Budget/Fiscal

At Tuesday’s Davis City Council meeting, City Manager Steve Pinkerton said, “I don’t think we have as much a spending problem here as we do a revenue challenge in the future.”

He has a point.  The projected revenue growth is still sluggish into the future.  From 2013 to the 2017-18 budget, a four year budget period, the city manager is only projecting just over 8% in revenue growth.  That’s about 2 percent per year.

You would think at some point things would turn the corner for the city of Davis in terms of its budget picture, but the cold reality once again rained home on the council.  Much of this is occurring after the city has made a series of tough choices – reining in spending, overhauling pensions and retiree health, cutting staffing, and restructuring existing staffing to give the city more bang for its buck and flexibility.

At the same time – like the water project or hate it – there is no doubt that the impact of the decision to go forward with the surface water project is, at least in the short term, going to make things more difficult.  First, there are serious general fund costs to budget and, second, the accompanying rate hikes will make it more difficult for the city to gain additional revenue.

By Rob White

I haven’t been in Davis long.  But one of my primary tasks has been to identify and meet as much of the entrepreneurial and tech community as possible in a very short amount of time.

This has included meetings with principles from well-known Davis companies like FMC Schilling Robotics, DTL/Mori Seiki, Bayer/Agraquest, Cedaron Medical, Gold Standard Diagnostics, Calgene, SiGNa Chemistry, Engage3 and others. I have heard stories of how the companies started, what their growth has been like, and what has kept them in Davis to date (or in some cases, moving back). I have discussed some of their challenges and took a keen interest in their industry and how that might relate to future companies that could be in Davis.

After years of decline or stagnation, the good news is that revenues are rising in the city of Davis.  However, the problem that the city faces is that expenses continue to rise faster than revenues.  This is in part due to the fact that, while the city has resolved the contracts for two-thirds of its employees, it still needs to approve new contracts for two bargaining units.

But there are other pressing issues, as well.  The city has chosen to undertake not one but two major capital projects simultaneously.  Writes the city manager in his message to council: “In the upcoming year, through the joint-powers agency, a new surface water treatment facility will take steps toward construction and the City will be working on a design-build wastewater facility. Most cities have one utility capital improvement project every twenty years: Davis has two underway simultaneously; the surface water and wastewater-treatment projects.”

On the one hand, what do you expect Bobby Weist, President of the Davis Professional Firefighters Union, to say – after all, he is negotiating with the city’s negotiator for a new contract and locked in a standoff that appears likely to result in the imposition of the last, best, and final offer by the city.  But on the other hand, his quote, featured in the article by Tom Sakash of the Davis Enterprise, is telling for its sheer audacity.

Mr. Weist told the paper that “he hopes it will not come to imposition.”

This week Bob Dunning posted excerpts from a Village Homes plan to go to well water rather than pay for the increased cost of water under the new project.

Drilling through the morass of tongue-in-cheek comments, it appears the  crux of the situation is, “The Village Homeowners Association Board has been contemplating construction of a well on Village Homes property for over two years to help defray the rapidly increasing cost of water.”

The City of Davis declared impasse with DCEA (Davis City Employees Association) back on November 8, 2012.  More recently, on April 12, 2013, the city declared impasse with the Davis firefighters’ union, Local 3494.

According to a press release from May 31, “The City’s agreement with DCEA expired on June 30, 2009, and the agreement with Local 3494 expired on June 30, 2012. The City commenced negotiations with both groups in the spring of 2012 regarding the terms and conditions of employment for these represented units, and the parties have spent the last year negotiating for successor agreements.”

From 2006 until only the last few years, one of our favorite expressions was that the council majority was lining up in punt formation to push off another hard decision for a future council.

The current council has actually had a rather remarkable run of putting to bed some of the tough and vexing issues: fire staffing cuts – done.  Structural reform and budget cuts – done.  Road pavement funding – moving forward.  Fifth Street redesign – moving forward.  Surface Water Project – about to be built.  Wastewater treatment plant – about to go to bid.

While I don’t want to diminish the work of the present council, who has in the past month fixed two rather vexing problems – fire staffing and road pavement – the vote on road pavement left me a little down.  Why, you might rightly ask.

Road maintenance has been a long and vexing problem.  When I pointed out that the alarm has been sounded since 2009, I was rightly corrected that it goes back much further than that.  Some see this as the legacy of the recession, but I continue to see it as a choice that we made probably going back to 1999 – when we started ramping up salaries and compensation for employees, while spending virtually no money on roads or other infrastructure.

While the voters approved Measure I in March, there is pending litigation that may be impacting the ability of the city to finance the project.  According to comments from City Manager Steve Pinkerton at this past Tuesday’s city council meeting, the city will need to produce 30 to 40 million dollars by this fall to finance some of the costs the city has incurred to date on the surface water project.

