Long before Joe Krovoza and Rochelle Swanson ran for the city council and won, I talked to them about the budget. They told me what I wanted to hear, but their first six months in office were very disappointing. Instead of a strong new majority, we saw a show being run by Don Saylor.
As much as Paul Navazio may frustrate, I believe he is generally a good person who means well. The policies of Bill Emlen and Don Saylor, however, probably set this city back by half a decade at best.
Still, despite clear improvements since January of this year with the running of the city and the general pleasantness of the city council, this budget, the first budget where the blind backers of the firefighters and other city employees did not hold a 3-2 stranglehold on the process, loomed as judgment day.
To be very honest, things did not look promising. As late as 10:18 pm on Tuesday night, I sent a text message noting that “Paul [Navazio] is slippery.”
The problem was that the budget that Mr. Navazio sent the council was business as usual. The same budgets I have seen in my rapidly approaching fifth year of coverage of the city. Too much of the budget balanced on hope and prayer, the absence of dealing with the mounting unmet needs, the lack of structural changes, the overly rosy projections that lead to false claims of a balanced budget in the out years, etc.
I had a majority of the members of the council, four in fact, telling me the right things behind the scenes, but nothing to see that was tangible.
Tuesday night up until 10:25 PM was not going well. You had Paul Navazio wasting time on RDA and other non-general fund items. You had Stephen Souza once again talking out of both sides of his mouth, trying to push the ball down the field as he argued that while he wanted to make structural changes, we could not do so by June 30.
Everything changed at 10:26 PM when the Joe Krovoza that the majority of the citizens in this city voted for finally stepped up to the plate and delivered what I called at the time a homerun.
There is much work to be done but the plan does a lot of things at the same time, and most importantly, as several people noted yesterday, it does not micromanage the budget from the dais. Instead it puts the onus on Paul Navazio to come up with a budget that does what the new council majority wants.
It does a lot of things that we desperately needed to do. First, it recognizes what we have talked about for several years now, that the city’s roads are in trouble and, while Paul Navazio moved some general fund money into road maintenance, it was not enough. Moreover, we would have to add more to road maintenance in the out years and his budget did not show that.
This puts the road maintenance budget at $1 million. That is where it needs to be, possible slightly higher, but this will at least prevent the deferred maintenance budget from looking like the unfunded liability of retirement health.
Second, it starts the process of closing the gap on unfunded liabilities for pensions. The reality is that the city is going to pay a lot more in the future for pensions and we have not budgeted for that. Now we are moving in that direction.
For now, the city is going to assume the tier 1 and 2 cuts, with some exceptions. Stephen Souza tried to argue that cutting services is necessary. It might be. But I would like to avoid it. The previous cuts, despite his claims to the contrary, have greatly reduced a variety of city services.
He called it a balanced approach of spreading the pain, but I do not agree. We did not get into this situation because we expanded city services, we got into this situation because we increased compensation to public employees during what amounted to a bubble in the last decade in the real estate market. That has crashed and so we need to get back to where we were prior to those increases. That is where we need to cut, but to date no one has done anything to cut that.
That is where part four comes into play, where the staff will have to come up with $2.5 million in personnel savings. It could be in layoffs. It could be in an across the board cut. It could be in labor concessions.
The council has laid down the gauntlet and it is now up to the city manager, the department heads and the city employees to determine how it falls.
Within ten minutes, the city’s future was changed. We were facing the very real possibility of bankruptcy. These changes, when implemented, put us on the right path for the first time in a decade.
Of all the comments that were made on Tuesday night, I particularly was angered by Stephen Souza’s comment/question as to whether the council could unilaterally cut 10% across the board to department heads and management. That was aimed at me.
The fact of the matter is, I know better than anyone that the council could not impose such a cut. But it needed to be on the table to change the mindset and put it in people’s minds. The leaders in this city have to lead by example. If they expect concessions from workers, they have to go first.
That did not happen in 2009 and 2010. As a result we failed, in the last round of MOUs, to stop the bleeding.
What the council has done is respect the bargaining process, but they have laid down their will at the same time. Employees can choose. The choice is somewhere between an 8 to 10 percent compensation cut, or 30 to 60 employees being laid off, or some mix.
The ball is in their court now.
