We have had wake up call after wake up call this year. It actually started last fall, when the council was informed by city staff that, in effect, they would not be implementing the budget that was passed back in June.
We have seen an impasse blow up in our face. We have seen the demise of the fire department merger, which is probably dead for good unless we find a way to gain parity in compensation. We have seen the prospects for budgets without massive layoffs dissipate in front of our eyes.
Discouraging. That is the word that continually goes through my head as I think about the past year. This was a year that I really believed we could make progress toward fixing the city’s fiscal crisis.
Reading the fire staffing report, which was less a report and more of a PowerPoint presentation, gave me a sinking feeling in my stomach. The report says exactly the same thing as the Interim Fire Chief told the Vanguard some time ago – sure, we can reduce our fire staffing on an engine from four to three, but we still need a certain amount of firefighters on active duty in order to fight a fire.
When the council last June passed by a 3-2 vote a budget that sought to take $2.5 million from personnel and put it toward unfunded needs and unfunded liabilities, it seemed like this was the beginning of the road to recovery. I honestly believed that we could do this without massive layoffs and making huge cuts to services.
What becomes clear, reading that report, is that we need to have leadership with the ability to start to think outside of the box. Because if we do not, we will be cutting back on vital city services, because it will be the only way to make ends meet.
I will be honest about something. I get disheartened when I see people coming before council complaining about cuts to the pool, or Acme Theatre Company, or some other great program that we have. It is not that I do not think these programs are worth spending money on.
Do people really have a sense for how bad things are?
Do people understand that there is about a $7 million bill coming due in the next fews years that we do not have the money for? $7 million may or may not sound like a lot of money, but right now it’s close to 20% of our general fund budget. That is the budget that pays for fire, police, parks and all of the little programs we like to send our kids to in the summer.
The budget that was passed last year was supposed to put $1 million toward road repair. That hasn’t happened. We are now about $15 to $20 million behind in road repair work.
We have promised workers about $60 million for their health care when they retire, money that currently we do not have. Pension costs are about to go up, as well, and we have not paid all of those bills either.
The worst part of all of this is that some of us saw this coming three or four years ago. The fact is, we can pack the house when we have a cell tower proposed. The fact is, we propose a peripheral development and people will be waiting until 3 am to speak.
For a water rate hike, people will bankroll a petition process personally.
But what we are facing now is so much worse than that. Right now, behind closed doors, the city’s pay negotiator is going to attempt get concessions from city employees. In June, all of our contracts are up and I would guess we are going to face the prospect for impasse with several of those bargaining groups.
I will make the assumption that we will do the impasse process properly this time. But to be quite frank, we are not going to fix this by going to impasse, which will impose, at best, one-year contracts after which we immediately have to do this again and again and again.
In the end, we will solve our budget problems by laying off workers who help provide us with the city services that we rely on. People are going to be angry when we close down pools. They will be angry when we shut down parks. They will be angry when we have to brown our greenbelts and they will be angry when the city services hours are cut.
And they are going to come out and they are going to say that they had no idea that this was happening, that we have to have this service, and sometimes the council will bow to that pressure, other times, the council will hold firm.
I am going to sit there and wonder where these people have been for the past several years when we needed to make the difficult choices.
The problems happen in this town when no one is watching. Like when the council can sell the public on a sales tax increase to keep city services going and avoid layoffs and turn around and give it to the firefighters for four years of salary increases – in total a 36% increase in total compensation.
No one was watching when, year after year, we got by on a double-digit property tax bubble revenue.
No one was watching as we quietly increased pensions to 3% at 50 for firefighters, under the guise that they do not live as long – something that we now know is completely false.
The worst part of the CityGate report, other than the fact that we keep hiring these guys despite their reputations as industry shills, is what it doesn’t talk about. Like the fact that we are paying these guys $150,000 a year to perform this duty to the community.
There was no outside-of-the-box thinking. No thinking about the fact that most of our calls for service are medical calls and no one is wondering why we need four firefighters and two ambulance attendees to service 70% of our calls every single time.
