Last year, the city dipped into it’s vaunted 15 percent reserve to cover one-time shortfalls created by a combination of lower than expected budget revenues and the impasse with the Davis City Employees Association. At the time, the shortfall was supposed to be closed by this year’s budget.
But instead, in October, there was still around a 40 thousand dollar shortfall. At that time, the council had asked the city manager to work toward closing that gap.
The council put their foot down, moving that the full 15-percent emergency reserve be restored by the end of this fiscal year.
Councilmember Stephen Souza made the argument that that reserve was there for emergencies and this is an emergency. He argued that we would never be in worse shape than this.
However, the rest of the council actually believes that things could get a lot worse. Moreover, they felt, given the fact that the reserve gap was growing and not shrinking, that they had to send a strong signal.
Worse yet, closing the gap in the last four months of the fiscal year is not a simple endeavor. In order to cut $320,000 in the last three months of a fiscal year, you have to cut $1.2 million in expenses over the course of the year. It is a huge cut, to be quite frank.
However, the larger problem that the council faces is more daunting. City Manager Paul Navazio, who as finance director created the budget, argued that the main part of the problem is the failure to reach agreement with DCEA (Davis City Employees Association).
If true, that explanation should be far more alarming than anyone let on. For the city needs to gain substantially stronger concessions in the next round of Memorandums of Uunderstanding, and if the largest bargaining group in the city can hold out and there is no ability to simply impose the last best offer, as many have implied, then the city is going to have problems fixing the big problems.
The last round of MOUs really did very little to advance the cause. And yet DCEA is balking at even those very modest cuts.
The truth of the matter is that the city’s finances are far worse than anyone has really let on or understood. As we have discussed many times, the genesis of the problems are in pension increases that gave 3% at 50 retirement to public safety employees and 2.5% at 55 for all miscellaneous employees.
That was coupled with multiple years of salary and benefit increases that far exceeded the rate of inflation. One of the most lucrative was a 38% pay increase to firefighters, pushing them into the upper tier all city employee compensation.
The other failure was a failure by the council and city staff to see the writing on the wall. That failure primarily falls on the shoulders of two men. First, Former City Manager Bill Emlen who failed to recognize the problems until far too late and instead tried to paper over the structural problems the city faces.
The other was Don Saylor. Mr. Saylor both publicly and privately directed city policies towards compensation. He did not do it alone. Stephen Souza and former Mayor Ruth Asmundson were his council majority accomplices.
They voted against more realistic budget projections put forth first by Sue Greenwald and later by Lamar Heystek. They supported the contract largess of the mid-2000s. And they supported the MOUs that would do little to fix the problem in 2009 and 2010.
Moreover, it was Don Saylor and Stephen Souza who, in their 2008 reelection campaigns, bragged about what good shape the budget was in. They argued they had a balanced budget with a 15-percent reserve.
Candidates Sue Greenwald and Cecilia Escamilla-Greenwald argued otherwise. To them, the budget was balanced using some fancy accounting techniques, stuffing things like road repair and other infrastructure needs into an unmet needs category off-budget.
Moreover, they argued, before the current wave of pension reformers, that the pension increases of the earlier part of the decade and the salary increases were unsustainable.
A few months later, Lehman Brothers collapsed and the economy and stock market with it, and they were proven correct. However, even these realities did not change the council majority.
The new council core of Joe Krovoza, Rochelle Swanson and Dan Wolk have all been elected or appointed with an understanding that the budget is the priority.
But now, more than ever, they are getting thrown roadblocks by their own city staff.
The city has a real problem internally. There seems to be dissension in the ranks. The Human Resources Director, who was part of the problem, is isolated but still in that position. The City Manager search is moving forward and the city needs to find a very strong leader.
The council is pushing back, but we are getting word that there are mixed signals being sent to city employees, who should be preparing for huge cuts, that one week the cuts are going to be devastating and the next week things do not look so bad.
This is not reality. The reality is that we are facing cuts to the core of city services.
The Council has a bigger job than just the budget – they have to fix city staff itself. Bill Emlen was a huge problem, not only in his policies but in his promotion practices, where he put people into leadership positions that had no business being there.
So, Council needs to push on the upper management to restructure, they need to find ways to cut spending and they need to find a good city manager at what is right now a very bargain price.
It is a daunting task and one that they got elected to achieve. They need to show resolve and they need to make strong and wise decisions.
—David M. Greenwald reporting
Although Davis is not Vallejo or Detroit we do face serious problems. Short term we are spending too much. Long term we have looming pension and health care liabilities even with CALPERS’ ridiculous 7.75% return assumption–the reality will be far worse than CALPERS now forecasts–yet another instance of where our political leadership has let us down.
