By David M. Greenwald
Executive Editor
Davis, CA – Despite some at times angry push back by public commenters, the Davis City Council unanimously asked staff to bring back a revenue measure for consideration to put it on the ballot. The council would need to approve this at the June 18 meeting and then it would go before the voters in November.
If approved, it would raise sales taxes in the city by an additional percent and would require a simple majority of support.
The proposal received some push back during public comment.
Elaine Roberts Musser said, “The city is in terrible fiscal shape. With a $21 million general fund reserve reduced to a mere $6 million in two years. The proposal is to increase taxes to create supplementary revenue. A 1% increase in the sales tax will 
result in 11 million in additional income to the city.”
She asked about polling as well as assurances about how the money would be spent.
“Trusting the city council will be fiscally responsible despite its abysmal record thus far. In other words, the city council wants voters to give them a blank check with no accountability to add insult to injury,” she said.
Colin Walsh added, “Let’s be clear about taxes. You’re proposing a regressive tax that hurts those that can least afford it most and could least easily drive away from it. And believe me, people will drive away from it.”
He noted that while the city talks about affordable housing, “there’s no guarantee that this council or any other council will send it to affordable housing.”
In addition, Walsh argued that the council should talk with UC Davis before going to Davis taxpayers.
He said, “It’s time for some straight talk about UCD. Davis gets no direct revenue from UCD, but the impacts are massive and we pay for them.”
He argued, “This is my wallet. You’re asking to get into my wallet. Before you ask me, go ask UCD first and maybe then we can talk. But if you don’t ask UCD first, you can’t get into my wallet without a fight.”
City Manager Mike Webb in response to questions from Councilmember Gloria Partida, noted that EMC Research which conducted the poll last November, “did in fact poll specifically for a 1% sales tax.”
That polling showed more than 70 percent support for a hypothetical one percent sales tax.
“We’re happy to post the results of EMC Research’s work so that the council and the community can see all of the data,” he said.
“The other question was with respect to the priorities of if a revenue measure were to be presented to the voters and were to pass, the revenues start flowing from that, what are the council priorities in terms of spending really utilizing those revenues?” he said. “Really that’s council policy directive.”
He continued, “The suggestion in the staff report is not to go and spend it on new services and programs, but to first use it to shore up general fund reserves and existing services and programs. And then to the extent that there’s excess beyond general fund reserve policies. And that’s what the council can set is what is that general fund reserve policy.”
He added, “And then the council has some room to start talking about whether there’s additional services and programs, housing trust fund, things like that, that homelessness services, affordable housing services. That polled very high in the survey that we did with the community as to needs and demands. But that’s a policy discussion for the council to have if a revenue measure were put forward and passed.”
Councilmember Partida also asked about UC Davis and its impact on the community.
Mike Webb responded, “I think there’s no question. So UC Davis, every couple of years does an economic impact analysis of the impact of UC Davis’s presence and activities on the economy in both Davis and the region.”
EPS does an analysis as to the impact of UC Davis on Davis in the region, including, but not limited to the multiplier effects of that impact.
Webb said, “So there’s no question that there’s impacts of having a university in the traffic and so forth that’s associated with that. But there’s also no question that there’s positive economic impacts of having a university in a host community like Davis, salaries of staff, faculty that live in the community, that spend money in the community that own property and buy property in the community, and pay sales and property taxes.”
He added, “There’s no question that without UC Davis, our economy would be vastly different than what it is today.”
Councilmember Will Arnold addressed the issue of accountability, noting the quirks of Prop 13 mean that there is a higher threshold for a “special” tax that would target specific expenditures.
“It’s always been counterintuitive to me that a tax where you identify the use of the funds is the one that has a higher threshold. I always think it should be the reverse that if you’re going to do a general tax should maybe be two thirds because there’s more discretion about how those funds get used. But if you identify ahead of time the use of the funds, that ought to lower your threshold in my opinion,” he said.
He later added, “I’ll also say as we enter a November political season that is going to be the wild West of rhetoric and hyperbole and folks sort of throwing half truths around and them going unchecked. I’m already a little bit disappointed about some of the rhetoric that’s being thrown around about these issues. And so I’m hoping maybe it’s false hope, but I’m hoping that the better angels of our nature will allow for a spirited yet truthful and a debate on these issues that we can all be proud of.”
Councilmember Donna Neville said, “I do hope that we will put forward a general sales tax measure on the ballot. We know that’s not the solution to all of our woes. What we need to do as a city is a much broader, much more concerted effort where we think more broadly about revenue.”
Councilmember Gloria Partida added, “When I first got on council, I was really excited about supporting economic development because I felt that that was a better way to bring in some revenue for our city rather than doing this tax. But we’ve gotten this far and we haven’t really been able to stimulate the economic development that is needed.”
Mayor Josh Chapman said, “I will echo many of my colleagues’ statements here this evening, and I am supportive of moving this forward this evening and having this come back to us in June. I think there is a clear demonstrated need for new revenue.”
He responded to the notion that this is a blank check, stating, “We have our budget cycle that comes up next year, where these funds would, in theory we heard earlier, would be there and be having these discussions around how this money is spent in doing that with our community and in conversation.”
He said, “I think that there’s this opportunity, this line of it’s just this blank check that we’re going to do whatever we want to do with it without having any say or conversation or input from anyone in the community is a red herring in my opinion.”
