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Saturday, December 20, 2008

AG Brown's Surprising Friday Evening Announcement on Prop 8

In my new job, I get a lot of press releases from statewide officials. On a Friday evening I was not really expecting big news, although it has been an unusual week in the Capital with the budget battle waging. Still you have to believe that if the Attorney General is sending out a Friday at 5 pm press release, he's hoping to bury the news.

In General the Attorney General defends statewide propositions that get challenged in the legal system, regardless of his personal beliefs. And there might be some wiggle room here since you have two conflicting aspects of the California constitution.

Still one probably has to think that the decision by Brown is more political than legal. I say that as someone who supports Gay Marriage and pleased the AG has stepped into the fray on my side.

The first part of what happened yesterday was that opponents of same-sex marriage changed their mind or went back on their word, and sought in court to have 18,000 gay marriages annulled. A few hours later, Jerry Brown, the state's Attorney General comes into the fray. Coincidence? I think not.

According to the press release from the Attorney General's office:
"Attorney General Brown believes that same-sex marriages entered into between June 16 and November 4, 2008 are valid and recognized in California regardless of whether Proposition 8 is upheld."
In general, he makes a similar argument as the one that has come forth elsewhere.

The Attorney General called upon the California Supreme Court to invalidate Proposition 8 because it deprives people of the right to marry—an aspect of liberty that the Supreme Court has concluded is guaranteed by the California Constitution.
“Proposition 8 must be invalidated because the amendment process cannot be used to extinguish fundamental constitutional rights without compelling justification.”
In this case, Attorney General Brown concludes that existing case-law precedents of the Court do not invalidate Proposition 8 either as a revision or as a violation of the separation-of-powers doctrine. But this does not resolve the matter.
"In the In re Marriages Cases, the Court held that article I, section 1 of the California Constitution provides a right to marry that cannot be denied to same-sex couples. Attorney General Brown argues that in order invalidate such a fundamental right; the Court must determine that there is a compelling justification to do so. But in the In re Marriage Cases, the court found that no such compelling justification exists. Accordingly, Proposition 8 must be stricken."
In his legal brief, he writes:
"The writ petitions present an issue of critical significance: whether the voters may, by initiative, amend the California Constitution when doing so takes away a fundamental right from a class of people who are members of a group defined by a suspect classification."
The Attorney General Continues:"Petitioners allege that Proposition 8, which declares that "only marriage between a man and a woman is valid or recognized in California," constitutes an illegal revision of the Constitution rather than an amendment. The Constitution provides two alternative processes for proposing an amendment: either proposal by petition through the initiative process or proposal by the Legislature."

On the other hand, a revision of the Constitution may not be proposed through the initiative process and instead must be proposed either by the Legislature or by a constitutional convention.

As I have suggested previously, the AG is on solid legal ground with the argument. The real question is whether he is the one who should make it. To flip the issue the other way, let us suppose the left side of the spectrum had passed an initiative and a Republican Attorney General not only refused to defend it but joined the side of opposition, I know I would be outraged.

Given the court move by the pro-prop 8 side, I can imagine why the AG decided to strike on a Friday afternoon, but you have to wonder if he wasn't trying to bury the news a little as well.

---David M. Greenwald reporting

Friday, December 19, 2008

School District Looks at Budget Assumptions, Passes Election Consolidation

In an action packed meeting Thursday night, the Davis Joint Unified School District received the first interim budget from Budget Director Bruce Colby. Despite uncertainty about the state budget, Mr. Colby reported that the school district has enough in its rainy day reserves to survive this fiscal year with no additional cuts.
"General Fund is deficit spending and has adequate rainy day reserves to maintain positive budget certification with the approved current state budget assumptions. The District budget will need to be adjusted once the state acts on revisions due to the state budget crisis."
That is the good news for the school district. The bad news is that next year they will not be in such fortunate shape. Depending on the budget that is ultimately approved, the district is probably looking at a sizable deficit of at $1.8 million. This is entirely due to the state's budget crisis and the prospect not only of zero COLA but the likelihood of budget cuts barring a major surprise.

Based on current budget assumptions, the district will be in the black for the three fiscal years covered by the report. The caveat is that once a new budget is passed, the assumptions will change and the district will have to adjust its budget.

One of the interesting aspects to the discussion last night over the budget is that the Governor's budget provides more flexibility on categorical funding than the Democrat's budget. Mr. Colby suggested that at least from the standpoint of this district, we are better off with greater categorical fund flexiblity. Board member Susan Lovenburg mentioned that the district had received a letter from Senator Gloria Romero who chairs the education committee asking the district to her know what their needs are in terms of categorical fund flexibility. The district will have Mr. Colby communicate with the legislature including our own representatives to let them know about our needs.

