Measure Q will be on the ballot in November, asking Davis voters whether to increase their sales tax by an additional one percent. The measure would provide “approximately $11,000,000 annually for general government use.”
The forum was sponsored by the Davis League of Women Voters. You can watch the full forum here:
The arguments laid out here are not particularly surprising or new. On the Yes side, it’s a modest increase that will go to pay for vital services and for the No side, the city has been fiscally irresponsible, why should the taxpayers bail them out with a tax increase?
For Councilmember Donna Neville, who along with Mayor Josh Chapman, represented the “Yes” side, she said, “A no vote means we won’t have that additional revenue and city services will suffer… There’s no question about that. The choice is easy. Do we want to pay a modest increase in local sales tax that will reap huge benefits for our community or do we want to see services continue to decline?”
On the “No” side, Elaine Roberts Musser said, “The City Council wants us to approve a 1% sales tax increase, in essence a blank check with virtually no accountability, insisting we trust them.” She asked, “Why should taxpayers fork over more of their hard earned cash if the City Council won’t get its fiscal act together?”
The basic argument then on the Yes side is that this is a “modest” sales tax increase, it pays for important services, and for the voters to deny them this money, it will harm the community.
The big problem that I think the city has trouble answering here is how have we gotten to this point? We have noted the failure of the city to advance economic development, the loss of retail, the fact that the same proposed tax increase in West Sacramento would yield almost twice the amount that it will in Davis.
Critics therefore have a point – the city needs to lay out a way forward, because it really can’t keep increasing sales taxes every ten years in perpetuity.
On the other hand, the No side is arguing for no taxes without accountability. The blank check analogy really doesn’t work well with me. I agree with Councilmember Will Arnold from a few months ago that the tax law is counterintuitive, that you cannot designate precise spending for general taxes.
And while I agree that the city has made some poor spending decisions, the idea, as Alan Pryor argued, that the city is “grossly overspending,” seems like election-season hyperbole.
He argued, “The city just gave out excessively generous compensation increases to the city manager and the highest paid firefighters claiming it was commensurate with nearby salaries when it clearly wasn’t, digging us into a deeper hole.”
But what is grossly overspending? Given the increased of housing, the cost of living, and the fact that the city needs to compete with other communities for employees limits a bit their discretion. Grossly overspending implies somehow that the city is way out of alignment with other communities, while there is at most a modest difference in some of the compensation.
That’s a point Mayor Chapman raised, who said Davis is like many other cities in California.
“Prop 13 essentially caps property taxes at 1% of the purchase price, which means that property taxes in California stay relatively flat even as home values soar,” Councilmember Chapman said. “So, cities turn to sales taxes, parcel taxes and retail growth to fund essential services. Meanwhile, the costs of delivering city services continue to rise, outpacing revenues.”
But while that is true – Davis has put itself in a much worse fiscal position with it’s lack of a retail base and its repeated failure to leverage the university. Again, the same tax increase that will generate $11 million in Davis, generates $20 million in the slightly smaller West Sacramento. That’s not on the state. That’s on this community.
Meanwhile Musser said, she will not support the measure until the city gets its finances in order and explains how it will spend the $11 million from Measure Q.
The problem of course is that the city has given general thoughts, but.. it can’t be more specific.
“This is a general sales tax and all the revenue it generates goes into a general fund,” said Neville. “We can’t earmark it for specific purposes right now. That would be inconsistent with the law and would turn it into a two-thirds tax.”
Neville also explained the audit issue: “You’ve also been told that the city’s been delayed in issuing its audits. Our audit was somewhat delayed in the 2020-2021 year. The federal government had to grant an extension that year due to COVID. We did issue the audit and what you need to know is that it was a clean audit. The auditors found that we do correctly account for our money.”
Mayor Chapman noted that the city employees are paid at market-median wage and this was based a compensation study done by the city.
While this is true, it is important to note that the city has changed the way it does this somewhat.
Previous councils had targeted bargaining groups getting five percent below median income – the current council has brought that up to median income.
That’s clearly an important point that hasn’t been discussed nearly enough. Given the cost of housing in Davis, and the increases in the cost of housing over the last five years – you could make an argument that this is a reasonable approach.
And there has been a sense that the city was struggling to get quality hires over the last several years. Nevertheless, that is a factor here that ought to be brought out.