Gloria Partida made the motion to bring the item back on June 18 for consideration of putting it on the ballot and council supported it without further discussion and without dissent.
Elaine is correct, but that is only the tip of the iceberg. The annual General Fund budget and the balance in the General Fund Reserve only tell part of the story. The part that those numbers don’t tell is the annual shortfall of Revenues to cover desperately needed Expenses for maintenance of the City’s roads and buildings and parks and greenbelts. That annual shortfall is now approximately $14 million a year.
When you add the $14 million to the $15 million that the General Fund has been depleted this year, you get a financial mismanagement total of $29 million.
One of the important ways that businesses and governments show accountability is by issuing an audited financial statement shortly after their fiscal year ends (June 30th in the case of the City of Davis). To address the “trust” issue and provide accountability, all such audited financial statements are reviewed by an independent auditor (accounting firm) who looks to see that everything is properly handled according to generally accepted accounting practices.
The City of Davis is waving a huge “red flag” regarding both trust and accountability with its audited financial statements, which were three years behind at the beginning of the year. What is wrong with the City’s financial management that it is so far behind? What problems does the independent auditor see that is causing them to not sign off on the City’s financial reports? Why hasn’t the City Council come forward to the citizens and disclosed the magnitude and legal problems with the City’s finances? Where is the honesty?
Regarding accountability, there is one more important point. Elaine asked about assurances about how the money would be spent. Here too the Council is “gaming the system” by choosing a general tax because it only requires a 50% plus one majority to pass. But general taxes hav NO assurances about how the money will be spent. Council could have chosen a tax that did have specific spending assurances, but that would have required a 2/3 majority to pass, and they are afraid that they can’t get that many yes votes. So they instead have gone with ta tax that has NO accountability. Council is banking on the Davis voters being sufficiently unaware to see the game that they are playing.
As Paul Harvey would say, “That is the rest of the story!”
This is the slide from Tuesday showing the CM’s recognition of the infrastructure funding shortfall…
Thank you David fore posting that. It is a far cry from Dan Carson’s campaign claim that he (with the help of his fellow Council members) had reduced the shortfall from $12 million down to less than $5 million. His accounting was simple feel good political rhetoric that he thought the uninformed Davis voters would fall for.
The graph does beg a couple of questions.
(1) — The graph starts in 2022, which is now in the rear view mirror by 24 months … 24 months that have seen the General Fund balance fall by $15 million. Given that, one has to wonder whether the amounts in 2023 and 2024 shown in the graph (something close to $9 million in each year) actually were spent. Is there a reason why the City didn’t use a current report?
(2) — How does the $15 million needed to replenish the General Fund Reserve back to 15% factor into the graph?
What magical manna falls from heaven in 2038 to rescue us from our infrastructure shortfall? This graph reminds me of one I saw in 1986 that Bonneville Power Administration had put showing that it would just accrue debt on the WPPSS nuclear power plants in perpetuity until it reached a TRILLION dollars. To pay off the debt reasonably would triple BPA’s rates. Instead the largest municipal bond default in history occurred and BPA’s rates did triple. Fantasies don’t really work for developing policy.
I’m curious as to what reason one might have to suggest UCD owes any money to the city of Davis.
Colin is part of a faction that discounts entirely the economic benefits that accrue to Davis from the presence of UCD. We only need to look at Davis compared to surrounding communities to see the realization of those benefits. UCD also provides direct municipal services to its campus so its not leaning on Davis for those. UCD doesn’t owe the City anything of note (other than better cooperation for economic development.)
Also I would argue that while the city has been about to wring some concessions out of the university, ultimately they pale in comparison to the benefit that Aggie Square would have produced fiscally for the city. But by opposing economic development, making every project a fight to the death, the university had no reason to even contemplate bringing Aggie Square here. That’s our loss. And it probably far outweighs any benefit from the MOU or what we can get from the university on the issue raised here.
… the benefit that Aggie Square would have produced fiscally for the city.
David, sometimes I wonder if you think before you post, and trhe comment above is one of those times. Of course it is possible that you know exactly what you are doing when you post fake njews like the statement above.
Locating Aggie Square in Davis defies logic on a myriad of levels.
— First, the UCD Medical Center is in Sacramento, not Davis. Locating a human medical technology incubator remote from the Medical Center would be both foolish and environmentally unsound.
— Second, the doctors who are involved in the technology incubation activities at Aggie Square have their medical practices in Sacramento … mostly at the UCD Medical Center. Locating a human medical technology incubator remote from the doctors’ medical practices would be both foolish and environmentally unsound.
— Third, the researchers who are involved in the technology incubation activities at Aggie Square have their research activities in Sacramento … mostly at the UCD Sacramento Campus. Locating a human medical technology incubator remote from where the researchers currently conduct their research would be both foolish and environmentally unsound.
— Fourth, the medical students, interns and residents have all their classes and teaching activities at the UCD Sacramento Campus. Locating a human medical technology incubator remote from where the medical students, interns and residents currently attend their medical education activities would be both foolish and environmentally unsound.
The Yolo Causeway traffic and greenhouse gas emissions are bad enough as it is. Why would you want to make them even worse by locating Aggie Square in Davis?