WE need to change the mindset here from one of expansion of services to asking where can we cut. My fear is that our City will do what all cities do–cut essential services back (road repairs have already been cut, libraries and rec could be next) while our firefighters continue to plunder the treasury with bloated pay, ridiculous pensions and crews that are larger than they need to be.
Mr. Saylor screwed us over. (I’d like to use a stronger word that begins with an f.) He should be the charter member of the City of Davis’ Hall of Shame. And we all should remember that Sue saw all this before any of our other elected leaders.
WE need a serious dialogue about where to cut in this town. I think the majority on our City Council have the best intentions but the political pressures from staff, etc will be to do the wrong thing. WE need to push back so they do the right thing.
A solution for Davis?:
[url]http://losangeles.cbslocal.com/2011/03/02/outsourced-city-council-votes-to-privatize-costa-mesa-jobs/[/url]
As is frequent, the Vanguard likes to cite “facts”, which are not, and ignore “facts” that would go against his arguments…
[quote]…and if the largest bargaining group in the city can hold out and there is no ability to simply impose the last best offer…[/quote]”fact” that is wrong: the City did indeed impose their last, best offer to DCEA for FY 09/10. “Fact(s) ignored: Sue Greenwald called for going to impass & imposing offers BEFORE negotiations had been significantly conducted… this was BEFORE PASEA and Mgt. folks continued negotiations and made concessions. For FY 10-11, it is not evident that there is even a City offer ‘on the table’ by the City, much less the last/best offer… for this FY, the city didn’t even hire a negotiator until November, and I suspect that there were no substantive meetings thru March 2011. For FY 09-10, DCEA was prepared to go to a vote of its membership on the offer, but the City declared impass before DCEA could (by their bylaws – 10 day notice) vote.. subsequently, after the City declared impass, DCEA voted overwhelmingly to reject (duh… you “dis” us, we “dis” you) and the City’s offer was imposed in Spring of 2010.
dmg: “Candidates Sue Greenwald and Cecilia Escamilla-Greenwald argued otherwise. To them, the budget was balanced using some fancy accounting techniques, stuffing things like road repair and other infrastructure needs into an unmet needs category off-budget.”
This is key. Accounting tricks do not a fiscally responsible budget make. Dr. Wu makes excellent points. However, the firefighters contract is a done deal, so I don’t know how the city legally could do anything to make significant changes to how much the firefighters are paid right now, other than any contracts moving forward, which don’t come up for renewal for a while.
At this point, I am less interested in blame, and more interested to see our current City Council actually take on the tough task of doing what is necessary to put the city on a more sound fiscal footing. The results won’t be pretty, but it has to be done.
I can tell you for a fact that many in city staff are terrified of losing their jobs, and I cannot blame them. The more people that are out of work, the less tax revenue that will be generated for the state. I would actually like to see the various employee groups MAKE SERIOUS CONCESSIONS so they can keep employed, rather than those in more senior positions hold onto their jobs at the expense of those younger/lesser ones who don’t have pull/seniority. Higher unemployment rates benefit no one. If they won’t make serious concessions, then let the firing begin…
[quote]Sue Greenwald called for going to impass & imposing offers BEFORE negotiations had been significantly conducted.—hpierce[/quote]I believe you are referring to the fact that I pointed out that we didn’t have binding arbitration and that impasse was an option. This was an effort to correct the perception that staff and some council members had given over the years that we had no options if, after negotiations, we could not reach agreement.
Sue: please correct me if I am wrong, but doesn’t an impasse require a test of all further collective bargaining discussions being futile? For example, the proof that both parties are completely deadlocked after sufficient attempts to negotiate? Then, as I understand, unilateral changes can be made by the employer, but only those that had already been offered and rejected by the union.
Assuming I have this correct, the last piece bit would seem to be a problem as I am not aware of adequate proposals being made by the city.
Jeff: you are not wrong… you are correct… I suspect that you will not get a verifiable answer to your question(s) of our elected… an answer would not serve their purpose…
Jeff, here is the operative state law:
[b]California Government Code Section 3505.4[/b]
[i]3505.4. If after meeting and conferring in good faith, an impasse
has been reached between the public agency and the recognized
employee organization, and impasse procedures, where applicable, have
been exhausted, [u]a public agency that is not required to proceed to
interest arbitration[/u] may implement its last, best, and final offer,
but shall not implement a memorandum of understanding. The unilateral
implementation of a public agency’s last, best, and final offer
shall not deprive a recognized employee organization of the right
each year to meet and confer on matters within the scope of
representation, whether or not those matters are included in the
unilateral implementation, prior to the adoption by the public agency
of its annual budget, or as otherwise required by law.[/i]
——————–
In the DCEA case, all the City of Davis had to do was:
1. To negotiate in good faith–meaning they had to meet at the bargaining table*, present an offer and listen to the presentation of the DCEA;
*I don’t know how many times you have to meet. But Davis and the DCEA met many, many times. In the case where Palo Alto declared an impasse with its SEIU employees, the declaration came after 26 meetings.
