Dunning Misunderstands the Need for Local Agencies to Maintain Reserves

The Vanguard has all but stopped responding to Bob Dunning columns from the Enterprise, but his column from Friday is so outrageous, irresponsible, and most importantly just plain ignorant it would be irresponsible not to respond.

The title of the column is "It's Time We Let Go of Our Reservations."

He writes:

"SURPLUS SPENDING - as the economy - locally, nationally, globally (take your pick) - continues to fall off the cliff, it was encouraging to me to intercept an e-mail from Councilman Steve Souza to a local resident bragging about how fat and sassy we are in the City of All Things Right and Relevant - noted Souza: 'Almost all of the cities around us would love to have our financial woes instead of their own. We have a 15.2 percent or $5.35 million reserve.' - wow, 5 million here and 5 million there and pretty soon you have a billion -

But, as nice as a reserve is - and I don't care if we're talking about the city of Davis or the local school district - when you start talking about laying people off instead of dipping into the reserve, your priorities are backward - if we're saving our reserve for a rainy day, I'd like to point out that today is that rainy day - it has arrived - anything we can do to preserve the jobs of city and district employees should be priority one - laying anyone off for fiscal reasons when we have a healthy reserve is contrary to what this town should stand for..."

The first question that comes to mind is whether Mr. Dunning ever does research on his columns, would he like talk to the finance directors from either the school district or the city and ask them about their reserves? Would he talk to Souza himself to ask him about his email?

Here's the best explanation of the city's reserve:

"The City maintains a “reserve” much like an individual or household would keep a savings account accessible for an emergency. The City Council has adopted a policy to have a General Fund reserve equal to 15% of the City’s General Fund revenues. This is a contingency reserve for general operations to help mitigate the effects of unanticipated situations such as recession, man-made or natural disasters, variances in financial forecasting, or costs imposed by other governmental agencies. The City does not use the reserve to fund ongoing services..."

Basically the way you maintain a reserve is you pretend like the money does not exist unless such an emergency situation arises. One reason for that is that city's in general cannot take on debt like the federal government can. So if an actual emergency came up, and the city spend its reserve on say employee salaries, then the city would be in deep trouble.

The city developed this reserve policy back in 2006. According to policy, the reserve acts as a "risk management" tool, it provides a buffer against revenue fluctuations inherent in economic cycles, and most importantly the policy prohibits the use of reserve funds for ongoing operating expenditures.

The key to remember is that the reserve is one-time money. Once you use it, the money is gone.

Dunning's column mentions the school district as well. School districts are required by Ed Code to maintain a fund balance reserve every year. That money cannot be touched at all without severe consequences. The district generally maintains its own reserve above and beyond that much the same way as the City does as a risk management tool and a protection against fluctuations and emergency situations.

In the late 1980s, an increasing number of school districts were facing fiscal insolvency. Laws were enacted that created budget standards and increased fiscal oversight for all local education agencies. One of these standards was that local school districts set aside a certain percentage of their budget as a reserve for economic uncertainties. This reserve provides a cushion against unanticipated fiscal needs that may arise and thus reduces the risk of fiscal insolvency and the associated need to borrow and increase district debt.

Failing to meet the reserve requirement does not have a mandated consequence, however, as we know from other discussions, the County Office of Education oversees the finances of all local school districts. If DJUSD were to eat into its required reserve it would increase the likelihood the county superintendent of education intervening into local school district affairs.

DJUSD carried the state-required 3 percent financial reserve, which is just over $2.1 million. However, they cannot touch that reserve. The district also carries its own one percent contingency reserve which comes to about $650,000.

Interestingly enough, the district discussed this very issue on Thursday and the Davis Enterprise covered it in this morning's paper.

Given the fiscal situation in the state, districts are being given greater flexibility with some of these reserves.

But a key point with these reserves is that they are one-time monies. They will get depleted rather quickly given the nature of the economic crisis. As Bruce Colby put it, last year was a crisis, this year is a crisis, 2010-11 will be a crisis, 2011-12 could be a crisis.

Moreover, in general one has to balance the three-year budget using ongoing revenues, not one-time monies.

As Tim Taylor put it:

"From my perspective, you would spend it in a situation where you have an emergency need, something that would not commit you to ongoing year-after-year obligations."

Bottom line here is that using reserves is not going to solve our fiscal problems, and it could make them worse as time goes on. Bob Dunning needs a better understanding of the fiscal policies, rules, regulations, and economic crisis before he makes such irresponsible statements.

Getting back to his column, there is another key point that needs to be addressed.

Here he quotes Councilmember Stephen Souza:

"Almost all of the cities around us would love to have our financial woes instead of their own. We have a 15.2 percent or $5.35 million reserve."

