The risk of a general use tax is that the voters have no say over how that money might be spent. As we presented yesterday in the case of the Utility User Tax, that risk is two-fold. First, while council can advertise the money going to core needs like roads, sidewalks and bike paths, there is no protection against the council, under pressure from special interest groups, to take the money and put it toward a 50-meter pool and a sports complex.
Worse yet is the fact that nothing would prevent the city from putting it toward employee compensation.
Impossible, you say? Well, there is the tale of the 2004 Sales Tax Measure. While we have referenced the issue many times in the last several years, I think we actually need to re-tell the full story so people can get a sense of the magnitude of the issue.
In 2004, the ballot measure was Measure P.
In the argument in favor of Measure P on the ballot the signers, that included Lois Wolk (Assemblymember), Helen Thomson (Supervisor) and then-Mayor Susie Boyd, argued: “The City faces increasing costs. We will face higher expenditures if we are to provide the additional police protection and meet park and recreation and open space commitments we have made to our citizens.
“Without Measure P revenue,” they argued, “given the uncertain state support to the General Fund, we would be faced with very deep service cuts in police, fire, and parks.”
In the city’s newsletter sent out in the winter of 2004, they claimed the money would go into the city’s General Fund and be considered “discretionary” revenue. They mentioned public safety and emergency services, street maintenance, parks and recreation, and neighborhood and community services.
The proponents argued, “The city faces increased costs to run city programs and services. Needs in the city have grown with the population. Programs, parks and other services have been added. As with other local businesses and organizations, basic program costs, including staff costs, have increased. The city has absorbed many of these increased costs into existing budgets, but this process cannot be sustained indefinitely.”
From 2003 to 2009, city staffing levels increased but, according to the city’s finance director at the time (2010), Paul Navazio, city staffing levels had gone up at a rate less than that of population growth and thus, on a per capita basis, the city had lower staffing levels than it did 2003-04.
Five years later, of course, staffing levels are at historic lows. And it has been pointed out, despite the fact that staffing levels have dropped by more than 100 FTE, we are still paying about what we paid for total compensation in 2010.
In 2004, “City officials are concerned about Davis’ financial situation with forecasts showing the city’s budgeted expenditures are greater than its revenues.”
They argued that if Measure P did not pass, “[i]t will be difficult to maintain the current level of services, programs and staffing.” They continued, “Building of parks and greenbelts, as outlined in the adopted General Plan (e.g., Mace Ranch), and anticipated by city of Davis residents, may have to be deferred.”
“It will be challenging to pay for increased staff costs, such as medical benefits, workers compensation and other insurance premiums,” they continued. “The city will have an even tougher time responding to State of California budget uncertainties.”
Moreover, they argued, “If local revenues continue to be shifted to the State or the shifted revenues increase, it will be a challenge to maintain a prudent city reserve. It will be difficult to continue to maintain the current level of service, programs or staffing. City Council will have to determine specific budget reductions to services and programs.” Finally, “The likelihood of all departments facing reductions is high.”
The result, of course, was that the voters would approve Measure P. The voters approved the Measure 68.5 to 31.4 percent, which was about ten points higher than Measure O passed last spring – which is itself something to consider.
So what happened as the result of Measure P’s passage? In 2004, the firefighters agreed to a new MOU which gave them a 36 percent pay increase. All of the other bargaining units in the city would receive between a 15 and 20 percent pay increase.
Sales tax revenue was $5.46 million in 2003-04 and went up to $9.1 million by 2007-08. Property tax revenue nearly doubled from $7.38 million to $14.3 million. The real estate boom coupled with the sales tax increase fueled the largest increase in total compensation in city history.
From 2004 to 2009 total compensation for the firefighters went from $4.92 million to $8 million, a $3.15 million increase on a staff that did not add a single new firefighter. That compensation increase was more than the maximum annual sales tax revenue from Measure P, which peaked in 2008 at $2.999 million.