In the end, you can definitely nitpick where some expenditures were necessary. I certainly disagree with the decision to bring in a laddertruck, when there was one at UC Davis, the need isn’t overriding, and the optics of asking the taxpayers for more money as the city council makes these kinds of discretionary decisions.
On the other hand, while $11 million is clearly a lot – in terms of an impact on the average taxpayer, it’s actually very modest. If you spend $1000 a year on taxable goods, you are paying an additional $10 and even if you spend a lot more, say $10,000, that’s still only an additional $100. In essence, the typical person is not going to feel this.
The question I think voters should ask themselves is whether they think it’s important for the city to have this money and on the other hand, whether not having this money is going to improve things.
In the end, that’s what this debate comes down to.
Actually the supposed “median market rate” studies the City’s consultant performed were bogus.
For instance, they only looked at the Firefighter II position when evaluating comparative market rate compensation for firefighters. They didn’t look at all at the Firefighter I or Battalion Chief or Captain positions when deciding to grant a 6% pay hike to ALL the firefighters (and they made it retroactive to a year ago too!). But our 10 highest paid firefighters (all Captains and Battalion Chiefs) are already above local municpalities by a lot – e.g. $37,000/year more, or 15% higher, compared to Woodland. The 10 hghest paid firefighters also make about $18,000 a year more in total compensation that our 10 highest paid police officers. This is the exact opposite of Woodland and other cities where police officers all earn more than firefighters reflecting the far greater risk of life or serious injury by violence faced by police officers.
When they compared our City Managers salary they looked at 12 nearby cities and decided he was paid, on average, about 2% less. So they gave him a 2% salary bump PLUS a 3.5% bonus for 2023 and the same 3.5% bonus for 2024. But of the cities looked at in the survey, most had far larger populations (e.g. Sacramanto, Roseville, Elk Grove, etc.). If you just looked at the 6 nearest cities with populations within 20% +/- of Davis, it turns out our City manager was paid from 3% to 30% higher than every single one of them!
It’s obvious our City Council put the thumb on the scale anytime employee compensation was evaluated – especially for our highest paid employees. So much for ensuring our employee compensation is commensurate with neighboring cities as claimed by Mayor Chapman.
The question I would then ask – for a moment let’s accept your data and premise – is that a marginal or a substantial cost?
If you just look at the 10 highest paid firefighters and city Managers pay, the incremental cost of these unwarranted salary increases may be on the order of $500,000 – so it is easy to claim it is not “substantial”. But the problem is this is reflective of the Council’s mindset on all financial matters (“oh, it is not that much in the scope of things”). And this thinking was/is pervasive across all of the City’s financial decisions they have made in the past decade – especially when it comes to employee compensation. We have calculated the additional costs to the City due to compensation increases above the rate of inflation over the past 10 years. It works out to about $10 million to $11 million per year .
Gee, how about that? $11 million is just what they are asking for in this tax measure. So if the City had simply held the line on employee compensation increases to the Bay Area CPI (seems fair to me), we would have an extra $11 million per year to put into roads, infrastructure, and paying down our $42 million in unfunded pension healthcare obligations. That is not “marginal”.
David Greenwald said … “The big problem that I think the city has trouble answering here is how have we gotten to this point? We have noted the failure of the city to advance economic development, the loss of retail, the fact that the same proposed tax increase in West Sacramento would yield almost twice the amount that it will in Davis.
Critics therefore have a point – the city needs to lay out a way forward, because it really can’t keep increasing sales taxes every ten years in perpetuity.”
I believe David has captured the essence of this in a nutshell with his comment above. What all the dialogue in the various threads about this tax increase indicates is that like so many other areas of our City’s operations, there is no plan … no plan for how the money will be used, and no assurances for the people who are hoping to get some of this money that they ever will get anything.financial plan here.
What is the plan for eliminating or reducing the $10.7 million annual road repairs shortfall that Council member Neville cited in the Forum? The simple answer is that there is no plan. Just like there is no Economic Development Plan, and no General Plan that is compliant with State Law.
Why is the City consistently across-the-board allergic to planning? Council member Vaitla and Mayor Chapman got into the trouble that they did with the Commission Reorganization because they had no plan. Then they compounded the problem by lying about “meeting with all the Commission chairs” and then doubled down by repeating the lie over and over again. Fact checking tells the citizens that they never met with David Sandino (FBC), nor with Linda Deos (Utilities) and I’m not sure that they met with Linda’s successor on Utilities Steve Gellen.