Davis is in better condition that a lot of other cities but it has very little to do with the reserve. I would and have argued that our fiscal policies are just as bad as many other cities--if not worse. And we are going to have to deal with that. Having that reserve just means we can weather an immediate crisis better than other cities. We still have an ongoing structural deficit. We still have an ongoing problem of unmet needs. We still need to fix our unfunded mandates. We still have to fix the pension system. We still have to reign in employee salaries at the top end of the scale.

However, the bottom line is the city of Davis has been hit less hard than other cities with the foreclosure crisis. It has been hit less hard than other cities because its property values have not plummeted as others have. We rely less on sales tax revenues than other cities as well, so while the declining economy is producing a tax revenue fall off, it is not to the point where cities like Roseville who are facing eight figure budget deficits.

The bottom line is that while we have a deficit for the next few years of at least 3 million and as much as five million (and notice if we used the reserves to fix that, they'd be gone after next year), we can probably survive short term by adjusting our spending and tightening our belts.

That is not to suggest that we do not have bigger issues. It is just to suggest at this point the economic crisis is not devastating us like it is many other cities or even Yolo County.

So yes, Councilmember Souza has good reason to express optimism, but it is not because of our reserves. Our reserves would be depleted very quickly in this crisis, if that was their intent.

Dunning has a large amount of influence in this community and his column is undoubtedly the most widely read feature in the Davis Enterprise. With that influence requires a degree of responsibility to research and understand the issues on which he has opined. In this regard, he has failed in his duties by suggesting the city or the school district are being irresponsible by maintaining fund reserves. In both cases, maintaining reserves is either required by law, required by city policy, and necessary and prudent for these entities to whether the uncertainty of such a downturn. It would be the height of irresponsibility for them to use these reserves in an effort to avoid making tough decisions in the coming year.

---David M. Greenwald reporting

Davis Finds Itself in Growing Fiscal Hole

The city of Davis now faces a large and growing budget deficit. Due to the continued decline of the economic conditions in Davis, the current year's budget deficit is projected to grow from the November estimate of $1.54 million to $2.37 million. Next year the budget deficit will range from between $3 million to $3.6 million depending on the city's negotiations with the employee bargaining units.

From the city staff report for Tuesday's City Council meeting:

"Despite the potential to manage the FY2008/09 budget through aggressive cost containment measures, the budget outlook for FY2009/10 and the out-years of the five-year forecast pose significant and growing challenges. The baseline General Fund forecast for FY2009/10 now reflects a $3.6 million deficit under our original expenditure forecast assumptions, and a $3.0 million deficit assuming no changes in personnel costs beyond those provided for in current labor contracts."

Part of the cost containment strategy calls for most departments to develop a 7 to 10 percent budget reduction scenario with pulbic safety developing 3 to 5 percent reduction scenarios. The city hopes that this would provide up to $3.1 million in budget reductions.

Here are some further notes from the city staff report:

"As of February 1, the City has documented a current vacancy list of 21 regular full time and 1 (75%) regular part time positions. These vacancies represent a 4.7% shortfall in our current work force, in relation to our 464.25 budgeted Full Time Equivalent permanent positions."

Revenues are project to end the year at $2.37 million below the adjusted revenue budget.

"Property Tax revenues now reflect approximately 2% growth in assessed real property valuations and reflect reassessments by the Yolo County Assessor’s Office, as well as a slowdown in the rate of turnover of property in general."

Sales tax has taken a big hit.

"Sales Tax receipts through the first half of FY 2008/2009 indicate a decrease from FY2008/2009 results. While we had originally predicted 2.5% growth in this revenue, we are now estimating a decrease of 7.8%."

The news gets worse when you look at Automotive and Restaurant figures.

"Our core categories of Automotive and Restaurant, which together account for approximately 60% of direct Sales Tax collections, reflect decline of 14.6% compared to the same period last year."

Transient Occupancy tax has also declined.

"Transient Occupancy Tax receipts for the first two quarters of the fiscal year indicate a 10% decline from FY2007-08 results due to a 3.5% decline in tax receipts from hotel operators, and the closure of one business. This results in a reduction of $133,000 from our original budget estimate."

Department revenue is also down.

"Departmental revenue estimates are being reduced due to declining Public Works inspection activity and declining participation in recreation programs. Community Development revenue is increased due to billable planning activity for private developments. Combined departmental revenue estimates have been decreased by roughly $150,000 for the current year."

The Vanguard has made much of the overtime expenditures by the city. The staff report notes that the total overtime budget for the current fiscal year is $1.38 million which represents 2.6% of the human resources budget.

The staff report also looks at the excess fund balance over the 15% reserve target.



The good news is that the excess fund balance for last year was $723,325, however, the current budget situation will deplete most of that even with the budget cuts. By they are now projecting an $86,705 fund balance at the end of this year.