Board Votes Unanimously to Consolidate Elections

Richard Harris felt truly conflicted about the issue of extending his own term by one year. He understood the budget realities facing the district. The fact of the matter is that the county was going to impose much larger fees for conducting an election. He still wanted to look toward a means of compromise for his term. He expressed frustration at the meeting about the process and the fact that the County Clerk was passing along fixed costs to local jurisdictions. He also questioned the decision by the Clerk to hire a new chief deputy. Very similar to the views expressed in the Vanguard yesterday.

In the end, he did the right thing and voted to consolidate the terms even though he recognized he would earn the scorn and ridicule of a local columnist who had previously given him an "A" for standing against such a move.

If it means anything to Richard Harris, I grew a measure of respect for him during this process as I could see a very genuine conflict in his mind between two principles--the first being a democratic principle of not extending his term that he was elected to and the other being a fiscal principle that he had to steward the school district through appalling economic times.

I think it was important that this vote not go down 3-2. I think that would have cast more doubt on the process and the legitimacy of it. So it was pleasing to see Mr. Harris and Susan Lovenburg do the right thing and join their colleagues on what was clearly a painful (and rightfully so) decision.

For that I give Richard Harris an "A" even though I recognize it does not mean nearly as much coming from me as it does from my longer term counterpart at the Davis Enterprise.

Board Votes to Extend Health Benefits and Bruce Colby's Contract

I am disappointed to report that the board voted 5-0 to extend the health benefits of certain classes of district employees during this time of economic crisis. As I explained earlier this week, the raises are much deserved and needed. The timing is suspect. The district has basically frozen open positions to balance out the books. That is both noted and appreciated.

That said, if they could freeze open positions to offset these costs, that means those freezes will not be available in the future to offset other needed cuts. That is my chief concern.

Boardmember Lovenburg voted for this one suggesting that the district had already promised this increase for health benefits because they had done the rest of the district's employees in a previous year and promised these employees that they would get their turn.

However, when it came time to extend the contract of Bruce Colby, Ms. Lovenburg held the only dissenting vote. She expressed strong support for Mr. Colby. However, she said she would only support a three year extension on the same terms as before. We could not afford to do a pay raise at this point in time.

As I stated earlier this year, no one has more appreciation for the work he has done than myself. This is not an issue of support or lack of support for Mr. Colby. Unfortunately we live in times where we will need maximum budget flexibility. The district has done an admirable job of balancing these pay increases.

I want to be clear that the district has made the funds available for these increases and it has come at the expense of the very departments where these individuals work. In other words, in exchange for greater pay or benefits, they will have to do more work. I want that point to be clear.

My problem with this is that once you cut these positions you will not have that flexibility next year when you face huge budget cuts. The district decided that their health benefits were irresponsibly low and that had to be rectified, I just do not believe this is the year to rectify that problem.

---David M. Greenwald reporting

Thursday, December 18, 2008

Water Issue: Can Council Stop This Runaway Locomotive?

In January of 2007, the Vanguard featured an article entitled: "Tracing the recent history of the water supply project." In it, we argued that there was a series of decisions that changed the trajectory of water policy to become a far more expansive and more expensive project than the original course of action. The remarkable feature is that at no point was a decision actually made to proceed with this project. Instead, there were a series of staff recommendations approved by council to explore various options which lumped together became a decision.

This is very important in trying to understand where we are right now. There is a basic inertial quality to this issue that is rather remarkable. There are basically two forces driving the process, neither of which are necessarily council approval. First, the concern that we will lose our place in line. Second, the concern that down the line the costs of construction will increase if we delay now.

The result I think is that at this point the water project has moved far further than where the council actually stands on this issue. The council has never made key decisions.

What we are seeing now is a realization both by the council and the public that the cost of this project is increasingly becoming problematic. As the public is slowly awakening from its slumber on this issue, the sobering fact has awakened it that this project means as much as $200 per month hikes in water costs. The city has already gotten a glimpse of what that might look like when they did something as simple as change the methodology for assessing the sewer rates for some a small group of people, that meant a huge increase in their sewer bill--something that was limited and temporary caused an uproar. What will a massive hike to people's monthly water rates do?

We see these countervailing inertial forces at work on Tuesday during the water discussion. Council really was trying to put the brakes on the project a little bit and try to explore alternative means to accomplish water changes. For instance, the city is looking for an extension before they begin getting fined for having water outflow that does not meet quality standards. Currently the city has until 2015, in February the Regional Water Quality Control Board will discuss granting Davis an extension of two years.

The board was torn on Tuesday night as to whether to have an independent firm for value engineering of the Preliminary Design for Secondary replacement project. Council was leery of the added cost and wanted to look at other alternatives. In fact, they will look at other alternatives concurrent with the value engineering.

The basic argument that prevailed once again was the issue that if we do not do this now, it throws off our timetable and may increase our costs. The costs of the independent firm not withstanding.