So, while Measure P was passed – on the guise that without the new taxes it would be difficult to maintain the current level of services, programs and staffing – the city would see the council take all of that extra money and put it toward increased compensation with almost no per capita growth in services, staffing or programs.
While the city might not have anticipated the huge increase in real estate tax revenue when it put Measure P on the ballot, the city was also not eager to keep campaign promises or return the tax revenue it no longer needed for existing purposes.
The magnitude of the fiscal mismanagement is staggering. By 2008, it was evident that the city’s finances were precarious at best. However, despite huge and growing unfunded liabilities and unmet needs (despite the nearly 40 percent revenue growth from 2003-04 to 2007-08), councilmembers were claiming that we had a balanced budget with a 15 percent reserve and they ignored the coming tsunami that would hit just months later starting in September 2008.
The council will undoubtedly argue that times have changed and that this council has shown fiscal constraint. While that is largely true, we still see council pounding their chest over the modest success of the current budget. We still see the city manager refusing to talk about more concessions, as longer range projections show potential pitfalls down the road – and the fact that, but for the sales tax, we would still be in the red.
And, of course, the council will likely point out that, unlike in 2004, the Vanguard will be watching. All of which is true, but the lessons of 2004 show that giving the council a blank check is a recipe for fiscal disaster.
No one has been arguing longer than the Vanguard that the city needs money for infrastructure longer. But a general use tax is not the way to go. I understand why the city would want a Utility Use Tax, and there is no reason that the city cannot use that form of tax along with specified usages. The cost would be the two-thirds requirement.
I understand why they want to avoid the two-thirds threshold, but avoiding that puts the community in the position of having to trust the city council to properly manage their money. History shows that might be a bad idea.
—David M. Greenwald reporting
So we have the choice of the UUT likely passing and a parcel tax dedicated to infrastructure likely not passing to match the revenue stream created by the UUT. I will vote for the UUT not only because it is a fairer consumption tax but also because it is more likely to result in getting the roads repaired than no revenue stream. Then again I am not offended if the money is also used to improve the quality of life for Davis residents with improved recreational facilities for adults and children to include a sports complex or 50 meter pool. Both are needed upgrades.
It is important to point out that Davis is in this position due to a failure to attract businesses to the city. The Mace 391 was an economic disaster. The entirety of the land between the Covell curve to the east should have been annexed by the city and opened up to industrial development to create a viable tax stream to fund city services. Instead we are in the position of needing to tax ourselves for these services. If you want to maintain the Davis Utopia of good schools, good recreational facilities and low crime you will have to pay for it somehow. The choice is self taxing or creating an industrial tax base. We are ringed by cities in this county that have large shopping malls that Davis residents travel to for purchases with Woodland and West Sacramento reaping the benefit. These cities have also developed an industrial tax base that does not exist in this town.
I don’t share your view of a UUT likely passing when the 2014 poll showed that a proposed $150 parcel tax was backed by less than 50% of the voters. So you now believe that a higher tax of anywhere from $250 to $600 per year would somehow pick up more voters?
As our roads continue to deteriorate a tax will pick up more support. At some point the city leaders will have to explain to the public why this tax is needed. The 50% threshold is more likely to be achieved. The UUT is a more viable alternative to a parcel tax. The only issue that I see is how much money the city will try to raise and how that translates to each tax payer.
i think it’s likely to pass. the question is whether the money will be misused and whether it is even enough to support the needs we have.
You can distill this down to just saying that Davis, through extreme land-use policy, has failed to develop enough business to support the city. Davis is alone with this distinction… especially given that it is in the enviable position of having copious opportunity to grow its local economy but instead says no to everything in a selfish stasis fit.
And you can add – and Davis is not alone in this – that every pothole and crack in the road represents the missing general fund dollars that alternatively pay for the millionaire retirement benefits for city workers. If you have a neighbor in his/her 50’s retired from the city and heading out for yet another European holiday, just think about that every time your car or bike careens from pothole to crack to pothole.