Commentary

We have discussed the issue of unmet needs multiple times here. The bottom line, the city has to take steps to make the city budget sustainable in the short term by cutting costs and in the long term by negotiating fiscally responsible deals with the city's bargaining units. All of the key bargaining units have the contracts up. The city cannot simply rollover the existing contracts in hopes that they can buy time until the next cycle when the economic outlook could be more favorable. There are structural issues that must be addressed.

The city has to hold the line on the top salaries. It needs to allow inflation to bring them back toward a more manageable level. It also needs to deal with the runaway train of retirement pensions. The current CalPERS situation is going to force some of this because CalPERS is going to forced increased contributions from cities that need to be taken up by employees.

The bottom line is that the city of Davis like the other cities in California has increased its employee salaries at an unsustainable rate during this decade. We are now about to pay the price for this rate of increase. We have the opportunity to fix that if we are proactive and act now. We are not in the calamitous situation that other cities find themselves in. But we could get there if we do not fix things now.

---David M. Greenwald reporting

Why Do We Need a New General Plan?

The Davis City Council last night began to embark upon their discussion of how the General Plan update process should proceed. There was considerable discussion as to whether it should even go forward at this point given the current economic situation, given the costs of proceeding, and given the uncertainty of our times.

The consistent question that arises and is never really answered by those councilmembers who support going forward with an update is why we need to do so now, rather than take the Housing Element that has already been adopted and perhaps modifying the plan with more modern and general principles of sustainability.

There is considerable difference as to how the council should proceed. Some such as Councilmembers Sue Greenwald and Lamar Heystek want to hold off on any major changes right now. Others such as Mayor Pro Tem Don Saylor believe that this current General Plan no longer can guide us and we now need a new one. Others such Mayor Ruth Asmundson and Councilmember Stephen Souza seem to want some sort of middle ground where there is some update, but on the cheap and perhaps not full blown.

Sue Greenwald cited the strength of the current General Plan and the budget situation as reasons not to go forward with a full-scale General Plan update process at this time.

“Personally I think there’s no reason to spent 1-2 million dollars that we don’t have to reinvent the wheel when the wheel that we already have is a Michelin. Yes it would cost 1-3 million dollars to do a comprehensive General Plan. Sometimes discretion is the better form of valor.”

Councilmember Greenwald expressed concern about the livability of this region in the future. She also demonstrated support for the work that has already been done and the fact that this General Plan is a model for other communities.

“We have an extremely high quality advance General Plan, we don’t need a new General Plan right now. Our General Plan is what other cities are trying to do. When you hear other cities are doing a General Plan, they are trying to do one similar to the one that we have now.”

The bottom line is costs:

“We can save 1 to 3 million dollars by re-adopting our current plan in essentially similar form. The Housing Element Update which is our legal requirement is good until 2013.”

As a result, she is looking at a more basic General Plan process—one that keeps what we have and is good, and updates where it is needed.

“We might want to add some sustainability items, but we might want to wait on that because the state is talking about how they want to incorporate sustainability into our General Plan.

We can amend our General Plan, four times a year with as many amendments as we want. We can work on a sustainability section now. We already have a housing element which is good through 2013.”

The uncertainty is also part of what drives the more cautious approach:

“It’s very important for us to scale this back. I was always against doing a full scale General Plan, but when the council majority decided to go forward with it, it was before the economic collapse. Many economists are debating whether we are going to have a recession that takes three or four years to really work our way out of or whether it’s going to be a Japan style twenty year recession where housing prices fell fifty percent and never got back to where they had been before…”

Given the current fiscal situation, we need to save whatever money we can.

“We’ve already set aside $257,000 just this year for this type of visioning process. We don’t have this type of money. Look at the budget deficits you’re going to see next week. I implore you, do not go forward with a comprehensive General Plan that we cannot afford to do and we do not need.”

Councilmember Stephen Souza spoke of several of the past General Plans and the process involved in developing them. He said that for him he didn’t want the extremely short, ten month process, but he also didn’t want the 215-member, 14 committee, six year process.

“As for the question raised by several in the community and the one councilmember that has spoken so far, why should we do this? Is there something broke that we need to fix here? I would say I have seen planning over the term that I have been on the council in a haphazard fashion. It’s not coordinate, there’s no vision of where it’s coming from, it’s project-by-project. I think that cuts into a vision I want to see in my community, inevitably.”

Councilmember Souza is looking for a vision that would describe what and where we will be within the parameters of the city of Davis. Is our “urban form” what we see now and will we simply redevelop it or is it something different?

“To should we. I concur, I really don’t want to spend any money right now. I want to save that money because I don’t know what’s going to hit us in the next two years. But I don’t want to stop what we’ve begun. If there’s some way we can move forward without moving forward as fast, on a plan. If there’s something we can do in the interim that gives us some guidance as to where we may eventually go.