When we have a medical call, we have probably $600,000 to $800,000 in personnel showing up each time.
Someone made an interesting point regarding volunteer firefighters, however, that volunteers would be volunteers, who may or may show up. “Do you want to depend on volunteers for your emergency? Whatever emergency a citizen has, chances are the fire department can help.”
But that misses the real point in all of this. The real question is whether every single member of that team needs to be a paid employee in order to perform the duties overall. The real question is whether fire departments are the ones best equipped to make medical calls, both from a logistical and a resource standpoint.
We need to start understanding as a community that we may not be able to have everything we want anymore, because we simply can’t afford it. We need to determine what our priorities should be, figure out other ways to fund some of the programs, and figure out some way to get a handle on the out-of-control costs of doing city business.
Can we do that? I just do not know. Prior to this past fiscal year I was fairly optimistic about our chances. Now, despite the best intentions of staff and council, I have grave doubts.
—David M. Greenwald reporting
[quote]When the Council last June passed by a 3-2 vote a budget that sought to take $2.5 million from personnel and put it towards unfunded needs and unfunded liabilities, it seemed like this was the beginning of the road to recovery. I honestly believed that we could do this without make huge cuts to services and massive layoffs.–[b]David Greenwald[/b][/quote]David, the “some of us who saw it coming” certainly included me. I got scant support when I tried to stand firm on the cafeteria cash out or on not enhancing the lowered retirement benefits for miscellaneous workers years ago. I believe I was carrying on this battle even before you started writing the Vanguard.
However, your $2.5 million personnel cut at that point meant major lay-offs; there was no other way to cut $2.5 million. We might need to make these layoffs this year, and they will be far worse if we have no cooperation from employees, but the layoffs will devastate those employees who are affected and also result in a significant reduction in services. That said, they could be inevitable.
[quote]When the Council last June passed by a 3-2 vote a budget that sought to take $2.5 million from personnel and put it towards unfunded needs and unfunded liabilities, it seemed like this was the beginning of the road to recovery. I honestly believed that we could do this without make huge cuts to services and massive layoffs.–[b]David Greenwald[/b][/quote]David, the “some of us who saw it coming” certainly included me. I got scant support when I tried to stand firm on the cafeteria cash out or on not enhancing the lowered retirement benefits for miscellaneous workers years ago. I believe I was carrying on this battle even before you started writing the Vanguard.
However, your $2.5 million personnel cut at that point meant major lay-offs; there was no other way to cut $2.5 million. We might need to make these layoffs this year, and they will be far worse if we have no cooperation from employees, but the layoffs will devastate those employees who are affected and also result in a significant reduction in services. That said, they could be inevitable.
Move fire dept to 3 man crew and institute partial volunteer fire dept to provide help in true emergencies.
End or seriously curtail cafeteria cash out.
Otherwise we are in deep trouble, not Stockton-type trouble but still serious.
Sue did indeed see this coming years ago–why we need to keep her on the council.
Thx David. This broken record is getting scratchier. How much of the inertia do you put on Steve Pinkerton? He sure seems quiet during CC mtgs, not very forceful or pro active. We had/have high hopes. The CC has been surprisingly quiet and accepting of the delay on initiating the budget cuts they adopted.
Councilor Greenwald, you can say that again. It sounds as though the only way to deal with employee input is through the unions, another reason that folks disparage public sector unions. And, the unions representing those in Davis municipal government don’t seem to have a great record of cooperation in these matters.
From reading the [i]Vanguard[/i], one would figure that massive layoffs or significant cuts in benefits, even for those presently employed–or some combination–is the only solution that will garner enough bucks to get us back on track.
It also seems that David’s basic prediction–argue the magnitude of layoffs then if you want–was essentially right. Act then with some layoffs, delay until now and require more layoffs, or procrastinate again and need even more.
Do layoffs here incorporate seniority? Would early-out buyouts of the most expensive employees help?
