City of Davis

This was the first public announcement by City Staff of the scope of the long anticipated water rate increases needed to finance the proposed new water project yet they provided only a meager 2-paragraph report to the NRC in asking for their approval to Council.

Said Councilmember Greenwald last Tuesday:

It is more of the same for the city, grandiose claims of savings, this time, of 2.19 million dollars over the projected baseline contract.  The contract savings mainly comes from the continuation of seven furlough days between December 2009 and June of 2010, five in 2010-11, and two in 2011-12.  In addition, there are a few structural changes, mainly along the lines of the management group contract that caps the cafeteria plan cash-out for employees, creates a vesting period for retiree medical benefits, and a cost-sharing plan on PERS rate cost increases.

The new contracts only partially address this issue.  The fire contract proposes a 20% of reduction of the cash payment maximum over the three year MOU.  The management group contract proposes no changes for existing employees but a $500 maximum payment for new employees.

According to the staff report, the tax currently generates $2.9 million in annual revenues, which represents around 8% of the City’s overall General Fund Revenues.

It is also unfortunate that Mr. Souza’s comments on Tuesday night demonstrated a lack of understanding about the amount of savings the city is really deriving from the MOUs.  While Mr. Souza messed up the math which was rather humorous given his choice of words, the larger point is more serious.

The discussion on Tuesday, was particularly enlightening, as the Council Majority essentially made three points, first they argued that this contract represents a savings of $744,000.  Second, they argued that while not as much as they might have liked, this contract marks the first time that the council has decreased the size of contracts.  Finally, they argue that this contract begins to deal with the structural issues.

The reality is that the city has a long way to go to even begin addressing the long term problems.  They have shown that now twice first with the firefighters MOU and now with the management MOU which goes much further in addressing the issues of the cafeteria payout and possibly even the pension crisis, but fails to adequately deal with the looming $42 to $65 million unfunded liability for health insurance.

While the agreement still falls short of what is needed, it goes much further than the firefighter agreement in beginning to address the long-term sustainability issues the city faces.  There is still a good deal of spin that the taxpayer will have to cut through.  As was the case with the fire department, the amount of savings was factored from the original baseline rather than from the actual budgeted amount from year zero.  According to the city’s release,

In a way, I debated whether I really needed to highlight his column on these pages, most of the arguments have been made before.  But I do so, because in a lot of ways, I think he raises a crucial point about the changing landscape in Davis.

Here are some of the highlights from the speech.