Maybe it’s just describing that vision of what we will become in 2035 and 2050. Maybe we go that step, we don’t do a full-blown analysis, revision, and update. And I do agree that I don’t think… I think after looking at all these plans, I like this one [current General Plan].

I like it, but it’s confusing and there’s areas that need better understanding for not the folks who read this all the time who can go through it all the time… but for the basic citizen of the community to be able to understand this document a little more.”

Mayor Pro Tem Don Saylor began by describing his involvement in the previous process. He suggested that contrary to popular belief, most of the people involvement played a small role. His own was played on committee that completed its work seven years prior to the final adoptions of the General Plan in 2001. From that standpoint our General Plan is not merely eight years old, but entire sections are actually closer to 15-years-old and thus badly in need of update.

He continued arguing that the current plan is in effect, obsolete:

“I submit in many respects our current General Plan is not guiding our actions. Any action that we need decision that we take, does in fact require a General Plan amendment. In fact, we do bundle them up and package them in one of these four General Plan amendments that happen each year. Virtually any project that comes forward, we’re looking at changing the General Plan.”

He then disparages the current General Plan:

“I think the General Plan is as our staff has said, long and unfocused. It is not clear in its guidance. It does not provide for reliable projects for financial and infrastructure planning. It requires us to have constitutional crisis over any project that comes before us. It has a lack of coordination with UC Davis plans and is not in sync with the state requirements, some of them are still shaping on climate change, water supply, environmental justice and other issues.”

From this perspective, he suggests we have a need to take a look at it.

“My interest in terms of what should it contain and achieve, I would dearly love for us to have a process… that allows our community members to be able to coalesce around some sort of shared vision on what we want our community to be on about 2035. The reason to take a date like that is that it’s far enough out that we are not necessarily talking about what we do with some intersection or some empty lot, we’re talking about a vision. That vision should guide what actions follow and flow from it.

I would like for the plan that we have to constitute a framework for us so that when we have decisions on individual projects or proposals that we can compare them against something rather than the individual opinions of the people who happen to be in the room at the time.”

He went on to point out the current General Plan does not address issues like climate change, sustainability, economic development, infrastructure needs, and other issues of finance. He spoke of the need to update our transportation circulation system.

“Our street system is sort of designed for something that doesn’t exist anymore. In a lot of ways our streets are designed for a town that existed in 1965 and we’ve already outgrown it and we should take a look. ”

Later the Mayor Pro Tem would take issue with the suggestion that this comment refers to the need for widening the roadways in Davis.

“In terms of the financing, nobody can argue that we’re in a good time to do this. But we’re not planning for this year or the year after, we really are thinking about visioning for a longer term.”

He wants the city to look for sources of funding and is willing to consider some sort of phased approach.

Councilmember Lamar Heystek was very cautious about the need to do this and urge us to be careful in proceeding.

“I think we need to be careful about our process that leads us to throw the baby out with the bath water. We’ve heard a number of comments made about our General Plan—some good and some not entirely positive. But, if this current General Plan is the road map of our community I ask anyone to tell us how this roadmap for our community, how has this road map let us astray. What is it about Davis now that we think this General Plan has led us to that we need to change?”

He agrees that there needs to be actualization of this plan. However, he challenged people to find what they disagreed with with regards to the current General Plan.

“If you find something objectionable please tell us and tell us how we should change it.”

For him therefore, it is unclear why we need to spend money for something that does not appear to be broken.

“It is unclear to me why we should be spending millions of dollar on a[n updated] document or taking this document and possibly creating an entirely different one if we can’t make the case that this document has led us astray.”

Councilmember Heystek argued that if there are weaknesses and omissions within the current General Plan, perhaps we needed staff to find ways to address those needs for less than one million dollars.

“Unless someone points out to me what’s wrong with this plan, I’m not inclined to start a new process… If it ain’t broke, don’t fix it.”

He also wants to look at other aspects of our General Plan aside from land use. He wants to think about where this falls within our priorities. His major concern is with the price tag and the need to change this project.

Mayor Ruth Asmundson did not want the finances of this plan to prevent the process from going forward.

“We talk about maybe this is not the right time to start this process because it’s expensive. But I think what we need to recognize is that we’re not planning for the today, but we’re planning for the future. We should be responding for future plans for what we have right now. It has to be a process that spans so many years.

We don’t really know what that future will bring, but what we need to look at is what do we want to see Davis in 2035.”

The Mayor wants to have a vision, we all have different ideas of what is best for Davis, and wants to start with a positive process where we look at what we want rather than what we don’t want. We need to have strong public engagement.

She is concerned a bit with the three million dollar cost and questioned how much input we need and how long a process this should.