Sue, do you know why we’re spending money to evaluate (or contract an evaluation) building a competition-quality swimming pool? It seems like another waste since we can’t afford to keep open the pools where Davis kids held swim meets and since UCD has the top competitive pool in the UC system?
Or, is this just one of those false rumors that thrive in [i]Vanguard[/i] comments?
[i]”We have seen an impasse blow up in our face.”[/i]
This might be a blessing in disguise. The DCEA fiasco, in my opinion, was due to faulty legal advice given to the Council by Harriet Steiner. She explicitly told them that if the DCEA was not being cooperative, the Council could forego the impasse procedures and act unilaterally. As the PERB judge determined, Harriet was wrong. This was a costly mistake. But if Davis had not done this in 2010 with the DCEA, and followed the same bad advice this year, when every labor contract expires, it would have been far worse.
The lesson is simple: the Council can declare an impasse; but it must follow the impasse procedures required by City ordinance and (since state law changed) the procedures required by state law (which are pretty much what Davis already was supposed to do).
Unless the Council does not attempt to get all five big reforms in–1) cap total comp growth at 3%; 2) cap the cafeteria cash-out for all employees at $500/mo.; 3) make all new safety hires 2% at 55 and all new misc. hires 2% at 60; 4) cap city contribution to retiree health premiums at $115/mo. to age 65; 5) make all safety pay 12% for pensions and misc. pay 8%–I expect every labor group to reject the City’s offers and therefore I expect every contract to go to impasse, this year.
[i]”We have seen the demise of the fire department merger, which is probably dead for good unless we find a way to gain parity in compensation.”[/i]
This is true, but I doubt it is a crisis. The real savings from merger is with shared management costs. It seems to me that is what we have now without merger.
[i]”We have promised workers about $60 million for their health care when they retire, money that currently we do not have.”[/i]
I have solved this problem, if the council takes my advice. The City must require that a retiree be age 65 and fully vested before he gets full retiree medical care paid for by a combination of Medicare and the City. For fully vested retirees under 65, the City will pay only the PERS minimum, which is $115/mo. now. That reform gets rid of 93.4% of the cost of retiree health care for retirees under 65. It wipes out about 75% of the $60 million retiree health care debt.
[i]”Pension costs are about to go up, as well, and we have not paid all of those bills either.”[/i]
We can handle this smartly, if we want. First is to cap the annual growth of total compensation. The cap needs to be aligned with the growth of revenues into the general fund. The second reform is to require all safety employees to pay 12% (which police now do, but fire do not) and require all misc. employees to pay 8% (which department heads do and no one else yet does).
[i]”But to be quite frank, we are not going to fix this by going to impasse, which will impose, at best, one-year contracts after which we immediately have to do this again and again and again.”[/i]
It would not be a horrible idea to make all contracts for one year. That way, the City cannot make such big mistakes. And when the employees make concessions, they only have to live with them for one year. In Japan, that is the normal procedures in public and private employement: one year contracts ([url]http://en.wikipedia.org/wiki/Japanese_employment_law[/url]). It ends up being much less confrontational, because the stakes are never so high.
“However, your $2.5 million personnel cut at that point meant major lay-offs; there was no other way to cut $2.5 million. We might need to make these layoffs this year, and they will be far worse if we have no cooperation from employees, but the layoffs will devastate those employees who are affected and also result in a significant reduction in services. That said, they could be inevitable. “
As you noted last year, the real amount cut is in excess of $7 million, so you either laid off people last year or you lay them off this year or next year. At least you would have been moving in the right direction had you actually implemented the budget last year, instead, we are waiting for the MOUs to come in, and then we will do this in the future.
JS: [i]”It sounds as though the only way to deal with employee input is through the unions … the unions representing those in Davis municipal government don’t seem to have a great record of cooperation in these matters.”[/i]
For the record, Davis employees are represented by only two official unions (fire and DCEA); the rest are “labor associations.” While that may just be a matter of semantics, the truth is that the real problems have been with the two unions. Fire has bought political power for years; and DCEA has been unique in refusing to make the least concessions.
[i]”Do layoffs here incorporate seniority?”[/i]
Yes.
