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Tuesday, February 03, 2009

Read My Lips... No New Taxes?

City Needs To Solve Its Fiscal Problems First Before Going to the Taxpayers for a Renewal of Existing Taxes

At the risk of sounding somewhat well... Republican, there is something to this at least from the standpoint of local government. It is really not that I am opposed to new taxes, it is that there needs to be some incentive for the city to negotiate hard this with the various bargaining units. Let us back up a few steps first here.

The city is facing an interesting dilemma. There is a long term structural problem facing the city with the scope of city contracts and the nature of pensions. There is a shorter term problem with the city's budget that has less to do with the long term structural problem than it does a short-term revenue problem resulting primarily from the recession and the loss of tax revenue.

If done correctly, the city can use the short term problem to give them the leverage to fix the longer term problem. However, that remains one gigantic "if." The temptation is going to be for the bargaining units to attempt simply to hold off on the tough decisions until the economy improves. So many of them will likely push to simply extend the current contract. The city must fight hard against that urge.

At last week's city council meeting, it became clear that neither the council nor city staff wanted to raise or impose any new taxes in the near future to solve the city's growing problem of unmet needs. While I agree with that approach, it does not solve the city's problems either in the short term or the long term.

Instead they have suggested that they will simply place the current taxes back on the ballot. That would include an extension of the Parks Tax, which is a parcel tax requiring two-thirds vote and an extension of the half-cent sales tax.

In order to get the sales tax on the ballot for a vote in June of 2010, they would need to have it ready by January 2010. To me that gives the city nearly one year to get their house in order. Because if they do not get their house in order, for the first time in my life I will not only oppose a new tax (which I did previously with the Parks tax), but I will actively work against the tax. I will get a group of citizens together, we will walk precincts, we will raise money, and we will run a campaign opposing a new sales tax.

In other words, the city will have to run a tax against organized and financed opposition.

Honestly, I do not want to do this for a variety of reasons. First and foremost, despite rumors to the contrary, I simply have better things to do with my time. Moreover, I actually believe there are vital services that the city offers and will not be able to do if they do not have that tax revenue. Frankly the services I would least like to see cut will be the ones that go if the tax revenue disappears.

On the other hand, we need changes and we need to give the city leverage to make those changes. Right now the residents of the city of Davis, many of them do not realize the peril that their city is in. Although as I talk to more and more people at Farmer's Market, it becomes clear that many are aware of these problems.

The city needs to negotiate hard on behalf on the citizens to fix these structural problems that loom.

First, it needs to be made clear, city employees are not the targets of this. The real concern is the rise of top-end salaries. If you look at the list of 100K jobs for the city of Davis, most of them are public safety employees and most of those are in exactly one department--fire.

The city needs to hold the line on the top end salaries. City Manager Bill Emlen showed good faith by not taking a raise, we need a wage freeze across the board for top end employees.

Second, we need to change the way we finance our pensions. We get another opportunity here with the problems that PERS is facing and the fact that city's are going to need to cover a higher percentage of the yearly contributions because the fund is running a deficit due to drops in the Stock Market and some bad investments.

The city needs employees, especially those on the top end, particularly those getting 2.5% at 55 and 3% at 50 to contribute to their retirement pensions. If we do that, we do not need a two-tier system that most public employees and their unions deem unfair. And if we do that, the city will face much less risk in the future from the rising costs of these pensions.

Third, and this falls mainly on the fire department, we need to change the way we deliver these services. We are one of the few municipalities that uses four-men teams to fight fires. And we don't often fight fires. The vast majority of the calls are for medical emergencies. Why are we sending in four-men fire fighting teams for medical emergencies? If you ask the fire department, in part, it's because if they get another call, they need all of their equipment and manpower. But the result of this practice is inefficiencies and a waste of money.

I'm not going to try to come up with the answer. That is for the fire department and city staff to do. However, that is a lot of money for not as much service as we are led to believe.

In addition, there has long been a push for a fourth fire station. That is something that we can look into when we fix the staffing situation. I think an innovative approach here can save the city money and also enable the fire department to get the tools they think they need to be effective.

But in order to be effective these other things have to be solved first. We have a window of opportunity. Everyone is going to have to give this year. We have a chance to fix some of these problems because of the unfortunate situation with the economy.

If the city knows that the public will not support a tax measure without fixing our fiscal health, the city will have the leverage it needs to get a more favorable agreement from the various bargaining groups.

Once again, I want to reiterate this. People have used this opportunity to attack all city employees. The majority of city employees are making $60K or less--which is not a whole lot given the cost of living in this city. The problems are really on the top end. In better times, I would be absolutely supportive of the average city employee getting a pay raise. Unfortunately these are not good times. However, these employees are not part of the larger structural problem. They do not deserve to be attacked or disparaged in this process.

The bottom line again is that the city has the opportunity to hold the line and fix some of its longer term fiscal problems as it tries to deal with its shorter term budget deficit. Hopefully they will use this time wisely.

---David M. Greenwald reporting