No, we are in the position of needing to apply urgency to developing peripheral land for innovation parks to attract the business that will increase our tax revenue to fund our needs and wants. If we need a tax measure, it should be temporary and connected with a timeline for innovation park development.
This was already the messaging for the sales tax increase, and yet here we are again without substantive progress on economic development and talk of another tax increase.
You must realize the strategy here. Claim you are for economic development and growth to meet our financial needs, while doing everything you can to stall it so voter frustration over roads and other unmet needs mount to the point that voters are willing to tax themselves more. This is the same scam at the national, state and local level that has got us into the mess we are in where we are highly taxed and government continues to grow deficits.
I think we could have a more productive conversation, (maybe I’m falsely assuming is your goal?), if we refrain from encouraging people to villainize their neighbors.
That is not what I am suggesting. I am suggesting that we all connect the dots. The retired neighbor is not at fault. It has been city politicians and the unions working to pay much more than what has been necessary and hence we lack the money to fix the streets.
That is the point… instead of filling potholes in the streets we have been filling city employee retirement accounts beyond what has been necessary.
There is a narrative that we have failed to grow the city economy in synch with our population growth and this is a reason that we lack sufficient tax revenue to meet our REAL budget needs. This is true. But there should be another narrative that we have overpaid city employees and continue to overpay city employees.
I think your point has validity, and was much better made, when you were not targeting our retired neighbors.
It’s our elected officials responsibility to address the fiscal needs of our city. Not the the unions, or any other special interest groups. Ultimately, for better or worse, the only power that any “special interest” group, whether it be “NIMBY’s, neighborhood groups, unions, environmentalist, developers, etc. have is that which is given to them by our elected officials.
When I first moved from a bigger city to Davis in 2001 I felt it odd that I had firemen knocking on my door soliciting for local politicians who were running for city council. I had never seen that before, maybe because I had never lived in a small town. After I saw the contracts that were given out to these firemen by these same politicians that they were politicking for I soon realized why the firemen were walking the precincts. So yes, the unions were actively involved in what was given to them.
I’m not denying that union members aren’t involved, nor do I question their right to be involved. They have the same freedom to knock on doors to support a candidate as any other group or individual who are advocating for their interests or their cause, and I would never deny their or any groups right to do so. But this does not give them decision making power, that responsibility lies with our elected officials. In my mind it is pointless to blame any special interest group, as voters we have no power to influence them or their actions. Where we do have power and influence is in the voting booth (or in my case, as I vote absentee, at my kitchen table).
So where do you stand on the Citizens United court decision?
The reason that I ask this is to test your balance on perspective.
I agree with you that special interest is not to blame and are generally the scapegoat for the malfeasance of politicians.
Unions though are unique. First, they are non-profit. Unlike a private-sector for-profit company that pays taxes, unions are over-represented in politics even though they pay no taxes. Second, they have special rights in most states to force members to pay dues that are used for political action. Third, unions today are mainly permanent political action organization with a primary purpose to enrich the leadership and membership of the union.
This last point is key, because unions have decades of experience doing the political work. It is their primary function. Compare that to private industry that must run a real business with all of the challenges of business, and only organize for politics when there is a need or opportunity to pursue… and at expense of the business itself… no dues from employees allowed.
If you have ever run for office and you must start a campaign operation from the ground up, union support would equal a giant kick-start as the union is an already established political machine.
There are more beneficial reasons that we should abolish public sector unions than there are in support of them. They are a menace to effective fiscal public policy. They give more political power to one citizen over another to influence the spending of our precious tax dollars.
You want to drag me down this rabbit hole on Sunday afternoon huh?
Lets just say this, my comments were made in the context of local Davis politics, where for the most part, relatively speaking, large sums of money are not being spent on campaigns.
When we start talking about regional, state, and national elections where a large amount of money starts coming into play, things get trickier.