There were two basic viewpoints raised at the council meeting. Councilmember Sue Greenwald repeatedly asked what the rush was here. On the other hand, Mayor Pro Tem Don Saylor suggested that the council's questions and alternative suggestions have already been asked and explored.

In the middle was Mayor Ruth Asmundson concerned about two types of costs, the first the cost of the value engineering firm and second the cost of delay. The cost of delay won out for now. Councilmember Stephen Souza was also in the middle, his compromise was for the council to take a field trip to look at how other communities do this, while at the same time continuing forward.

The breaking point for this project will be when either Mayor Asmundson or Councilmember Souza become concerned enough with the costs that they can pull away from the inertial pull that this project has been taking. They came closer on Tuesday than they have in the past, but city staff was still able to push the project forward with the warning about increased costs and place in line.

The city desperately needs a paradigm shift here. There needs to be some alternative that can come forward. They also have to weigh the magnitude of the fines compared with the cost of repair.

However, we are beginning to see a shift. Council is recognizing that this is cost prohibitive and that the public will likely balk at it when it becomes clear to them just how much this will cost. The question remains whether they can stop this train before it runs off the tracks.

---David M. Greenwald reporting

Vanguard Looks At Increasing Election Costs

Tonight, the Davis School Board will most likely vote to pass an election consolidation measure which will move school board elections to the November General Elections as opposed to the current arrangement of the November Election in odd years.

The overriding factor here is cost and the rising cost imposed on the school district by the County has made this move necessary. Because the other districts in the county have already moved their elections to even years, the school district would have to bear full cost of running an election.

Last year that cost rose to $585,622 for the 2007 election county-wide. It is unlikely that the district would have to pay that full amount and estimate suggest closer to the $300,000, but part of that will depend on increasing costs from the county which if they continue at the current rate, could push the cost much higher.

DJUSD officials were stunned in February for instance when they got the bill for the November 2007 and found it to be $155,420, a more than three-fold increase over the 2005 election. Far more than they budgeted.

The Vanguard now takes a closer at these rising costs. The first graph and chart show the increasing costs for running elections since 2000.

In 2003, the total cost was $88,000 of which DJUSD bore $52,000. That cost rose to $319,000 in 2005, remember in 2005 was the Governor's initiatives and Measure X, as a result, even with the rising cost, DJUSD only paid $47,000. That changed in 2007 when the cost increased by a huge order of magnitude. County-wide it was just under $600,000 of which Davis paid over $150,000.

These increases were somewhat baffling since the cost of doing business may have gone up, but certainly not by half a million over four years.

When we examine the breakdown of the costs we get a far better picture of what is going on.

In 2003, the county only passed on a fraction of the costs to local jurisdictions. The biggest costs were all direct costs for running the election. The county charged $46,000 for its printing and $15,000 for its election night staff. A small portion of that cost was $10,000 to staff and salaries.

In order to highlight the changes, I have color coded the changes for 2005 and 2007. Coded in blue are huge increases in cost from 2003 to 2005 and coded in red are huge increases in cost from 2005 to 2007.

What we see in 2005 is largely what appears to be a fuller bearing of election night costs from the county to the jurisdictions holding election. So you have a huge increase in the cost of election night staff, printing, postage, and drayage (the cost of trucking the polling equipment around). One exception was a nearly seven-fold increase in the cost of staff salaries and wages.

In 2007, we see that trend continue, but now they are asking local jurisdiction to bear what appear to be fixed costs. There was an increase in drayage costs, but the other increases were mainly fixed costs with the exception of extra help salaries, wages, and overtime which the county charged for the first time.

But you see now $154,800 in staff salaries and $58,000 in benefits. Overtime appears to be an additional cost. But you have over $200,000 in costs passed on to the local jurisdictions for what appears to be normal operating costs to the election's office. It is hard to evaluate the line for indirect election costs, also a new line for 2007.

What appears to be happening is that with the county facing revenue problems, they have simply passed along the costs to other jurisdictions. That seems reasonable. But they are making those jurisdictions that utilize specific services that year bare the full costs of running the department, costs that would be incurred regardless of whether or not they held an election.

The consequence has been to force most jurisdictions into the general election where the costs are shared across jurisdictions, but for Davis this comes at a cost.

Board Member Richard Harris adamantly believes that it is wrong to vote to extend his term. I do not agree with him fully on this issue, but he clearly feels very strongly about it, strongly enough that it appears he will resign after his fourth year. The county's revenue crunch appears to be the culprit here, but the cost-bearing apparatus should be examined.

Perhaps a more equitable distribution of costs would be a more fair way to go. After all, the elections office will still operate in 2009 with its basic staffing level regardless of what DJUSD decides to do here. So the question as to why they should pass along fixed costs to DJUSD seems appropriate? Perhaps this is something that should be more closely evaluated.