“I think most of the three million (dollar) cost is because of the long process, long public engagement that is going to happen. I think we need to find a hybrid—I don’t want it too short that we are shortchanging our process, I don’t want to have that. If we’re going to have a new General Plan or an updated General Plan it has to be realistic and pragmatic that we can really use rather than just having a nice product that will go on the shelf.”

She thinks that two years is too short. She’s looking at two to five years with five years being too long. In terms of the cost, she wants to do it for less than a million but recognizes the costs of the EIR. She wants to possibly have a “cheaper” environmental impact report. She also wants to explore alternative funding options like SACOG.

“If the cost is what’s prohibiting us, then I know that we can get the funding grant from somewhere else. But that shouldn’t be the limiting factor for us in this study. I think we need to look at what we want and then look at the cost. My personal preference is I don’t want to start with the cost. ”

Finally, she feels that since the issue of growth is a divisive issue, we should not look at growth but rather what we want in Davis. According to the Mayor, growth has to happen, but how do we get to that.

“It shouldn’t be the growth that leads us to where we want to go. So I want growth to be used secondarily not what’s leading us.”

Commentary

The question I came in with is why we need to do this now. What I heard at the meeting, even from those who argued that we did need this now, was really no rationale for urgent and immediate action. I heard reasoning of why things need to be updated on a variety of fronts. I heard reasoning of why we need at some point to come up with a shared vision for the future of Davis. What I did not hear is a reason why this needs to begin today or next year, rather than in 2013 when the Housing Element expires. What I did not hear is a reason we cannot revise the current General Plan to include elements of sustainability and climate change that we seem concerned about to go along with the Housing Element Process.

The bottom line is I simply do not see the need to go forward with this today when we are facing down a budget deficit that will run in the millions, when we have adequate housing to fill our needs frankly for the next ten years let alone five, when the market is crunched, the state and country is in crisis, and we have no idea what tomorrow let alone next year will look like. There was nothing said last night that changes that viewpoint.

As Councilmember Sue Greenwald wrote on the Vanguard last week:

"This is a total waste of money, which I have been opposing from the start. Our current general plan is very good, and way ahead of its times. The housing element update can be done independently. The plan can be amended quarterly.

There is no way we have the money for this exercise. I can only imagine that growth agendas are driving it."

Councilmember Greenwald is exactly right. The city's current budget appears to have a deficit of upwards of $5 million for the fiscal year 2010-11. And yet the re-drafting of the general plan will cost into the millions.

According to the city staff report:

"Total costs for updating the City's General Plan could range from approximately $1 million to $3 million over two to four years, depending on the work program selected."

We might be able to justify the cost if there was a pressing need to update the general plan. During the course of the meeting, again, I saw rationale for us to update portions of the General Plan. What I did not see was either rationale for the scope that Mayor Pro Tem Don Saylor suggested or to do it today.

As Councilmember Greenwald has put it, the current General Plan is a sound plan which was way ahead of its time. There is no need for wholesale changes.

"We can just take the existing plan with the new housing element, make a couple of changes (we do that regularly anyway), and adopt it as our new plan."

Councilmember Lamar Heystek concured. He told the Vanguard prior to the meeting:

"It is not clear to me, especially in light of the millions of dollars in budget cuts we'll have to make over the next few years, why we should be spending millions in taxpayer dollars redoing what the taxpayers themselves spent years doing just a short time ago. My priority is to implement what we have, not reinvent the wheel."

What is clear is that our citizen-based General Plan is now under attack by the forces that are demanding more growth. Our current citizen-based 2001 General Plan is a core document which speaks to a long term vision of the future of Davis. Many spent years working on this document, why throw it out now?

Moreover, they are pressing for a twenty-five year general plan that looks out to 2035 or even 2050. 2050? That is forty years. But by developing a plan that far out, what will happen is that sites that would never be considered in the next ten years, will be given life and consideration when we look forty years out. Such a document is growth inducing.

This is not the time to spend money on this sort of project. We do not need to do it right now. We have serious problems facing us including a budget deficit, a structural deficit, and a pension and compensation system that is out of whack and in need of restructuring.

There are serious questions about our water supply and even more questions about the cost of developing alternative sources for water which will threaten to drive the average person for their homes.

It is ironic that so many talk about Davis' lack of growth policies as leading to the increase of cost of housing, the pricing out of the middle class, and yet if we continue to grow as we have, we will be forced to develop a water project that will do exactly that--force out existing residents who cannot afford the $200 per month additional cost for water.

In short, there is no justification for updating the General Plan right now. The housing market has sapped the demand for new housing. The council has already approved enough housing over the next five years to meet our RHNA requirements. And most of all, there is no fiscal justification for a project that runs in the millions and gives us so little in return.

And yet as we stand here today, that is exactly what this council is poised to do. There appears to be a majority in favor of some sort of process. They may not necessarily agree on what that process should be, with Councilmember Souza seeming to want a much more modest process than the seeming complete revision that Mayor Pro Tem Saylor wants.