[i]”Would early-out buyouts of the most expensive employees help?”[/i]
Not likely. The only way this could be of help is if the position of the person accepting the pay-off is totally unproductive and his position will not be filled after he is bought-off. And even then, we would be stuck paying for his medical premiums; and likely backfilling his underfunded pension.
From what I can figure, the best route to go is to reduce the hours of highly paid employees whose jobs are not mission critical. The City can make a position which is now full-time one that is half-time. If we do that, the person whose hours were cut back cannot “bump” anyone else with his seniority.
[i]”… we are waiting for the MOUs to come in, and then we will do this in the future.”[/i]
David, you still have this wrong. We can manage increasingly expensive pension funding by capping the growth in total compensation within the contracts. You are assuming that labor costs will grow in excess of revenue growth to the city. That will not be the case if we cap total comp growth.
Second, if we get all employees on a max cafeteria cash-out of $500/mo., the costs of the cafeteria benefit to the city will drop substantially overnight. Right now, the vast majority of employees are either fully cashing out or partially cashing out. This will cut by 2/3rds the cost of full cash-outs and will eliminate the partial cash-outs. That savings will be far larger than changing fire staffing from 4 to 3.
Third. if we follow my prescription for retiree health care costs (see my 10:11 AM post), we will get rid of 75% of our retiree health care debt. That makes this problem manageable and sustainable.
[quote]For the record, Davis employees are represented by only two official [b]unions[/b] (fire and DCEA);[/quote]I define a union as having recognizable affiliations beyond the immediate employer. Examples include teachers (CTA, who they have to pay dues to, beyond the local bargaining unit), public employees who belong to (and pay dues to) AFSME, Teamsters, Operating Engineers, etc. Mr Rifkin may use another metric. To my knowledge, only the management group has no dues (even ‘internal’). To my knowledge PASEA, DCEA & management employees have no affiliations outside the City. By my metrics, DCEA is not a “union”.
[quote]”From what I can figure, the best route to go is to reduce the hours of highly paid employees whose jobs are not mission critical.”[/quote]One of many of your good ideas here. Implement by taking a long-time employee who gets shifted around for inadequate performance (or, at least, unpopular performance) and have her/him take over the Arts Program management, now that it’s stolen a budget and even if the money should be going to historical resources issues. Who cares about local artists’ grants anyway?
Has the city council contracted for your studies or even called you in for advice during secret sessions?
[i]”Who cares about local artists’ grants anyway?”[/i]
Clearly a lot of artists in Davis do, even though most Davis artists have never personally benefitted from these contracts.
[i]”Has the city council contracted for your studies or even called you in for advice during secret sessions?”[/i]
A majority of the current members of the Council call me–some regularly, others less often–for input on contract matters. I have also recently had enoouraging conversations with candidates for the Council. I am generally hopeful that the Council will make the needed reforms. I do expect, though, that the situation will not be resolved before the coming Council election, and that if there are new members, they will have to get up to speed fast on these issues.
I need to stress one point: The most important reform we need is [i]to cap the growth in total compensation at the rate of revenue growth.[/i] I am optimistic that all of the other reforms are likely to be accomplished this year (probably after impasse procedures play out). I am far less sanguine that the current Council understands that by far the most important change that must be in this year’s contracts is a cap on total comp growth.
Notably, the fire contract ([url]http://cityofdavis.org/cmo/hr/pdf/fire-mou.pdf[/url]) has a cap on total comp as a precedent. That provision needs to be the model for all future deals: [quote] If the Total Compensation percentage contributions above are not sufficient to cover CalPERS Retirement benefit and Medical increases, UNION agrees to an additional hourly rate decrease in an amount sufficient to cover any shortfall.
