year 2014, however, saw Joe Krovoza replaced as mayor by Dan Wolk – and a change in focus. In late December 2015, Mayor Wolk presented “The Davis Renaissance.”
In it he declared that “our budget is balanced and resilient.” He explained, “Due to improved revenues and cost-cutting efforts, our budget is balanced with a healthy 15-percent reserve. Better yet, it is a fiscally resilient one in that we are paying what we need to be for our pension and retiree health obligations and are making substantial investments in our infrastructure.”
His conclusion was “there are still long-term challenges. But we are doing very well.”
A few months later, Robb Davis would take over as mayor in July 2016, and he disagreed with Dan Wolk. In a response column, he wrote: “Dan is correct: we are paying what we need to on retiree medical and pensions, but the costs of these continue to grow more quickly than revenue growth. He is also right that there ARE long-term challenges. But they are not just long-term. They are here now.”
Consultant Bob Leland was brought in and determined that the city was facing a long-term $7.8 million annual shortfall.
As Robb Davis put it: “City staff demonstrated that we are under spending on critical infrastructure and programs by over $10 million on an annual (ongoing) basis. That is $10 million every year. This is for things we already have (not new things), including bike paths, streets, sidewalks, park structures, pools, tennis courts, traffic signals, our urban forest, playgrounds, irrigation systems and city building maintenance.”
What is interesting is that the last five mayors in Davis have gone on to leave the council: Ruth Asmundson 2009-10, Don Saylor 2010 (before resigning to become County Supervisor), Joe Krovoza (2011-14), Dan Wolk (2014-16), and Robb Davis (2016-18). That has led to a lot of change in terms of the message coming out of the city.
One question is about the focus of the city for the next few years – the need to renew the sales tax, the need to possibly pass a parcel tax for roads at some point (probably 2022), and the need for economic development – what would be emphasized.
The reality is that the picture painted by Robb Davis and Bob Leland remains. Last year (2018), voters voted down a parcel tax for road maintenance, despite needs that remain between $6 million to $16 million annually over the next 20 years.
The city continues to estimate that there is an ongoing deficit of $8 to $10 million for city needs, including infrastructure.
It is not just roads: bike paths, facilities, parks, parking lots, traffic and more. The estimated funding gap over the next 20 years is $224.4 million.
Comments from council on Tuesday:
Lucas Frerichs: “It’s not a particularly sexy budget, but it’s a solid budget.”
Mayor Brett Lee: “These budget investments enable the city to use our existing resources more efficiently and enhance the Davis community’s assets. Our overarching goal is to continue to provide excellent city services with transparency and innovation.”
“I think this is a prudent budget that I’m happy to vote for,” said Councilmember Dan Carson. “It does address council priorities — additional funding to fix our streets and roads and bike paths…”
He added that “we’re being very careful and responsible, not making commitments beyond what we can handle.”
The press release from the city focused on smaller items – funding for public safety staffing, police officer recruitment funding, cannabis revenue and grants.
It also notes, “Over $7.6 million in projects related to streets and roads, with approximately $6 million in state and local funding allocated for pavement maintenance alone.”
But reading between the lines, the $6 million for pavement rehabilitation and maintenance drops back to $3 million for 2020-21.
The city needs the voters to understand the precarious nature of its budget in order to support things like the sales tax renewal in 2020, a possible economic development project, and a potential 2022 parcel tax for roads.
My complaint is that the budget largely treads water here – which is understandable given that there are no real new revenue sources except for cannabis. But they fail to lay the groundwork for the coming asks.
Dan Carson noted in his comments on Tuesday that the two-year budget “assumes renewal of our Measure O sales tax.” He also acknowledged: “We need to start our communication process with our citizens to make sure they understand the stakes there.”
My problem is that the budget discussion was a good opportunity to do that, however, the message coming out of City Hall with their press release and the news coverage was one that was overwhelmingly positive.
That will serve the incumbent councilmembers seeking reelection fairly well, but it could make it harder to do the heavier lifting starting in 2020 and beyond.
—David M. Greenwald reporting
Dan Carson noted in his comments on Tuesday that the two-year budget “assumes renewal of our Measure O sales tax.” He also acknowledged: “We need to start our communication process with our citizens to make sure they understand the stakes there.”
Council member Carson and the FBC are on the same page in principle. The FBC passed the following formal recommendation to the Council in the June 3rd FBC meeting.
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The most important component of that FBC recommendation is the timing. The Council and staff need to start our communication process NOW. We can not afford to take a summer recess. If we don’t act now, then our citizens will not understand the stakes when it comes time to vote. Council needs to set the tone, and Staff needs to deliver the communication, much like Staff and the Water Advisory Committee (the WAC) delivered the communication about the Surface Water Project back in 2013.