The question I think is what do the citizens of Davis want. It is your city. What do you want to see?

---David M. Greenwald reporting

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

City's Budget Hole Grows--Unmet Needs Will Go Unaddressed

A year ago the city basically identified around $13 million in what it called unmet needs. These were needed projects in a variety of departments that the city needed to undertake but lacked the available money to pay for them. As the Vanguard has mentioned previously, some of these are quite basic road repairs and other vital services.

Right now the city is projecting a growing budget deficit for the foreseeable future. It begins at close to $1.5 million for the current fiscal year and doubles to $3 million next year.



As Finance Director Paul Navazio stated on Tuesday night, the city is going to have to first address the structural and immediate budget problems. That means that these unmet needs will continue to be unmet needs into the foreseeable future.

From the staff report:

"While the growing list of unmet needs – both one-time and recurring – remains a significant concern, current economic and budgetary realities suggest that emphasis should be placed on securing existing revenues over seeking new revenue sources that could, potentially, jeopardize revenues relied upon to provide existing City services."

Right now the city is focusing on addressing existing revenues. They do not believe they will be able to in this climate get the voters to approve tax increases. Therefore the priority at this point is on renewing the existing tax measures--namely the parks tax and the half cent sales tax. One alternative would instead of the renewal of the parcel tax for the parks, combine the the parks measure with an additional quarter cent sales tax to produce the $1.5 million the parks tax is currently generating.

From the staff report:

"At this time, staff is suggesting that the highest priority related to future ballot measures should be the renewal of the ½ Sales Tax (Measure P), approved by the voters in June 2004, with a 6-year sunset provision. This measure currently provides roughly $3 million in General Fund revenues to the City.

Secondly, priority should be given to options for renewing or replacing the Parks Maintenance Tax (Measure G), which was re-authorized by the voters in June 2006, with a 6-year sunset provision. This measure provides roughly $1.3 million in dedicated funding in support of park maintenance activities. In the past, some concerns have been expressed over the appropriateness of assessing this tax on the basis of a flat $49 tax on parcels within the City. Staff has previously been directed to explore alternative funding mechanisms, to the point where the text of Measure G provides that the measure would be repealed in the event that the City secures an alternative means of funding parks maintenance activities."

What is driving this is the basic reality of the situation for the city. The taxpayers in Davis have already been asked to pass two parcel taxes for the school district and one for the library. They will be asked to pass another parcel tax by the school district in either late 2011 or early 2012.

The city does not want to be competing against the school district for tax funds. Right now they are simply looking to renew what they have. That would mean a June 2010 ballot measure to renew the sales tax or possibly fold Measure G into the sales tax.

The problem here is obvious but unavoidable given the city's lack of addressing the unmet need problem previously. The assessment of Navazio and the city is exactly right--the public is not going to approve the slew of tax measures that it proposed a year ago.

In December of 2007, the city was considering a public safety tax placed on the ballot sometime in 2009. At that time, Councilmember Souza even pushed for it by November 2008.

Second, they suggested a new sales tax on the ballot in 2010 with a quarter-cent increase. At that time it would not have subsumed the park tax but rather would have paid for street and road maintenance.

Finally in he called for a replacement of the park tax with an increase in the municipal services taxes.

Now the dilemma. Many will undoubtedly be pleased to hear that these taxes are essentially off the table. However, the downside is twofold.

First, the city is going to have to find a way to cut millions from the budget over the next several years.



Second, the city while cutting millions from the budget over the next several years, needs to find a way to chew into what is now $8.74 million of one-time unmet needs (including nearly $6 million for the fire department which I assume still includes possibly a fourth fire station and a new engine) and $7.35 million in recurring unmet needs, that one is more spread across the board.

In December of 2007 Councilmember Don Saylor said:

"Today we really can look at the structural deficit as we refer to so often as something within our grasp. The numbers are so small that they will be taken care of by small increases in the economic development plans that are already underway."

Councilmember Saylor was wrong. He did not foresee the magnitude of course of the economic crisis bearing down upon us. But he did not recognize that our failure to appropriately deal with the unmet needs would become a crisis just over a year later. The problem was that everyone assumed or at least three councilmembers at time assumed that we could simply tax ourselves out of our hole. Now that is no longer a possibility.

In the meantime, no one dealt with the longer term structural problem namely unchecked employee salaries, and this is not a general statement about employees. There are specific areas that are particularly problematic.

It turns out in December of 2007, that then-Mayor Sue Greenwald was the one who was correct.

"We have a structural deficit, we haven't really done anything to improve it, we've just changed our accounting principals, made them less conservative. But that also means it's going to be more sensitive to downturns in the real estate market and other potentially recessionary phenomena."