I have some issues with how the Citizens United decision has played out, and with some of the loop holes that exist within the ruling. These guys do a pretty good, and entertaining job of highlighting some of my concerns.
http://thecolbertreport.cc.com/videos/av6bvx/colbert-super-pac—coordination-resolution-with-jon-stewart
http://thedailyshow.cc.com/videos/3pwzi5/colbert-super-pac—not-coordinating-with-stephen-colbert
I added some links to my reply so its is awaiting moderation. Here is the comments sans links:
You want to drag me down this rabbit hole on Sunday afternoon huh?
Lets just say this, my comments were made in the context of local Davis politics, where for the most part, relatively speaking, large sums of money are not being spent on campaigns.
When we start talking about regional, state, and national elections where a large amount of money starts coming into play, things get trickier.
I have some issues with how the Citizens United decision has played out, and with some of the loop holes that exist within the ruling. These guys do a pretty good, and entertaining job of highlighting some of my concerns.
I don’t want to debate unions with you. But I will say that this, when it comes to political power and money things tend to get messy fast. Claims of the unfairness of how any individual, union, or corporation that is funneling large sums of money to support or oppose candidates and issues, raises money or spends this money, can most likely be legitimately made.
The reason I like local politics is because citizens through active engagement can have a larger influence over who represents them then special interests and the money that follows them.
There is exactly one “union” of Davis City Employees. FF’s. Neither PASEA, nor DCEA have contributed time/money/endorsements for any candidate for any office, as well. Think DPOA did once or twice, but that was many years ago.
The City forced all employees, other than dept heads, to negotiate as “units”. Many, many years ago.
True by definition, but not by practice since all groups collectively bargain and are organized labor.
Where do you get this information? References?
True on one hand, but on the other it still takes money and manpower to run a campaign… just less of it that county, state and national politics. And so just a little help is useful and attractive to a candidate. Why do 12-14 unionized firefighters have a history of being so impactful toward local election outcomes? The answer is that there isn’t much else that is perpetually organized and experienced in helping to campaign.
I disagree that organized public sector labor in this city hasn’t been a factor.
It is a public-sector-employed town. Most of the CC currently work in the public sector, or used to. There is in fact a huge conflict of interest being supported that provides with mutual back-scratching at the expense of taxpayers and residents lacking a hand in the cookie jar.
Frankly… re: your 6:10 post
You seem to hear, but not “listen”…
I wrote “The City forced all employees, other than dept heads, to negotiate as “units”.” The City chose to treat non-safety employees as a unit. The City adamantly refused to let individual employees “meet and confer” (M&C is required by State law) with the city. Used to be there was Fire, PD, Management, and everyone else. The miscellaneous unit, which has split into DCEA and PASEA (in the late 80’s, early 90’s) had to call themselves something, [DCEA] The employees didn’t “organize”, they were lumped together by the City, for the City’s purposes.
I said, “Neither PASEA, nor DCEA have contributed time/money/endorsements for any candidate for any office,” You replied, “Where do you get this information? References?” Nice. Ask someone to prove a negative. For over 35 years, I’ve had good friends in PASEA and/or DCEA. I stand by my statement. Hitting the ball back over the net, can you show even one, single, solitary instance where DCEA and/or PASEA contributed funds to any political candidate, had their members (at the organization’s direction) campaign for any candidate, endorse any candidate. You can’t. It hasn’t happened, and is unlikely to. I can’t “prove” that something hasn’t happened. Can you ‘document’ one iota, one scintilla, of evidence that my statement is untrue? If not, “put a cork in it”.
BTW, Frankly, DCEA/PASEA has been approached in the past, several times, to affilliate with AFSME, Operating Engineers, SEIU. Each time, the membership resoundingly declined (maybe ~ 15% support). Yeah, sounds like a powerful union to me…. NOT!
So your declaration is that there has never been a case where employees of the DCEA or PASEA in a coordinated or even semi-coordinated effort supported a “friend of DCEA or PASEA” candidate?
You say “at the organization’s direction”. Nice cover. What is a labor organization other than a collection of workers?