2. Make a last, best and final offer. This means that you cannot reduce your offer as you go along. The last, best, final offer has to be the most generous offer the agency made to the union during the entire course of negotiations;
3. Have the union reject the final offer.
[i]”For FY 10-11, it is not evident that there is even a City offer ‘on the table’ by the City, much less the last/best offer…”[/i]
This is unnecessary. Once a City imposes its ‘last, best offer,’ there is no legal requirement to keep making any new offers.
[i]”… for this FY, the city didn’t even hire a negotiator until November, and I suspect that there were no substantive meetings thru March 2011.”[/i]
There is no legal requirement for the City to hire a negotiator.
Rich, thanks for the clarification on this issue…
[quote]There is no legal requirement for the City to hire a negotiator. [/quote]This is true. The CC chose to do so, in great part (IMHO) due to allegations that having City Mgt conduct the negotiations is “incestuous”. Many of those allegations occurred on this blog-site. Still, a certain councilmember called for going to impass after the city made its FIRST offer (i.e. DEMAND) that employees accept a reduced benefit retirement plan, complete elimination of ‘cafeteria buy-out’ (which, personally I agree with), significant reductions/eligibility for retiree medical benefits, furloughs, and reductions in salaries, to boot (‘ya want fries with that?).
Rich: Thanks for this information. My point was that I don’t think the last best offer included enough management and pension restructure. So, in theory, the bargaining would need to begin again and demonstrate a new round of futility that could then justify a unilateral decision by the city based on impasse rules.
Here are the city services Cost Mesa are considering for outsourcing:
[quote]The entire Fire Department operations;
Street Sweeping services;
Graffiti Abatement services;
Park Maintenance services;
Parkway and Median Maintenance services;
Fleet Maintenance services;
Street Maintenance services;
Facility Maintenance services;
Animal Control services;
City Jail services;
Special Event Safety services;
Information Technology services;
Telecommunications services;
Building Inspection services;
Reprographic services;
Graphic Design services;
Payroll services; and
Employee Benefit Administration services.[/quote]
[i]”Still, a certain councilmember called for going to impasse after the city made its FIRST offer …”[/i]
Assuming your comment about Sue is true–I would not know, because I am not privy to the closed door negotiations where any such call would have been made–it was irrelevant, because Sue did not command a majority of the Council votes. She was, in effect, a minority of one.
Also, there is no requirement in state law that the council make multiple, different offers. It can make one offer and it can keep repeating that offer. As such, the first offer and the last offer can be the same. So saying that Sue wanted to stick with the first offer, and, if rejected by DCEA, go to impasse is not saying Sue was suggesting anything untoward or illegal.
[i]”… (i.e. DEMAND) that employees accept a reduced benefit retirement plan, complete elimination of ‘cafeteria buy-out’ (which, personally I agree with) …”[/i]
My feelings about the cafeteria cash-out have evolved. I formerly thought the best idea was to minimize the City’s expenses by giving something like a 40% cash-out. So on a $20,000 benefit, the employee who otherwise did not need the City’s healthcare plan could take $8,000 in cash and the City would save $12,000 net by not buying his health insurance.
But I now have a different opinion. I think the City should deal with all labor costs on a total comp basis.
Take, for example, the job title of assistant city engineer, which pays a base annual salary of $112,184.64. If you add in the costs of pension, retiree medical (unfunded), healthcare, MediCare, life insurance, worker’s comp, long-term disability and survivor benefits, it costs the taxpayers of Davis about $195,000 to keep this person employed. So to me, $195,000 is the total comp figure.
In normal (non-recessionary) times, we can sustainably afford to inflate this person’s total comp by about 2% to 3% per year, no more. That is what our policy ought to be. We should not worry about whether any one individual wants a higher share of cash and a lower share of health insurance. Our concern should be the total comp he costs. If his pension costs go up, other areas will have to come down. Let the employees choose their own mix. That might mean a cheaper alternative for retiree medical or even a less generous pension formula (to the extent the law allows it).
[i]”Here are the city services Costs Mesa is considering for outsourcing:”[/i]
I have not looked closely at Costa Mesa’s plans. However, one thing to keep in mind about some city’s which are turning to ‘outsourcing’: the replacement providers are usually other government entities, not privat contractors. So if a city ‘outsources’ its police force, what they mean is that they will be using county sheriffs, not city police, to do the same job, presumably for less money. That is what Half Moon Bay, for example, recently decided to do ([url]http://www.nctimes.com/news/state-and-regional/article_14100e12-6dff-5e51-b95c-063c74962f64.html[/url]).
http://www.miamiherald.com/2011/04/13/2165835/an-ongoing-civil-war.html
Which side are you on?