As the No On Measure Q team both said last night, they would support the tax if the Council would commit to a binding plan, but they won’t.
Perhaps the most important moment of the Forum came when Council member Neville was refreshingly and publicly honest about the City’s unfunded liabilities in streets repairs.
Donna is the first City official to be honest about that annual shortfall. If you go back to the State of the City presentation earlier this year Mayor Chapman and City Manager Webb were conspicuously silent about the massive unfunded liabilities problem. Donna should be thanked by all of us for being honest.
But honesty only goes so far. What is the plan for eliminating, or mitigating, the $10.7 million amount she cited in the Forum? The simple answer is that there is no plan. That isn’t her fault personally, but it is a major contributor to the distrust of the City government that Mayor Chapman so vehemently tried to disavow responsibility for. What was he thinking?
I also had to wonder what Mayor Chapman was thinking when he made the closing remarks where he listed the new programs right after Council member Neville had just said “there are no new programs being paid for by this tax.” Council member Neville’s remark was in response to Elaine Roberts Musser’s identification of the rumored contribution to the Housing Trust Fund as a new program and the rumored contribution to Homelessness as a redundant service that the County is responsible for … and that two separate services for the same thing by the County and the City is not only redundant, but also inefficient. What was Mayor Chapman’s plan is so clearly contradicting what his colleague had just said? It seems pretty clear thatr there wasn’t a plan for how to conduct the debate. Is that a surprise?
David Greenwald said … On the other hand, the No side is arguing for no taxes without accountability. The blank check analogy really doesn’t work well with me. I agree with Councilmember Will Arnold from a few months ago that the tax law is counterintuitive, that you cannot designate precise spending for general taxes.
Council had a simple solution to the bolded problem … propose the tax as a specific tax with a requirement of a 2/3 majority.
The other simple solution Council had at their disposal was to put a second Measure on the Ballot … an advisory measure … where they outline the specific plans for how the tax dollars would be used and what annual accountability reporting would be provided to assure the public that the monies were used as promised. The voters would have a yes/no vote option telling the Council whether they supported the described plan … or didn’t support it.
What the Council has left the community with is a choice between an intervention or a bailout.
Donna Neville said … “This is a general sales tax and all the revenue it generates goes into a general fund. We can’t earmark it for specific purposes right now. That would be inconsistent with the law and would turn it into a two-thirds tax.”
What is wrong with it being a two-thirds tax?
David Greenwald said … “And there has been a sense that the city was struggling to get quality hires over the last several years. Nevertheless, that is a factor here that ought to be brought out.”
I’m not sure where you have been getting that sense. The last hiring of firefighters had applicants lined up for two city blocks.
The challenge all new hires at the City face is (1) they come into a work environment that has no commitment to planning, and (2) as the new Commissioners have consistently found over the years, no commitment to training new hires. That is a huge double whammy for new hires to overcome and show their quality.
Fire is only one department. They’ve had a lot of trouble hiring police. A lot of trouble hiring planners. For example
Is the issue with police one of money or work environment?
For planners is the issue job security or money?
In order to maintain the current level of services and expand the programs the public has indicated they want (homeless services, affordable housing programs) the city needs more revenues.
Revenues can come from economic development, increased sales or property taxes, or user fees/taxes. Economic development has been blocked. The methods of taxation available are limited in a general law city. The council has concluded that the sales tax increase is necessary because revenue options other than taxes are gone and other forms of taxation are less likely to pass.
Economic development has been discussed for more than 15 years now. If any of the business parks had been approved, they’d probably be generating revenues now. But all economic development options have been scuttled. The Davis market is anathema to commercial developers.
From 2010 to 2012 the city cut the budget significantly due to the economic recession. Outsourcing services led to poorer maintenance of the parks and trees, among other undesirable outcomes. Any proposal that the city cut costs by paying employees less is simply a non-starter. Likewise any proposal that staffing be reduced. Services = staffing. Reduced staffing = reduced services.
I urge that the voters pass this measure. I would hope that the voters will also consider finally approving some kinds of economic development, but clearly that isn’t something we should count on.