For the first time in a long time we have seen leadership by the city council in being proactive to thwart problems, as opposed to sitting back and waiting for them to come up – even when they are foreseeable – and try to do something reactively.
I will never forget the budget debates that occurred during the 2008 debate. On one side was Stephen Souza and Don Saylor, arguing that they had a balanced budget with a 15 percent reserve.
On the other side were the Greenwalds, Sue Greenwald and Cecilia Escamilla-Greenwald (my wife) who were arguing that this was a house of cards, and talking about the facade of balance when there was then $13 million in unmet needs and we had raised the amount of pension contributions and had huge unfunded liabilities.
Three years later, for the first time, a very different council has made them prophetic. We have taken real steps to bridge the unmet needs gap and deal with our unfunded liabilities for the first time in a very real way.
If only the council had heeded those worries instead of bragging about a balanced budget and fiscal responsibility that was based on a house of cards, deception and mirages.
Davis now has the leadership that it deserves and for now, the confidence of many former skeptics.
—David M. Greenwald reporting
I get what you want here, it’s what we all want: to have the city’s past mistakes managed and resolved, its problems fixed, and to do it without cutting services.
I feel like everyone always throws city (or on a broader scope, government) employees under the bus though. You can only cut so much and still have effective staff.
[quote]I feel like everyone always throws city (or on a broader scope, government) employees under the bus though. You can only cut so much and still have effective staff.[/quote]
I don’t see this as “throwing gov’t employees under the bus”. It is an attempt to get gov’t on a sound fiscal footing, so that funding for salaries and pensions is there to pay the gov’t employees. Some cities have actually run out of money, and cannot pay anything to present or retired employees. Is that a better solution? At some point, the city has to be realistic in what it can deliver. To wrestle with the problem now, is better than dealing with the more devastating fallout later.
Justin:
I guess it can look like that. The way I see it is that we raised salaries and compensation past the point where we could pay for them.
So we have options as to how to fix that:
1. cut service
2. coinciding with 1, laying off employees for non-priority service
3. making salaries and retirement more sustainable
What we have done so far is use attrition to reduce the workforce, reshuffle the deck, and cut some services mainly through the attrition and some through furloughs.
Bottom line is that we have only touched the core issues on the edges.
Does this throw employees under the bus? Somewhat. Someone though has to pay for the mistakes of the past and so far it has not been the employees all that much.
[i]”What we have done so far is use attrition to reduce the workforce, reshuffle the deck, and cut some services mainly through the attrition and some through furloughs.”[/i]
More than the things you list, we have ‘balanced the budget’ by deferring maintenance (on streets and to some extent parks and buildings) and we have accumulated a tremendous amount of future debt for pensions and for retiree benefits.
[i]”I feel like everyone always throws city (or on a broader scope, government) employees under the bus though.”[/i]
I don’t see this, unless you mean by ‘throwing under the bus’ just pointing out the political power of the unions and other labor associations?
The great fiction which got all levels of government into serious fiscal trouble was that public employees need to be paid what they make and need the benefits they have been handed because without them we cannot attract or retain qualified people in public employment. So slowly but surely, what once was ‘public service’ became private enrichment.
With rare exceptions in municipal, county and state government, the salaries paid to public employees greatly surpassed those in the private sector. Anyone who pointed this out was accused of ‘throwing the public employees under the bus.’ We have clerical staff–usually with some misleading title–making $100,000 or more a year in Davis and Yolo County and no doubt for the State, too.
But it has not been their excessive salaries alone which have driven us into our fiscal nightmare and long-run debt. Public employees get non-salary benefits unheard of in the private sector for equivalent productivity.* We simply cannot go on giving every last public sector worker a benefits package and vacation package and sick leave package and retirement package which together costs nearly $100,000 each.
If you want circumstantial evidence which suggests that public employment pays too much, look at what just happened in Woodland. They had a few openings in their fire department. They got more than 300 applications from qualified prospects. That is not proximate to labor equilibrium. Woodland could have cut all pension benefits and retiree medical and cut the starting pay in half for these jobs and likely would have had 100 or more qualified applicants. And it’s not as if these guys who get hired would pick up and leave for some other agency. They would have to get in line with hundreds more in hopes of winning the rare job opening elsewhere.