Earlier this week, the County Clerk's Office announced the hiring a new chief deputy, Andrea Jones, who had previously worked as Supervisor Mariko Yamada's chief deputy. The position had been open it appears for at least six months, meaning that the election's office functioned through the highest turnout election in recent years without someone filling this position. Given the cost cutting mode of the county and given the new policies by the County Clerk's office, perhaps, this position would have been better off staying vacant. After all, is there not a basic hiring freeze in place in the county, and if there is not, shouldn't there be?

---David M. Greenwald reporting

Wednesday, December 17, 2008

District Does Grande Property the Right Way and It Will Pay Off

Last night at the Davis City Council meeting, the City Council heard from the school district for the first time about the 41-unit proposed development on DJUSD property that the district has been hoping to sell for some time in order to provide some additional facilities money through the California Education Code’s provisions for the sale of public surplus property.

The result of the meeting was a unanimous 5-0 by the council to move the process forward. At the conclusion of the item, a good sized number of the Grande Property neighbors stood up and cheered. It was the end of a long process, but the last year and a half of this process has marked a model for government agency inter-cooperation between the school district and the city and an equally impressive model for government agency-neighborhood cooperation.

It was only just over one year ago, in their November 18, 2007 Op-Ed in the Davis Enterprise, that former DJUSD Board Trustees Marty West and Joan Sallee accused the newer school board with fiscal mismanagement regarding the Grande Property. They wrote:
“When we left the school board in December 2005, the finances of the school district were in good shape. Any financial mismanagement that has occurred has been on the 2006 and 2007 school board's watch. In early 2006, the board majority rescinded the $5.5 million contract we had signed to sell the Grande Avenue site, thus jeopardizing funding for building a student commons at the high school and modernizing Emerson Junior High School.”
The Vanguard has largely debunked that argument with a detailed recount of the Grande issue that was run on March 10, 2008 as the third installment in the Vanguard Investigation into Tahir Ahad and the dealings of the DJUSD Business Office under his leadership.

In 2005, there was no chance that the neighbors would have stood up and cheered. The early process was marred by neighborhood complaints and backdoor deals, the likes of which are still not fully known even after the Vanguard's investigation.

The gist of the arrangement was a shady three way trade in which the district fearing the city to the invoke the Naylor Act and require sale to the city at below market, tried to swap the land with UC Davis property near the Fairfield school and then sell the land to a Bay Area based developer.

From the March 10, 2008 Vanguard:
The arrangement that Superintendent David Murphy and Tahir Ahad had employed by October of 2005 was a land swap that involved a UC Davis property that was the home of Fairfield Elementary School. This piece of property that the university had not wanted was offered to Davis Joint Unified for at least three years prior to this land exchange. The university had been willing to simply give DJUSD the Fairfield School property at no cost.

Instead, the school district would enter into an agreement with BP Equities in which BP Equities would pay the school district $4.5 million in exchange for helping the school district to acquire the 10-acre site west of Davis. In essence, Davis Joint Unified would trade BP Equities the Grande Property in exchange for $4.5 million and the Fairfield School.

Coincidentally, this $4.5 million happened to be the same monetary amount that the district lost out on matching funds from the state when they missed the Montgomery Elementary school deadline. Questions have arisen as to whether the speed, urgency, and also secrecy of this deal had something to do with that lost funding.

The land exchange generated a large amount of controversy in the community. Under pressure for the seemingly sub-market value sale price, the offer was raised on November 22, 2005 to $5.5 million and the deal was locked in.
In the meeting when the board rescinded the original sale, Board member Provenza expressed his concerns for the process:

“I have an ethical concern about going forward because I feel that the process from the beginning was flawed. And it’s not because of anything that Mr. [Brian] Purcell [from BP Equities] did, he was negotiating with Tahir Ahad in good faith, but our process I believe was flawed from the beginning."
While that deal was approved by the previous board featuring Ms. West and Ms. Sallee, the newly elected board featuring Gina Daleiden, Sheila Allen, and Tim Taylor joined fellow board member Jim Provenza in rescinding the deal in early 2006, much to the chagrin of Joan Sallee and Marty West, who nearly two years later were raising the issue again last November.

It is interesting to note a letter from the Grande Neighborhood Association still posted on their site from September 2005:
"We also learned that Tahir [Ahad] and B.J. [Kline] were working under the impression that the neighborhood endorsed development of the Grande site for 48 homes (Alternative B that we discussed during the neighborhood meeting and potluck in June). We told him that was not the case - the neighborhood supported the concept of the other alternative, which had 33 homes, and was generally consistent with R-1-6 zoning (like that on the west side of the Grande site)."
Note the lack of communication between the two parties. Also note the fact that the district and neighborhood ended up splitting the difference in density right down the middle, with the neighborhood making it a point to give the district last night 41 units which the district wanted quite badly.