She continued:

"We have not only not reduced it [structural deficit] but we've also made ourselves more vulnerable to our PERS contributions."

Mayor Greenwald turned out to be exactly correct and the current Mayor Pro Tem was overly optimistic.

The system has imploded. We have seen our vulnerability to the real estate market downturns and for the first time really to a major recession. There is no light at the end of the tunnel. The unmet needs are still unmet and now there is no immediate plans to meet them.

It will be interesting to watch the impact on this community when the city has to cutback on vital city services. We have already seen push back on the issue of parks and recreation--and frankly that was mere pennies compared to what awaits us.

---David M. Greenwald reporting

City Facing Budget Crisis, Cutback on Youth Programs and Award Honoring Slain Teen

In a letter from Mayor Ruth Asmundson pasted on the city's page for the Golden Heart Awards this year, it reads:

"As a result of the death of Andrew Mockus in April 1992, the City of Davis Recreation and Park Commission expanded its commitment to the youth of our community. Forums were held throughout the community to discuss the problems of youth and to brainstorm on how the community could do more to meet the needs of youth.

After careful consideration, the Commission suggested the City Council adopt several recommendations. One of the Commission recommendations was to develop the Golden Heart Award. The purpose of the Award is to recognize outstanding youth in the community. There are two different categories within the Award: the service award and the personal challenge award. The service award recognizes individuals who have given significant service to the community, their peers, and/or their school. The personal challenge award recognizes individuals who have overcome a significant challenge in their life."

However, due to budgetary problems this year, City Staff is recommending that the Golden Heart Award and our "commitment to the youth of our community" be canceled.

In February of last year, the Davis City Council honored nine students with Golden Heart Awards.

"The Golden Heart Awards, which began in 1994, represent the best of the community in honor of Andrew Mockus , a 14-year-old Davis student who was killed by a group of youths in 1992 — an act that represented the worst of the community.

Following his death, forums were held to discuss issues facing the community's youths and ways the city could do more to meet their needs. The city adopted seven recommendations, including the Golden Heart Awards to honor courageous and kind students in grades 7-12."

Recipients last year included:

"Brandon Kitchen, a 15-year-old student at Holmes Junior High School, received a Golden Heart Award for his ability to overcome serious challenges after a biking accident that resulted in eight major surgeries, many months in bed and almost a year in a wheelchair."

The award was created in 1994 following the brutal beating death of 14 year-old Andrew Mockus in 1992.

From a Davis Enterprise retrospective published April 24, 2002:

"Ten years ago today, Davis residents discovered that an unthinkable act of violence -- one they thought occurred only in other towns -- had, in fact, taken place in their own back yard.

On the night of April 24, 1992, 14-year-old Andrew Mockus was brutally beaten and robbed of $2 by three other teens, then pushed into the side of a moving freight train and killed. The incident occurred in a gully near UC Davis, a popular gathering place for youths at the time.

Two days after Andrew's death, Solano County authorities arrested Michael Johnson, 17, and Andrew Childs, 16, both Davis residents and students at King High School. A third boy, 14-year-old Joshua Bettencourt, also took part in the beating but was granted immunity in exchange for his testimony."

At the time of the article, not much was known of the fate of the culprits upon their release.

"Today, little is known about the whereabouts of Andrew's assailants. Childs would have been released from the CYA at age 20, and his public defender, Harvey Bender, said he has not heard from his former client. CYA officials declined to release either Johnson's or Child's release dates."

However one of the youths, would kill again.

"What is known is that Bettencourt's involvement in violence and death did not end on that night in 1992. In December 1995, Bettencourt was involved in a road-rage incident at a Carmichael intersection in which he shot another man four times and killed him. Claiming he shot in self-defense, Bettencourt pleaded no contest to voluntary manslaughter and served five years in state prison before being paroled last October."

The story also quotes UC Davis Professor Larry Berman:

"That is to me the greatest injustice and the greatest miscarriage of our system, that they're walking on the streets and Andrew is dead," said Larry Berman, who was Andrew's baseball coach. He organized the planting of a memorial grove of redwood trees near the baseball field at Holmes Junior High, where Andrew was a student...

He remembers Andrew as a boy with great potential and a "wicked curve ball..."

"I walk by Holmes Junior High and look at the memorial grove," Berman said. "I remember the generosity of the community as they contributed funds to the grove and the bench that's there. The senselessness has been replaced by the great memories of Andrew."

Now however the community led by the city staff is on the verge of forgetting about not only Andrew Mockus but their commitment to youths.

In addition to staff proposals to eliminated the Golden Heart awards tomorrow evening, they are also talking about initiating "a $2.00 per drop-in rate for the High School Open Gym program."

In other words, they are going to charge youths $2 to play basketball. This is how the city is dealing with their budget problems.

The Recreation and Park Commission reviewed and discussed the various proposed fees for Recreation Activities in November 2008.