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*Sure, highly paid executives in private corporations get far more in benefits. But those people are not comparable. The men and women who run big stock companies–many of whom are over-compensated by foolish boards of directors–work 100 hour weeks, 52 weeks a year for decades before they get the serious cheese in most cases. The exceptions to that are generally the most highly productive salesmen and research scientists who are essentially just getting back what they put in.
[quote]Sure, highly paid executives in private corporations get far more in benefits. But those people are not comparable. The men and women who run big stock companies–many of whom are over-compensated by foolish boards of directors–work 100 hour weeks, 52 weeks a year for decades before they get the serious cheese in most cases.– Rich Rifkin[/quote]I agree with you that there is no comparison between the executive compensation abuses in the large corporations financial institutions and city management employees, but I have the opposite take on it.
I do not believe that the corporate executives work harder (I suspect that our interim city manager works A LOT harder than most corporate and finance executives –I don’t see him hanging out at the country club and I know that he works late into the evening)– the two are not comparable because the corporate executive salary abuses are several orders of magnitude more outrageous, and because they often bring in these salaries for destroying the country rather than for at least trying to manage a city.
[i]”I do not believe that the corporate executives work harder (I suspect that our interim city manager works A LOT harder than most corporate and finance executives –I don’t see him hanging out at the country club and I know that he works late into the evening.”[/i]
Any evidence for your assertions about corporate execs?
Bill Emlen once told me, as an aside when I was suggesting to him we cut back from 4 on a truck to 3 on a truck in the fire department, that the private sector executives he spoke with recently at a conference–Paul Navazio was with me and Bill and he nodded in agreement–were shocked at how little public sector managers work each year compared with those in the private sector. Bill said the private sector managers, who get much less in vacation, far fewer paid holidays and are on the job in a normal day many more hours, work about 150% as much as people in city government work.
But what Bill told–abd what I know from my work in a private corporation, though not in management–is anecdotal.
NFI Research studies this specific topic and reports ([url]http://www.cio.com/article/25090/Report_Most_Executives_Work_50_Hour_Plus_Weeks[/url]) “The majority of senior executives and managers now spend 10 hours or more in a typical workday.”
Regardless of what top execs do, my point was not about them. My experience tells me that the men and women employees in major companies who rise to the top of the corporate ladder do so because, as middle-rung employees, they are the ones who put in the 80, 90 and 100 hour work weeks. They usually out-compete others in their companies.
For every point anybody wants to make on anything–and posts a study report to legitimize it–somebody else can go in the Internet and find equally credible (or not) reports for rebuttal.
Reviewing the past is informative and instructive on how the City got to where it is now. We have various interpretations of past leaders’ actions and motivations. We’ve already walked this trail how many times? None of this has resulted in a solution to the existing problem of huge public debt.
If we insist on dwelling on history, we are in the wrong era. Go back to Rome and look at Nero with his fiddle. That’s us now! We have to forget the past and all the finger-pointing, it’s a complete waste of time. Instead, make tomorrow’s history by assisting the public leadership with constructive input on viable budget options.
And by the way, if you REALLY want to be effective with the Davis political leadership, say, “I am willing to bear the pain.” It’s just too simplistic to say somebody else should pay which is the constant theme here.
If your solution is “somebody else” should pay, nobody will pay and the debt just gets bigger.
Let me put it to you, leave out all other analysis, do you think the current council made the right decision, Phil?
[quote]We have to forget the past and all the finger-pointing, it’s a complete waste of time. Instead, make tomorrow’s history by assisting the public leadership with constructive input on viable budget options.
And by the way, if you REALLY want to be effective with the Davis political leadership, say, “I am willing to bear the pain.” It’s just too simplistic to say somebody else should pay which is the constant theme here. [/quote]
Nicely said!
To Mr. Greenwald:
The right decision, yes. But it is only a prelude to a solution, yet to be determined. The Council’s decision gets us off the merry-go-round we have been on for the past couple of years.
If the Council has the political will to stand united when the painful and political volatile budget recommendations come from City staff, the solution will follow.
[quote]The right decision, yes. But it is only a prelude to a solution, yet to be determined. The Council’s decision gets us off the merry-go-round we have been on for the past couple of years.
If the Council has the political will to stand united when the painful and political volatile budget recommendations come from City staff, the solution will follow.[/quote]
Again, nicely said!