Total compensation for purposes of the CITY contribution to this MOU is defined as the budgeted amount for a Firefighter I/II and Fire Captain. “Budgeted amount” means the total actual gross amount budgeted for all approved positions in the specified category in the particular fiscal year described. For example, if the total actual budgeted amount for Firefighter II for 2009-2010 is $139,686.20, and 1.5% would be $2,095.29. [/quote]
In a recent conversation with a friend who’s a senior city staffer, the matter of salary negotiations came up. I was told that the city’s negotiator is looking for a 10% reduction in salary costs, at least within that particular bargaining group. My friend was skeptical, saying (I paraphrase) “the city wants a 10% reduction, but it hasn’t said what it wants the money for.”
If high-level staff members really don’t have a good sense of the need for cuts, they’re not going to be very cooperative in negotiations. My question to everyone: How would you respond to my friend’s statement?
.
I should amend the above question: How would you respond beyond generalizations about touchy-feely program cuts?
.
Jim… I suspect you mean 10% reduction in total comp… at least that’s what I hope was meant. If the City gets the employees to pay (non-safety) for the entire employee share of PERS, that’s a 8-10% decrease in take-home (salary stays constant). My figure comes from the 7-8% contribution, but as that would come “post-tax”, you have to figure that in to what is deducted from the paycheck.
In addition, I’ve heard that the City is seeking a continuance (3%) of what employees have been paying towards the employer share, plus any increases in the employer rate that PERS may do.
In addition, if the cafeteria cash-out is reduced to a max of $500/mo, an employee might have 0-$1500/mo deducted from what they’re getting now.
In addition I’ve heard that the City is looking to have the employees ‘share’ in increases to medical coverage.
I hope there isn’t a proposal for 10% salary decrease on top of the above…. it might mean a whole new ‘exodus’, particularly for the more talented folks who could probably still find good employment even in this economy.
[quote]In addition, if the cafeteria cash-out is reduced to a max of $500/mo, an employee might have 0-$$1000/mo deducted from what they’re getting now. [/quote]
[i]”…the city wants a 10% reduction, but it hasn’t said what it wants the money for.”
How would you respond to my friend’s statement? [/i]
Because the city is running a deficit and needs to balance the budget.
HPierce: [i]”If the City gets the employees to pay (non-safety) for the entire employee share of PERS, that’s a 8-10% decrease in take-home (salary stays constant).”
A small number of misc. employees are now paying the full 8% employee share. So for them there would be no increase. All the rest of misc. employees are paying 5% or 3% now. The largest group paying 3% is DCEA, which is still operating without a contract (AFAIK).
Take, for example, someone making $100,000 per year in base salary–I know that is higher than average, but it makes the math easier. Say he is now paying 5% ($5,000). If he is required to pay 8% starting July 1, he will have to pay $8,000. This change would not affect his taxable income, unless the extra amount he pays is classified as “employer share,”* which would reduce his taxable income. So his loss is not (as HPierce said) ‘an 8-10% decrease in take-home’ pay. It’s a 3% decrease in take-home, all else held equal.
—————————
*I was told a couple of months ago something I never knew about “taxable income” with regard to public employees and their pensions. (I was told this by an employee in the management group, but not one of the big-wigs.) If the employee makes $100,000 in salary and is required to pay 3% for the “employee share” and none for the “employer share,” he owes $3,000 for his pension and is taxed on $100,000. However, if the same employee makes $100,000 in salary and is required to pay 3% for the “employer share” and none for the “employee share,” he owes $3,000 and is taxed on $97,000. If I recall correctly, all of the misc. employees who are now paying 5%, are paying 2% for “employee share” and 3% for “employer share.” I know this is the case with civilian employees of the DPD.
This kind of a change in designation of “employee share” and “employer share” makes no difference to the City of Davis, but it does make a difference to the employees. Because of that, it seems to me (unless the IRS would not allow it) we should call every amount the employees pay “employer share.”
Don Shor: can you fix my italics screw up (see 6:18 PM post). Everything after [i]salary stays constant).” [/i] should not be in italics.
“David, you still have this wrong. We can manage increasingly expensive pension funding by capping the growth in total compensation within the contracts. You are assuming that labor costs will grow in excess of revenue growth to the city. That will not be the case if we cap total comp growth.”