My complaint is that the budget largely treads water here – which is understandable given that there are no real new revenue sources except for cannabis. But they fail to lay the groundwork for the coming asks.
Actually the budget doesn’t even tread water. Even with $1 million of incremental new revenue from cannabis and one hotel, the annual Budget Shortfall has grown from last year’s $8.6 million a year up to this year’s $10.0 million per year.
If you took out the new revenue, the growth of the Shortfall would have been $2.4 million per year. That is not “treading water.”
Point taken, although I was using the term to describe something slightly different than you are.
What were you describing?
What I was describing was a budget that really wasn’t moving any policies forward – there is no new revenue, no major commitment to cost containment, limited additional economic development. Right now, what it appears we are doing is treading water, hoping to access at some point new revenues. Your point that we actually moved slightly backward is a good one, but doesn’t change the point I was making with my analogy.
I agree with Mark. If that was the analogy you were trying for “treading water” should be replaced with “surely drowning.”
Another better analogy is that we are a frog in a pot of water on a stove, and in the past 12 months the water temperature around us has risen another 5-10 degrees (or 2.4 million “ticks”) … and bubbles are starting to appear around the edges of the pot at the waterline.
Then again, you can also look at our situation through the lens of Pete Seeger
No, we are sinking, slowly drowning in a sea of red ink (while our infrastructure continues to deteriorate). There has been no effort at cost containment and little movement on economic development. This is a status quo budget.
Sounds like a near-perfect opportunity for a “snake oil” salesman to emerge.
I have a vague recollection of an old cartoon series, where the main character (a turtle?) inevitably ends up yelling out “Help me, Mr. Wizard”!
But in this case, the “wizard” has his hands full, in communities throughout the state.
That was Tooter Turtle…
Oh, and the wizard was always responsible for getting Tooter in trouble, by granting his wish to be someone he was not…
And, other than saying there are challenges, which is obvious… what would you propose… be as concrete as possible, please….
Thanks. For some reason, my recollection was that “Tooter” created his own problems. In any case, I was not completely sympathetic toward Tooter – even when I was a child. He seemed rather like a doofus, to me.
In all honesty, I don’t think there’s a “solution” to the statewide problem, other than to take it one yearly budget at a time. I believe that the state has recently used its surplus to pay down some of the CALSTRS pension obligations, but it remains to be seen how this statewide problem will ultimately be completely addressed.
Not something I’m staying awake at night, worrying about.
As a side note, are you sure that we aren’t referring to “Yertle the Turtle”? Maybe later, I’ll review the online history of cartoon turtles.
Actually, Ron has touched on perhaps a good allegory/metaphor… Tooter Turtle…
Consider Tooter the public, and the wizard local government… Tooter always wanted to be someone he wasn’t, but he really wanted it, and pleaded/cajoled the Wizard to grant it. Wizard warned that it wasn’t a good idea, but capitulated… then came the crises…
Citizens wanted the City to take on “Child Care Coordinators”; more expansive recreation programs (that were always heavily subsidized by GF); open space coordinators; more commissions (requiring staff to do research, do analysis, prepare staff reports,and follow up; etc.
So, the City “staffed up” to meet Tootle’s desires, and a lot of those folk are now retired, and drawing pensions & PERB. Connect the dots.
We have met the enemy, and it is us… even while calling for “cost containment”, some are calling for increased levels of service… a bunch of vocal Tootles in town…
The seeds for a lot of the City’s financial issues have their seeds in the ’70’s, ’80’s, ’90’s, etc., etc., etc.
Nothing new under the sun.
When will we ever learn…
Bill, this is getting rather folksie. I’ll see your PP&M reference and raise you a Pete Seeger.
To be trapped/compelled into commenting on the Vanguard. Not much of a retirement. You’d think that we’d all be out enjoying ourselves, somewhere (instead of discussing city finances).
And yet, – here we are, criticizing and looking down upon poor “Tooter” (or is it Tootle)? 😉
https://www.youtube.com/watch?v=DYUvj8jRf3I
That’s some “mighty fine” animation (he says sarcastically).
How did we go from Warner Brothers / Bugs Bunny to this, in a relatively short period of time?
Thankfully, things have improved once again. But still not up to the visual level of the really old days. (For awhile, there was Ren and Stimpy, which had some visual/old time quality to it – with a more extreme edge.)
The problem is not communications, it is a systematic failure on the part of the CC, Senior Staff, and the Commissions to address the fiscal shortfall that has been growing for the past couple of decades. There is no excuse here, especially for those folks who have been involved in the process for more than a year or two. The focus (as always) is almost entirely on raising taxes (yet again) when what we should be doing is reducing costs and growing revenues through commercial expansion. Repeating the same poor decisions over and over again will not result in a new outcome, no matter how well we ‘communicate.’
