Tonight the Davis City Council will begin to assess the potential for renewing the half-cent sales tax. Staff is hoping the council will approve placement of the tax renewal on the June 2010 ballot.
In March of 2004, the Davis voters passed a one-half cent sales tax that will sunset on December 31, 2010 unless voters reauthorize the measure. According to the city’s staff report, the tax currently generates approximately 2.9 million dollars in annual general fund revenues, representing around 8% of the city’s overall General Fund.
“a measure to renew this revenue source can only be placed before the voters on a ballot where members of the legislative body are up for election. The upcoming June 2010 ballot presents the only opportunity for the renewal of the local sales tax, prior to its scheduled expiration in December 2010.”
Staff argues that this revenue source has become an important component of the city’s long-range fiscal planning, especially given the current fiscal and economic climate that have severely comprised major revenue sources.
It also suggests that the City remains committed to addressing its remaining structural budget shortfalls without seeking increased tax revenues.
That is the city’s position on the issue of sales tax renewals. However, the Vanguard has a very different view.
On February 3, 2009, the Vanguard took the position that it would oppose the renewal of the tax measure unless the city got their fiscal house in order in part through restructuring employee contracts and pensions.
In late February, Councilmember Lamar Heystek joined the Vanguard in the call. Councilmember Heystek told the council and city staff that he would oppose the renewal of the new taxes unless the city dealt with the fiscal problem and new employee contracts in a responsible manner.
His announcement seemed to stun city staff who immediately took notice. The City Council is not directly involved in employee negotiations, although they do approve the final contracts. However, Mr. Heystek believed it was the only leverage he had.
Two of his concerns are asking city employees to take more responsibility for their post-employment benefits. In addition, the city should re-examine the method by which we deliver services such as fire.
Since that time, it is becoming increasingly clear that the city will not address these key issues. In June’s budget where the council cut $3.4 million, $1.25 of that was to occur through savings from bargaining group negotiations. However, we are now in December and there is no contract.
A month ago, it became clear that the contracts will not produce the savings we need. The city’s Finance Director, Paul Navazio indicated that there might be as much as a $350,000 shortfall in the projected savings based on the current trajectory of discussions.
The city, despite urging from council and the community, never set forth a plan for transparency in terms of these talks, so the public has largely been in the dark with the exception of a few tidbits that have leaked out every so often. The city also never established a policy for vetting the new contracts to the public prior to approval. One possibility would be once agreement in principle was reached to have a 30 day comment period by the public, have the process go through the Finance and Budget Commission and then have the item discussed in open council meeting. That seems reasonable but unlikely to occur.
If the city fails to reach the full $1.25 million in savings to close the remainder of the $3.4 million general fund deficit for the current fiscal year. For starters, any savings extracted now would have twice the $350,000 number. The reason for that is that with half the fiscal year already having ticked by us, the city will have to cut twice the services, staff, and other cuts to reach the same level of savings.
It gets worse because given the amount of time that has elapsed, the city may need to find additional savings anyway as Mr. Navazio warned on Tuesday night. He spent a good deal of time dealing with the possibilities including a hard hiring freeze, the shutting off of 200 street lights, closing the community pool, and reducing funding for various services.
Despite these rather drastic cutting possibilities the city did not hesitate to add $400,000 in expenditures for a new Battalion Chief Model under the guise of cost savings which is achieved through the shifting of already proposed spending cuts from one line to another.
The bottom line here is that if anything the long-term situation is worse not better that it was back in February of 2009. It was hoped that pressure on the sales tax renewal might exhort the city to get serious about structural changes to its budget. Instead we are long since approaching impasse without the fortitude from council or staff to make the real changes that are needed.
So now we are left in a bad conundrum. We can continue to oppose the $2.9 million tax and watch as the city cuts vital programs and services in hopes that this might coax the city to really get serious about fiscal reform or we can fight this battle on another front. This seems a lose-lose situation from the standpoint of voters and those hoping for change in the way the city does business.
—David M. Greenwald reporting
I wholeheartedly agree- the sales tax should not be renewed and I will actively campaign against it.
The city management continues to waste money and show absolutely no ability to control their ridiculous employee costs… why give them more money?
Show some responsibility, reign in their unions and then we can talk.
I don’t know where I stand on this question. (I was very much against the imposition of this tax when it first was approved by the voters.) My hesitation to stand against it now is that, if we don’t re-approve the tax, the big cuts to the city budget will be made in almost all departments but the ones which need the most budget reform. The victims of those cuts won’t be the people making the most money, they will be the lower-paid, marginal employees who need a paycheck and the marginal citizens who depend on services.