The Clean Water Agency will select its DBO contractor and execute a contract by September.  Staff reports, “The City will need to be prepared to fund its share of the DBO’s design costs and any initial project mobilization costs by September.”

Council Makes the Tough Call But This is a Bittersweet Day At Best – It was not quite as dramatic as the scene three weeks ago when the Davis City Council voted in a contested 3-2 vote to reduce fire staffing – an issue we have been touting for five years now.  Instead, it was a 5-0 vote with little fanfare, relatively late in the evening but not absurdly so, and that fixed a vexing problem we have been covering since February of 2009 – roads.

Those who do not want to read about the past, avert your eyes, because we need to ask this critical question – what if the council had acted with the vigor and resolve we saw from this council on Tuesday night in dealing with the pavement issue head on back in 2009, when Bob Clarke first sounded the alarm on the issue – back when it was believed we could deal with the problem by pumping in a mere few million per year?

When the city of Davis originally entered into a contract with their professional labor negotiator on December 6, 2011, the contract with Renne Sloan Holtzman Sakai, LLP, authorizes negotiator Tim Yeung to serve as chief labor negotiator  to provide labor negotiation services for the labor negotiations with all the employee groups.  It was originally set at $50,000.

It seemed a small price to pay for a professional negotiator in what figured to be a challenging round of negotiations, as the city would be looking to make major reforms to things like pensions, retiree health care, and cafeteria cash outs.

Yesterday, we responded to the op-ed by Glen Byrns, the Davis resident who recounted his story about the garage fire.

“There’s been a lot of talk about reducing staffing levels for the Fire Department. During the discussion, it was often mentioned that Davis doesn’t get a lot of fires, as fire calls apparently amount to 1 percent of the call volume,” Mr. Byrns writes. “Well, here I am, the 1 percent. The 1 percent who always thought of firefighters as a group of people who live down the street from me and are there for other people.”

If you thought the fire issue was put to rest with the 3-2 vote a few days ago, you would be incorrect.  In today’s Enterprise, Glen Byrns, a Davis resident, writes in to argue that, while there may be few fire calls, he was one of them.

“There’s been a lot of talk about reducing staffing levels for the Fire Department. During the discussion, it was often mentioned that Davis doesn’t get a lot of fires, as fire calls apparently amount to 1 percent of the call volume,” Mr. Byrns writes. “Well, here I am, the 1 percent. The 1 percent who always thought of firefighters as a group of people who live down the street from me and are there for other people.”

It was only a matter of time as the city found out the bad news back in February, that it would have to spend a huge amount of money on roads if it wished to avoid a prognosis of failed roads within thirty years with a price tag of 444 million dollars.  However, the abstract is still the abstract, and until now we have not seen the specifics of what roads will cost us now.

Staff recommends four components to the roads plan.  First, that the council approve the funding and budget strategy for pavement maintenance, in concept, for the multi-year period.  Second, staff would be directed to proceed with the first year, planning the project, obtaining a design consultant and a public outreach consultant.

by Rob White

Over the last few weeks I have spent much of my time talking with Davis businesses and community leaders about their views on the City, the university, and the role that each of these play in the region.  It has been informative and interesting, especially as a relative newcomer.

Some of the thoughts expressed appear to be based on activities that occurred years (and sometimes decades) ago. Some of the impressions are from more recent examples. But in the midst of almost every discussion was a common theme that Davis should receive more recognition for the leadership it has provided in such areas as sustainability, technology research, agricultural conservation, and community involvement. Digging a little deeper in to the conversation, you also hear themes about Davis that clearly set it apart from most communities due to its quality of life.

During last week’s budget discussion,  City Manager Steve Pinkerton and Mayor Joe Krovoza laid out the bleak fiscal picture facing the city.  The question from the audience came almost immediately: given the limits of revenue enhancement and cost-cutting, is growth the only way out of this?

In the short term, the answer is that growth is not going to make much difference either way.  The city is primarily going to have to cut spending, they may be able to pass some limited revenue measures, but most of the heavy lifting has to be on the spending side.

I was reading Rich Rifkin’s column on the fire staffing vote from a week ago this past Tuesday, and he argues that he was not surprised by the vote of Councilmembers Dan Wolk and Lucas Frerichs on the fire staffing vote.

He noted that in his March 13 column he had written, “It is clear, when listening to Dan Wolk and Lucas Frerichs, both ambitious young Democrats, that they are willing to bend over backwards to not come across as anti-union. They know that label could imperil their futures in higher office.”

by Rob White

I was recently challenged to describe why innovation is so important. And more specifically, why does this matter to Davis and its efforts around strengthening its economic prosperity and quality of life.

These are excellent questions. And though I can quickly come up with many singular answers, let me quote three paragraphs from a study done by Collaborative Economics in September 2008, titled “The Innovation Driven Economic Development Model” (page 9).