It is communications but not how you seem to interpret the word. The problem is that the public is oblivious to the problems and therefore because the city has failed to communicate them to the public, there is no public support for the solutions.
Can you show in an objective way that the city is spending too much money? Because my sense is not that they are spending too much, but rather taking too little in in the form of revenue from retail and other business.
If you are spending more money than you are bringing in as revenue by definition you are spending too much, so I’m not really sure what you are asking.
That’s not necessarily true. If you are spending what you need to run your services and spending a comparable amount as other locales, then you might not have a spending problem but rather a revenue problem.
You would make a great politician as you already seem to believe that balancing the budget doesn’t matter… Just spend the money and raise taxes later…everybody’s doin’ it so why not, right?
Davis has a revenue problem, something that has been true since before the first Core Area Specific Plan in 1961. It is not a new problem that only recently ‘snuck up’ on the community, but rather a ‘feature’ of Davis life. Regardless, we chose to overspend those meager revenues anyway, not out of ignorance, but with full knowledge. There really is no excuse, and your attempt at justifying the failure is absurd.
A City government can control their expenditures (to a great part)… not so much their revenues… fact of civic/political life… Craig, more revenues can help, but until they are “guaranteed”, Mark is correct. Just saying…
But Craig, are we spending what we need to run the services? If you compare the average total compensation per fire fighter in Davis to the average total compensation per fire fighter in the surrounding communities, you will find that we spend considerably more … and deliver essentially the same Level of Service.
Further, when was the last time that Davis got a clear read from its citizens and businesses on which services the community really wants/needs, and which current services are no longer valued by the citizens and businesses?
With all due respect Matt, until the backlog of ‘unfunded liabilities’, both personnel and capital related are well on their way to having those debts paid off, am thinking any new “wants”, and many existing “wants”, should be put on the back burner… and only focus on the “needs”…
Am I being more fiscally conservative than you? That would be funnier than hell…
Well Bill, I suspect that there are current City services being delivered that the current citizens and businesses of Davis have a very low need/want score for. However, we continue to provide those services because “that’s the way we have always done it.”
Which is why my survey/workshop suggestion resonates.
Further, I suspect that there are a number of current city employees whose position has become superfluous, and the citizens would not see any drop in level of service if that(those) employee(s)went on extended sabbatical.
In the main, I disagree not with your 4:59 post… perhaps in nuance, but have said/implied same thing in previous posts…
Mark, I understand your point, and to a large degree agree with it. However, in the City’s current legal (participatory democracy) landscape, the ability to grow revenues through commercial expansion goes through the voters. To a large extent, cost containment (cost reduction) goes through the voters as well. The clear cut opportunity to save substantial dollars by discontinuing The Claw is a text book example.
Communication to the voters about the true nature of the precariousness of our lives as a frog in a hot water pot on a stove is, in my opinion and the opinion of my colleagues on the Finance and Budget Commission, a necessary initial step in getting the citizens’ support for the life-changing steps that are necessary.
If we lived in an autocracy, you would be right, but we do not live in an autocracy.
Speaking of autocracy, an Associated Press article by Lolita Baldor in yesterday’s Sac Bee was very thought provoking. Here’s an excerpt from that article, with the part thar is pertinent to Davis highlighted in light blue.
No it does not. Cost containment is entirely in the hands of the CC and CM. They know the revenues and the expenses and could choose to match them, or not. They choose to spend more than they have in the hopes that the community will bail them out by voting to raise taxes, usually by ‘scaring’ voters with threats of cuts to come if the taxes are not approved. If they had never overspent in the first place there would be no reason for the cuts. It is an utterly dishonest approach to governance, and completely normal. Everybody is doin’ it so why not Davis.
We will have to agree to disagree on your first four words above. The voters do indeed elect the City Council. We need go no further back than Susan Lovenberg and Sheila Allen penning their “With these lessons in mind, it is time to move on” letter to the editor to see the consequences associated with citizen/voter backlash. Putting an end to selected City Services and/or cutting back on the level of those services is not a decision without consequences. Further, the CC and CM do have their hands tied due to California collective bargaining law, and CalPERS rules and regulations.
We have to Pay Our Bills! is not an ear-catching, smile-producing, political campaign slogan. It takes courage to run a campaign on that platform … either courage or a willingness to accept defeat when the votes are counted.
I never said it was without consequence. The poor souls may never get elected to County Supervisor or to State Office if they make the tough choices, but it is still their choice to make and it does not need to be ratified by the voters. If we are overspending it is because the CC collectively lacks the _____ to make the tough choices, whether that is on how they structure the budget or on who they hire as the CM. The fault is entirely their own, and frankly, if they are that concerned with their next election then they probably shouldn’t be on Council in the first place.