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Sunday, June 01, 2008

City in Dire Financial Condition

Throughout this campaign, Incumbents Don Saylor and Stephen Souza have made the bold claim that we have balanced our budget with a 15 percent reserve. However, that claim has been disputed by Incumbent Mayor Sue Greenwald and several of the challengers who argue that the balanced budget claim masks the huge problem of unmet needs.

Indeed the residents of the city of Davis saw the dire warning signs on Thursday when the Davis Enterprise ran the startlingly truthful and bold headline:

"City lacks funds to keep up with needed street repairs."

Below that is the ominous warning:
"But while streets, bike paths and sidewalks will stay in good condition for the immediate future, the city's current proposed funding allows streets to deteriorate while the cost to repair them will climb exponentially."
The unmet needs are not some kind of budgetary extra that require funding when we get the money--they are essential upkeep and repairs and upgrades that if we do not act on them now, will cost far more in the future.

City Manager Bill Emlen acknowledged the problem:
"There's lots of concern about the sidewalks and the bike paths. Realistically, it's going to be hard to address them."
The Public Works Department report is rather dire. The bottom line:
"This backlog will continue to increase steadily if additional funding is not allocated. The higher maintenance backlog will result in increased future costs because expensive treatments will, unfortunately, be necessary if less expensive treatments aren't utilized in a timely manner.

"The cost to maintain or repair roads exponentially increases as time goes on."
As the Mayor Sue Greenwald pointed out this is part of the deficit. And if we do not meet these needs, the costs increase.
"Citizens consider sidewalk maintenance, roads and bikeways essential services, so we can't just redefine it away and say we have a balanced budget. We call them unmet needs, but they're really part of the deficit. I consider that semantic."
Meanwhile, in Wednesday's Davis Enterprise column, Rich Rifkin described in vivid details the trainwreck approaching if we do not contain costs.

Mr. Rifkin rightly sounds the warning:
"By drastically reducing spending on capital projects, the all funds budget appears to be in surplus.

And counting just ongoing expenses and income, the general fund is sort of balanced. The city expects general fund revenues of $39.7 million and plans to spend roughly that next year. However, that "balanced budget" is misleading.

The reality is the general fund will be in deficit for the third year in a row. Next year's shortfall, made up of one-time expenditures, will be $436,286, almost $100,000 worse than was projected last year. Since 2006, the general fund reserve has declined by one-third, from $9 million to $6 million.

We are also short an additional $3 million in 2008-09 needed to pay for ongoing repairs to our streets and sidewalks. That is not a one-time deficit. We will be short this money every year for the foreseeable future, inevitably leading to brutal and unsafe road conditions in Davis."
But all of this really gravy. The real problem lies in the unfunded debt of around $40 million for retiree benefit liability:
"As bad as that sounds, it doesn't approach what is really wrong. The biggest problem is the rapidly growing retiree medical benefit liability. This unfunded debt stands at around $40 million, more than six times what we have left in the general fund."
This was not a good news week for the some of the incumbents or the firefighters. The firefighters, pardon the pun, must be feeling the heat.

They felt the need to respond in the Davis Enterprise with a letter to the editor. Something that they have never done. But unfortunately, their response does not address the heart of the concerns.
"We, the Davis Professional Firefighters Local 3494, would like to thank the citizens of Davis for their ongoing support for the job we do. Performance surveys consistently show that the public is "very satisfied" with the service we provide. "
This is a typical sleight of hand. No one, has complained about the service that the fire fighters perform. No one. The complaint is strictly about the cost of that service to the taxpayers of Davis and the impact of that cost on the city budget.

Moreover, do not try to turn this into a public safety issue. If we do not have the funds to repair our roadways, bike lanes, and sidewalks, that is a safety hazard that far exceeds the hazard of paying the firefighters less in medical benefits when they retire, paying them less than the $150,000 they receive on average in pay and benefits, etc.

The firefighters go on to say:
"Contrary to recent reports, none of the candidates we are supporting this year was a member of the City Council when our retirement plan (the industry standard across the state) was approved in 2000. "
It is true that none of the current candidates they are supporting this year was a member of the City Council when their retirement plan was approved. It is also largely irrelevent.
"The statement in a recent letter to the editor that, "Saylor and Souza have already voted to sweeten our firefighters ' retirement to way beyond fair! Only our mayor, Sue Greenwald, had the courage to say no" is completely false."
It is true that Saylor and Souza did not vote on the 3% at 50. But because of the way that formula works, they did in fact sweeten the firefighters' retirement by drastically increasing their salary, so it is not "completely false."
"The Davis City Council approved this plan on July 12, 2000, with a motion made by Susie Boyd and seconded by Sue Greenwald. With one member absent, the motion carried with Mayor Ken Wagstaff, Sheryl Freeman, Susie Boyd and Sue Greenwald voting yes."
As Mike Syvanen, Sue Greenwald's husband explains in a response letter in today's Enterprise:
"Sue voted for this, along with the rest of the council, accepting the argument that it could be dangerous for firefighters to work in the extreme heat with heavy gear."
However, when the firefighters' contract came due again, Sue argued vociferously against the contract and did not vote for it."

Why? Because total compensation had risen to nearly $147,000 per person before overtime. Captains receive $166,000 per year plus they averaged $29,000 in overtime last year.

The firefighters go on to discuss criticisms about overtime pay--again missing the point.
"Additionally, we are being questioned about overtime pay. The fire chief or a qualified representative must approve any overtime hours worked beyond our normal 56-hour workweek."
Again this is a misdirection, the real question is not who approves the overtime, but the amount of overtime and the reason why captains receive overtime, and the reason why firefighters receive more in salary and benefits than the Fire Chief, Police Chief, and City Manager.

It is obvious that the firefighters are feeling the heat. But they have not addressed a number of the key complaints including the level of influence peddling that dwarfs any other campaign expenditure in this race.

In closing their letter they write:
"The safety of the citizens is our top priority."
One must question that. We have this week the announcement about the inability to repair our streets. That is going to lead to safety problems for the citizens. The city is going to need to probably raise revenue to address these concerns, but at the same time, the firefighters are pushing for another tax to pay for a fourth fire station, a new truck, and more personnel. If we cannot keep our streets in good condition, that is a real safety problem for the citizens.

We question the IEs in the Assembly Race, but how about questioning an IE from an interest party in the Council Race. They have likely spent in excess of $25,000 to $30,000 in this race both in direct contributions and their IE. We also see the stakes--protecting their overtime pay, their $150,000 base salary and benefits, and their 3% at 50. All of which is going to lead to the citizens of Davis not to be more safe, but to be less safe because of deteriorating road conditions.

---Doug Paul Davis reporting