Since the time of that letter and the eventual board decision to go ahead with the sale, the district has completely changed its approach. They have met extensively with the Grande Neighborhood Association. They have worked out a deal with the district and the city to develop a 41-unit subdivision which reflects the basic density of the surrounding neighborhood.

Several neighbors came up and raised minor concerns with the plan but were thankful to the district for working with them on their concerns. The biggest concern was the safety issue of bikes pouring out onto Grande Avenue.

So the city council moved one of the lots, lot #9 it was called, which sat on the outside of the development. They agreed to turn that lot into a community gardens in order to allow bike traffic to flow there rather than through the more heavily traveled Mercedes Road which would flow into the new subdivision.

By working with the city, the district helped the neighbors to identify a longstanding safety issue. There are still some details that need to be worked out, but the neighbors are comfortable enough with the process and the commitment of both the city and DJUSD to addressing them, that the project has been moved forward and fast tracked.

One of the issues still be resolved is that the school district would like to prioritize affordable units for their own employees. That will have to take place by lottery and the district has agreed to indemnify the city should the issue of discrimination come up.

All of these issues should be addressed by January when this comes up for a second reading to the ordinance.

Many involved describe this as a win-win-win scenario for all involved. The school district has worked extensively with the neighbors to produce an acceptable development proposal. The district and city have worked close together rather than against each other as typified the early part of the process where the district tried to pull a shady deal out of fear that the city would invoke the Naylor Act.

Instead what we will see come forward is a fully entitled property that will hit the market. Even given the economic downturn and collapse of the housing market, there is nothing more rare in Davis than fully entitled property. As such, when the district puts it on the market, the selling price will well-exceed the $5.5 million that the district would have gotten had they gone through with the sale. Even at that time, there were credible offers, and the Vanguard has seen these in writing, from credible local developers for as much as $8 to $9 million. They sold it quickly to avoid public scrutiny.

From this standpoint alone and from the standpoint of working with the neighbors to gain approval, the district has contradicted the complaints of its two former board members.

But in all likelihood, the district will get far more than the $5.5 million. A prospective owner will quickly recognize that they do not have to build immediately, but rather they can buy the property and wait for the right market. The value is that they know this is Davis property and that the land is fully entitled and they only need to go ahead with the development agreement to make a huge profit.

It is a winning solution for all involved and shows the value of transparency and cooperation. This is the model now for how to do business whereas the previous process was the very model for how not to do business.

---David M. Greenwald reporting

Tuesday, December 16, 2008

Why is DJUSD Considering Pay and Benefit Hikes During Fiscal Downturn?

There is no doubt whatsoever that if these were normal economic times, two items on the agenda would be both well-deserved and the right thing to do. But given the fact that the district will be facing a $1.8 million shortfall next year, it makes little sense to increase either salaries or benefits.

On the first item, the board on Thursday night will consider a health and welfare benefit increase.
"The non-represented employee groups (Administrative Leadership Team and Confidential Employees) did not receive increases in either salary or benefit compensation in 2007-2008. Throughout the collective bargaining process in 2007-2008, the District expressed an interest in providing competitive health and welfare benefits to all employee groups."
It continues:
"The District contribution for administrative and confidential employees is $3,004 annually. In a study of thirteen local districts, the average district contribution for health and welfare benefit is $10,900. The current discrepancy has placed Davis Joint Unified in a competitive disadvantage when attempting to hire and retain new administrative and confidential employees. During the last eighteen months, we have experienced multiple hiring challenges; including losing candidates to neighboring districts, due to our reduced level of health and welfare benefit compensation."
What is the fiscal impact of this? For 2008-09, the impact would be $60,000 beginning January 1, 2009 until June 30, 2009. The annual on-going financial impact would be $120,000 beginning July 1, 2009.

According to the staff report:
"The current Board approved operating budget has the capacity to meet this fiscal obligation in the benefits contribution with no adjustments required."
Guess what? That's two teaching positions.

There is no doubt that the level of health benefits provided by the district is embarrassingly low. No doubt. No one can dispute it. The problem is that right now there is one pot of money.

The district is going to have make some tough decisions here. If they indeed go ahead with this increase then the money is likely going to have to come from an administrative position. That likely means an administrative position goes unfilled and everyone else will have to work that much harder. And yet, even then you have to wonder, perhaps if you are looking at $1.8 million in cuts next year and who knows how bad it would be 2010-11, perhaps you do not spend the additional $120,000 on health care. Perhaps you need to bank that money to save two teaching position. And even if you can take out an administrative position, maybe you do that to save two teaching positions. It is the timing of this proposal that is alarming. THey deserve the better benefits, but not now.