I think you are part right here. The $7 million assumes no increased growth, long term, I think you can solve some of this through capping total compensation growth, but short-term costs are coming due from past policies regardless.
“My friend was skeptical, saying (I paraphrase) “the city wants a 10% reduction, but it hasn’t said what it wants the money for.””
If that’s the case, we’re in worse shape than I thought. By now the employees, at least those who have paid a scintilla of attention ought to at least understand that we have promised money to employees that we don’t have and that we have failed to invest in infrastructure. 150 employees were there last June for the budget discussions where these issues are raised. I don’t get how they could not know.
[i]”… short-term costs are coming due from past policies regardless.”[/i]
The only areas I can think of where your statement applies are with:
1. Street & sidewalk repairs and any other deferred maintenance; and
2. Deferred compensation.
As to No. 1, those costs will be a problem for some time. I think we may have to increase revenues to catch up: that is, ask the residents to pay a short-term special road-repair tax.
As to No. 2, I really have never looked into this deficit. However, I do know that many employees are owed money from deferring salary the last 3-4 years.
[i]”I don’t get how they could not know.”[/i]
It’s the same mentality of those folks who still want to fight against the Crown Castle DAS. They don’t accept what you and I think are the given facts.
Rifs
“It’s the same mentality of those folks who still want to fight against the Crown Castle DAS. They don’t accept what you and I think are the given facts”
For some, it may be even more basic than that. In any group of people there will be a number who show up to hear and learn and to have their ideas considered. There will also be a number who come only to have their own ideas heard and do not care to hear about the facts, learn, or consider a different perspective. I suspect that the latter may represent at least some of the more vociferous opponents to Crown Castle and some of the employees that David is referencing.
Ok, I have now exhausted my mornings cynicism. Time for an appropriate smile inducing pic Rich.
[img]http://bellsouthpwp.net/s/m/sm_farm/images/Kalebs_puppy2.JPG[/img]
Does this Weimaraner puppy do the trick?
If sue did see this coming, props to her – for her intelligence. However, understanding the issues does you no good if you cannot work with others.
JustSaying wrote,
“Sue, do you know why we’re spending money to evaluate (or contract an evaluation) building a competition-quality swimming pool? It seems like another waste since we can’t afford to keep open the pools where Davis kids held swim meets and since UCD has the top competitive pool in the UC system?
It’s my understanding that the Aquatics Users Group, consisting of Davis Aquatic Masters and all the numerous other pool user groups are the ones studying a proposal for them to fund their own 50 meter pool. Since the shut down of Community Pool these groups are struggling to accommodate the 10% of Davis familys who have swimmers.
Davis aquatic Masters, the largest Masters club in the nation , accesses the U.C. 50 meter pool for a few weeks in the summer when U.C. is not using it. This is possible because a DAM member was a primary donor in building the U.C. pool. DAM access was negotiated at the time of that donation.
Regards the closure of Community Pool, the savings from closure have been miniscule because you can’t “close” a pool. It must remain filled with water or it will be permanently damaged. This means that it must still be regularly cleaned and chlorinated or it ends up like the pools in foreclosed homes.
The only real savings come from turning off the heat in the Winter months.
So we now have four full time employees maintaining three pools. For the life of me I don’t know where these four individuals spend all their time. I swim every other day at Civic Pool and rarely see any of them. In spite of an $80,000. annual contribution from DAM to the city, they can’t seem to keep the pool cover in tact so that the pool is not leaking huge amounts of energy, and money.
The consensus in the Davis aquatics community is that two guys should be able to keep all four pools in tip top condition. But Staff/Council don’t seem to be able to get up the gumption to lay off anybody. The City of Davis is a business. When a business experiences a decline in revenue it lays off employees or goes out of business. So the choice for City of Davis employees is to take concessions or take layoffs. The ball is in their court (assuming that CC/Staff has the gumption to put it there).
When I was single I got $75/month cash out on my medical. The numbers for Davis employees who get health insurance elsewhere blow my mind! I wonder how do these numbers compare to what nearby cities give their employees?