I understand that there are seven separate bargaining units of city employees. That is seven separate labor organizations. Frankly I think these employees would be foolish not to collaborate on supporting certain political candidates.
Break up the bargaining units and make every employee at will and develop pay grades and standard benefits for all employees. Implement professional HR and do away with all the negotiations. Here is the job, what it pays and the list of benefits. Take or leave it. That is how we do it in the private sector and it works very well for both the employer and the employee.
“You can distill this down to just saying that Davis, through extreme land-use policy, has failed to develop enough business to support the city. Davis is alone with this distinction… especially given that it is in the enviable position of having copious opportunity to grow its local economy but instead says no to everything in a selfish stasis fit.”
i think the problem is one of spending – we gave away too much last decade. i don’t think that cities with more tax revenue and more development really faired better than davis. if anything davis held up better than those other cities.
From the Sunday Enterprise:
I think we all know how this could come down. All council members would have to say is that they’ve been getting a lot of feedback that a new sports park or pool is needed or that they’ve been getting emails that city services are a high priority and in turn city employees must be compensated appropriately.
Or possibly we’ll be party to another phone poll with obscure leading questions. For instance, is a community pool important to you? Are youth sports and accommodating facilities good for our community?
We can easily be played.
Frankly
“You must realize the strategy here.”
Or you might realize that there is more than one strategy here. 1) There are surely some who want Davis to stay the same as it is and they may, based on their own perception of what is best for Davis, try to obstruct all change. This is in my view no more or less “selfish” than a developer or investor who sees growth as in their own best financial interest.
2) There are some who believe in fiscal and economic responsibility and truly feel that we should be willing to pay for the amenities that we want ourselves, not use the natural resources that might be controlled by our children over a 20 to 50 year build out rather than leaving them with our decisions on how to pay for what we wanted rather than using a pay as you go strategy. Seen in this light, one might see it as selfish to push the payment for our amenities onto others be they those new to the community or our own children.
3) There are some who view progress as something different from more of everything and who recognize that if we choose slow growth, we need provide fewer amenities than if we grow rapidly.
BP
“We can easily be played.”
Or we can write to our council members, write articles for the Vanguard and Enterprise putting forth our own viewpoints. We can show up at commission and city council meetings to express our views. On the Vanguard, we frequently hear about the “special interests” or other less flattering names for those not aligned with the posters point of view. This completely ignores the obvious fact that none of us speak for “the majority” or “the citizens of Davis”. We speak either for ourselves or for those who we know are in agreement with us…..Namely our own ” individual or special interests”.
“We can easily be played.”
that’s my fear
zaqzaq: “Then again I am not offended if the money is also used to improve the quality of life for Davis residents with improved recreational facilities for adults and children to include a sports complex or 50 meter pool. Both are needed upgrades.”
Would you be offended if the City Council: 1) failed to fix the roads and repair the already existing buildings; 2) went ahead and built a new sports complex; 3) then asked for more taxes because the City Council subsequently claimed there wasn’t enough money to repair roads, maintain existing buildings, or maintain the sports park?
Think about it. A new sports park would cost something like $24 million is the figure I have read (have no idea if that is correct.) However currently, we have roads that are going unrepaired, that would cost more than that to fix. We also have old buildings that have not been properly maintained. It would seem to me prudent to make necessary repairs/maintenance BEFORE the city spends money on new projects that will need to be maintained/repaired.
The way to afford new projects is figure out how to generate new tax revenue through sound economic development. At some point, continued increased taxation will not work as a long-term fiscal sustainability plan.
exactly
zaqzaq: “The UUT is a more viable alternative to a parcel tax. The only issue that I see is how much money the city will try to raise and how that translates to each tax payer.”
Not necessarily. A UUT that merely carries a nonbinding “advisory” measure that City Councils do not have to follow may very well be a nonstarter for more than 50% of Davis citizens who decide to vote, especially if the city continues to remain quiet about economic development and floats out ideas for new projects to spend city funds on.