The second item is Bruce Colby's contract. Let me state this upfront so there is no confusion. I like Bruce Colby, I think he does a very good job, this is not to be read as a criticism of him. But here's his new contract and they are talking about giving him $173,644. And there is actually a built in increase.
"the amount of the salary shall be increased in the second and/or third year of this Agreement by a fixed five percent (5%) step if the annual summary evaluation for the Associate Superintendent in the preceding year was “fully satisfactory.”"
The district believes that Bruce Colby is indispensable, he may be. But during tight budgets when you might have to lay off teachers, I cannot see the justification of giving a pay raise.

The suggestion is that this will be paid for by leaving an administrative position unfilled, perhaps it will, but perhaps that position could go to keep another teacher rather than give the Associate Superintendent a pay raise.

During these times, you pretty much need to freeze the salaries of your employees.

One other aspect of the contract that is worth noting, the Tahir Ahad-clause.
"Therefore, unless supported by the Superintendent with written a recommendation and approved in advance by the Board of Trustees, while the Associate Superintendent is an employee of the District, the Associate Superintendent shall not perform any work outside of the District for compensation because any such outside work may involve time demands that would render performance of the Associate Superintendent’s duties to the District less efficient.

Further, if the Associate Superintendent is granted permission for outside work for compensation, he shall not employ other employees of the District in enterprises outside of District employment."
Apparently this is now a standard clause, it basically means that there is an outside chance an employee can seek outside employment, but there is no chance they can hire other employees of the district.

In conclusion here, I believe that if this were a normal year, these would be no-brainers. However, given the facts on the ground, even if you balance the books by taking from the administrative pot, it is a bad move and bad publicity. I hope the district does the right thing and tables this discussion until they figure out their finances for the next year and yes that requires a lot of work from Mr. Colby who is already well-compensated for his work.

---David M. Greenwald reporting

Electoral College: California Selects Obama

On Monday, California formalized what the voters had done on November 4, casting its 55 electoral votes to President-Elect Barack Obama.

The ceremonial procedure took place on the floor of the California Assembly where electors gathered from across the state along with numerous elected officials. The media turnout for the event was somewhat lower than normal because the Republicans chose the same time slot to announce their budget priorities.

The highlight of the ceremony came in the opening comments by California Assembly Speaker Karen Bass. Speaker Bass is the first black woman to serve as speaker in California.

She told the electors that they were participating in one of the nation's older rituals. The Electoral College system was devised during the Constitution Convention. At that time, she told the crowd, she would have been considered three-fifths of a person. As a woman she would not have even a vote until less than a hundred years ago.

It was a moment of reflection for the entire crowd, who probably take this fact for granted these days.
"It is certainly a sign of the progress that is possible that I am welcomed to the task of officially electing Barack Obama of Illinois as the next president of the United States."
Before casting their ballots, the electors went through the process of selecting a chair. The chair was David Sanchez, who is the head of the California Teacher's Association.

The electors vote by ballot and they vote separately for President and Vice President.

There were no surprises as both President-elect Obama and Vice President-elect Joe Biden received all 55 votes from a crowd that was filled heavily with Democratic Party loyalists.

Upon announcing the result for the Presidential ballot, the room erupted into long and sustained applause.

Obama defeated Republican John McCain by a 24-point margin in California on Election Day. He received 61 percent of the vote compared to just 37 for McCain.

This is not the official end of the Presidential election. Congress will tally the outcome of Monday's Electoral College vote in a joint session scheduled for January 6. Obama will finally be sworn in as the nation's 44th president on January 20, 2009.

---David M. Greenwald reporting

Monday, December 15, 2008

Analysis: Further Examining Davis' Financial Situation

One of the issues came up last week with regards to the Budget discussion, was that of sales tax revenue. As a result, I wanted to look at total revenue for Davis per capita in comparison to other cities in region.

Assistant City Manager Paul Navazio provided me with that data, the only downside to it is that it is 2006 data from the State Controller's report. The upside is that it has a pretty good list of comparison cities, so it provides a pretty good picture and frankly I am not certain that much has changed in terms of rank order.

As one can see from the first slide here, the city of Davis is near the bottom in general fund revenue of the comparison cities. What is interesting is that cities like Vacaville, Chico, and Fairfield that have tremendously expanded their sales tax base in recent years by building a number of strip malls with big box stores, are almost identical in terms of general fund revenue (granted we are not looking at sales tax alone). Councilmember Greenwald's point is not far off that Vacaville does not have a tremendous difference.

Some have suggested that if we simply had a larger tax base, we would be in better financial shape right now. The problem is that larger tax base would mean more expenditures by the city. And once the economy reduces the revenue, the cities have found themselves in a deficit. And yes, I understand that cities should exercise greater degrees of fiscal responsibility, but the fact is they do not. Cities with greater revenue in fact are facing larger problems with the economic downturn.

The second point is really what I was trying to get at last week. Yes, Davis has lower sales tax revenues that other locales, but Davis is actually in a lot better shape that many other cities in terms of budget deficit.

Part of the reason for that is that more general fund revenue also means more general fund expenditures.

Now the expenditure data comes with a large caveat as Paul Navazio explained in his email to me. Basically no two cities are identical for purposes of this type of comparison. Some cities, for example, provide library services, paramedic transport, public health, etc. Very few cities operate there own water and sewer utility, whereas Roseville operates its own electric utility, some cities operate their own Housing Authority, etc. Navazio removed capital program expenditures, that will reduce the expenditures for some cities, for some reason Roseville is coming to mind, but it enables us to better gauge spending on comparable terms.

Based on these data, I make two more general points. First, with regards to city employee salaries--and the biggest concern there is going to be both retirement and rising health costs. Davis has seen as we have presented in the past a meteoric rise in employee salaries over just the eight years in this decade. Total compensation to city employees rose from just over $27 million in 2000-01 to just under $50 million in 2007-08, which is an increase of $21.7 million over an eight year period.

At the same time, tax revenues have not kept up. That is a big concern.

Part of that has been driven by the need to compete with neighboring communities for quality employees. That is indeed a concern and it is one that we need to take into consideration. In fact, as Paul Navazio showed in October, Davis is in fact in better condition than it's neighbors in terms of city salaries. The problem is that we have still seen a large rise.

Last week the Davis Enterprise surprisingly called for greater transparency in the salary contract process. They in fact, questioned the practice of using recent labor agreements from other nearby communities as benchmarks to help determine Davis' wages and benefits in an effort to remain competitive.
"Unfortunately, some of our neighbors have been overly generous and, like lemmings, we have followed them over the cliff's edge."
That's actually a pretty good description and so I respectfully have to disagree with the conclusions the city made back in October that simply because we are somewhat better off than our neighbors is not a rationale to continue the same policies that will lead more cities to bankruptcy such as Vallejo has faced.

A final point, I want to make here is that I actually agree that we should expand our sales tax revenue. I see that as a longer term solution to the city's budget. That is a prime reason I now oppose residential development on a 100 acre parcel of land that is currently zone for light industrial uses. It is the largest remaining parcel within the city limits so zoned and it would be a mistake to take that out of the market.

One of the things we are learning is that the Lewis Properties much like the owners of Westlake, never really marketed the property for business uses. The result is that while they claim there has been no interest, they have not actually tested that theory, and in fact, if that site were to be marketed there seems to evidence that there is some considerable interest just as there are grocers who apparently want to come to Westlake.

While there are considerable differences between Davis and San Luis Obispo, one of the things I have looked at is their model for economic development. In terms of residential development, San Luis Obispo has almost not grown since 1990. I think the population in 1990 was around 42,000 and now it's around 44,000. What they have done is develop their economic base. I would like to see some of that in Davis.

As I have stated in the past, I am generally opposed to the kind of big box retail companies like Target or Wal Mart. In part, I think they are inefficient producers of tax revenue, often taking more resources out of a location than they bring in. Moreover, from a long term perspective, their policies are not sustainable. We need to move in a different direction.

I think as Councilmembers Sue Greenwald and Stephen Souza expressed pretty eloquently at the previous council meeting during the discussion on Lewis-Cannery, there is a huge and growing green technology industry. Davis is primly situated to take advantage of that. As Councilmember Greenwald suggested, we have missed out on past booms such as the one. We should not miss out on the green technology boom.

I would also like to see us expand some into retail, but I would prefer smaller and more sustainable types of business other than big box.

If we are smart and innovative, we can make a lot of the kinds of changes that we want without sacrificing the character of our community. Obviously there are some on this blog who do not give a darn about that and in fact want to get rid of that. One wonders why they have chosen to live if here if they dispise it so much. However, I think these people are in the very small minority of the populace in Davis who have repeatedly voted to continue relatively slow growth and strongly environmental principles. Many of these people are the same who derided Measure W and we found out that those people were in the very small minority of Davis residents. For much of Davis, the challenge is how to expand our base without sacrificing what makes Davis, Davis. How do we grow without becoming like Fairfield and Vacaville.

---David M. Greenwald reporting

Illustrating the Budget Woes For Davis

Last week the Vanguard covered the city's "Budget Workshop" where Assistant City Manager Paul Navazio presented the bleak forecast for Davis due in large part to the economic downturn that has impacted Davis in ways that Davis often does not see.

The Vanguard ran an article: "City of Davis Stares Down a Budget Deficit". At that time, the PowerPoint presentation was not available. However, Paul Navazio has kindly provided his PowerPoint slides, some of which will be posted here to illustrate the budget projections and where Davis falls short from the predicted.

---David M. Greenwald reporting

Sunday, December 14, 2008

Legislative Game of Chicken Imperils Local Governance

Friday the Vanguard primarily looked at the fiscal crisis the school district now faces which is due entirely to the state budget situation at this point. The school district is not alone in receiving bad news this week, the county faces an $18 million deficit next year which is something on order of one-third of their general fund budget. The city is actually off relatively light facing only a $1.2 million deficit this year, $3 million next year, and $5 million down the line. Did I say light? Well, at least I qualified it with relatively.

Time to be brutally honest here. The state is facing a problem of such severity that I do not believe most people grasp the magnitude of it. First it was $10 billion (that's with a "b"), then $28 billion, now the latest is perhaps $40 billion.

Speaker Karen Bass deserves credit because she seems to recognize the magnitude of the problem. She is afraid her colleagues do not.

She said on Monday:
"I think that some of my colleagues on both sides of the aisle are in denial, frankly. And feel that this problem is not as big as $11 billion right now or $28 billion over the next few months, or feel that we can solve this through cuts alone or that we can solve this through revenue alone."
She continued:
"I'm saying that on both sides of the aisle, in both houses, and I'm also saying that for the new members especially who come here with wonderful ideals that they need to hear the reality."
Since that point we have seen the GOP legislative leaders have it out with the Governor. The Governor clearly has no clout with his own party. He is a man without a base. Some people will hear that and say good for him. The fact of the matter is it is good for nobody. I prefer a moderate governor to a conservative governor on an ideological basis, but we need someone here who can be a deal broker, who can get the votes. The Governor has no ability to do that. At this point he might as well not exist.

Let me lay out the implications of what the Speaker is saying because from my perspective she is the only one making sense.

On Thursday she acknowledged that in order to stave off something far worse than we are already facing, that Democrats have to be prepared to cut programs that they do not want to cut.
"They said that they came up here because of what they believed in and they believed that there should never be a tax increase. All of us came up here for what we believed in. I came up here to make sure that I would protect programs that now I have to recognize have to be cut. We all have to do things that we never thought we would do because California is in a catastrophic situation."
The Speaker may see the reality here, it is questionable as to whether her colleagues recognize the truth with which she speaks. It is doubtful that the Republicans understand that they are going to have to do likewise.

The Sacramento Bee this morning has an article called "GOP hangs tight on taxes as red ink rises."

The Bee writes:
"California is hurtling toward a financial abyss, projecting a $40 billion shortfall by July 2010, and no deal can be struck without at least three Republican votes in both the Assembly and Senate.

GOP officials clutch that trump card with relish as the state braces to pull the plug on $5 billion in public works projects and warns it won't be able to pay all its bills by February or March.

Democrats and Republican Gov. Arnold Schwarzenegger want to shrink the gap through a combination of program cuts and tax increases – but Republican lawmakers adamantly oppose raising taxes and nearly all have signed national pledges to hold firm.

Democrats say the GOP is holding California coffers hostage."
Republicans want to see structural changes as the Assembly Leader Mike Villines said:
"The point is, if you don't make structural reforms now, I don't know when we can ever do it in this state."
The Republicans are right in a sense, we do need to make structural reforms now. But what needs to happen and quickly is that both sides drop the posturing and put their cards on the table. Republicans are going to have to accept tax increases, there is no way to make this work without increasing revenue. Democrats are going to have to accept program cuts--figure out which programs can be cut (which is a problem onto itself) and then how much money can be saved from them.

State Treasurer Bill Lockyer is exactly right:
"State Treasurer Bill Lockyer, a Democrat, characterized the high-stakes showdown between legislative Democrats and Republicans as political "chicken," with each party expecting the other to blink.

"I think they're going to run off a cliff," Lockyer said."
The problem is that at this point both sides are pointing the finger at each other. Republicans see Democrats as the roadblock and Democrats believe that three Republicans are holding up what the majority of the legislature wants.

The Bee writes:
""What we see is a gun being put at the head of the California taxpayer, they're being told, 'All right, look, it's time for you to dig deeper, pony up more or you're going to suffer even more pain,' " said Senate Republican leader Dave Cogdill.

Villines said the GOP is willing to discuss revenue increases – not specifically tax hikes – after a deal is struck on a state spending cap, permanent budget cuts, trimming waste, and amending some environmental regulations and labor laws to bolster business."
The problem here is that the Republicans are in fact making a demand--spending cuts be placed on the table first, they need to be willing to discuss both simultaneously. Until both sides recognize they have to work together, this stalemate is going to continue.

Ordinarily, I would say so be it, but these are not ordinary times, each day that there is a deal that is not struck to actually fix rather than bandage the problem, the problem will get worse.

This is not the time to play politics. They have two years until an election and the actual problem outweighs any political benefit that one side would receive by winning.

The Bee article sums it up by quoting Claremont McKenna Government Professor, John Pitney:
"Sometimes games of chicken end in a crash."
Unfortunately if they do, it is a crash that would harm the voters and taxpayers of all Californians, regardless of their party affiliation. Time for both sides of the aisle to step up, work together, and fix the problems. Then they can figure out who won.

---David M. Greenwald reporting