According to the staff report they agree with all of the proposed fee recommendations with one exception:

"the exception of the $2.00 High School Open Gym fee. The Commission also expressed their overall concern for the rate of fee increases associated with programs that are primarily targeted to the teen population. The Commission expressed their desire to have a more comprehensive discussion with the Council related to appropriate subsidy of these types of activities."

One councilmember is very concerned about these fee hikes and the loss of the Golden Heart Awards. Councilmember Lamar Heystek told the Vanguard, we should be looking elsewhere for balancing our budget.

"I find it disturbing that we are considering balancing our budget in all the wrong places. I cannot in good conscience vote to charge kids to play "open-gym" basketball. I cannot in good conscience cut the recreational scholarship fund for low-income families by $5,000. And I cannot in good conscience vote to eliminate the Golden Heart Awards, a program that was created in response to the brutal death of 14-year-old Andrew Mockus."

Of all of these, the Golden Heart Awards which honors the life of a fallen youth seem the most outrageous to cut.

It is not even clear there is a cost to the city associated with the awards. Regardless, this seems to be the wrong area to cutback funding. If the city is concerned about youth activities and youth getting into trouble with drugs and alcohol, cutbacks in these areas are the wrong way to go. As are cutbacks in the area of encouraging youth to give back their community. Given the enormous budget deficit, these programs amount to literally pennies. We need to start with the bigger cuts and hold off on these kind of cuts until we have a better sense for what is needed.

I would hope the city of Davis finds a way to continue to honor the memory of Andrew Mockus with the annual awards that encourage youth to give back to their community.

---David M. Greenwald reporting

Commentary: City Manager Bill Emlen's New Contract

For those that like to criticize the Vanguard for picking favorites, something that indeed occurs, here is a deviant case. In general, the Vanguard has been supportive of the efforts of DJUSD Associate Superintendent and Chief Budget Officer Bruce Colby. He has helped cleaned up to a substantial degree the mess left behind by his corrupt predecessor Tahir Ahad.

The Vanguard to a large degree credits the efforts of Bruce Colby for keeping the district afloat last year financially and putting the district in position to be able to possibly ride out the next year and a half without a slew of pink slips. In fact, if you look at the article below, without the efforts of Mr. Colby, we would likely be telling a very different story.

On the other hand, the Vanguard has been in general, particularly critical of Davis City Manager Bill Emlen. We can look at his recent handling of the Grand Jury report investigation into the fire department as an example of clear mismanagement. The list can go on and on from there.

However, the Vanguard does indeed need to give Mr. Emlen relative praise compared to Mr. Colby in terms of the handling of their own contract extensions.

Bruce Colby has already drawn criticism from this blog for his taking what amounts to a 5% COLA increase on an ongoing basis during a time when his teachers will once again get zero cola, and during a time when the district will once again have to tighten its budget.

Moreover it seems that district felt that if they did not raise his salary, Mr. Colby would be looking elsewhere and the district may find itself doing a CBO search during these economic times. The district is already without a full budget office staff, to have to find a replacement CBO at this stage would be devastating.

So it seems we can support the job effort but not the approach of Mr. Colby. I write that as one who genuinely likes the guy and thinks he does a very good job.

The bottom line here is principle not the money itself. A 5% pay increase is not going to make or break the district's budget. But the principle of the matter is important as is the loss of flexibility. Essentially, Mr. Colby's raise requires his own office to operate unstaffed in order to accommodate increases in his salary. In short, he's doing more work for the additional pay, the question is whether the district will regret the loss of flexibility in the future.

On Tuesday night, by contrast, we have City Manager Bill Emlen taking the opposite approach. Mr. Emlen is basically saying what we believe Bruce Colby should have said, in light of the current fiscal crisis, Mr. Emlen is forgoing a cost of living adjustment and a merit increase. Mr. Emlen will receive the same base salary as he did last year.

Not that he is going to the poor house with his $158,000 salary. However, on a comparative level, Mr. Emlen is making considerably less than many of his counterparts and certainly than his counterpart with the school district, Dr. James Hammond (let alone Mr. Colby).

We do take some issue with the city council however. Mr. Emlen once again has had the time frame extended by which he would have to relocate to Davis from Vacaville. He now has until June 30, 2012 unless the city modifies the city code requirement for the city manager to reside within the City.

Mr. Emlen has now been city manager for two and a half years. The current claim is the drop in the price of the housing market and therefore the loss of money. However, that is of course a recent excuse. Frankly, this is not the people of Davis' problem.

It was suggested in the Davis Enterprise article that Davis has not suffered from a loss of service based on the fact that Mr. Emlen does not reside in the city. First of all, how was that study performed and quantified? Second and most importantly, this is a matter of principle and following the current laws on the book.

Nevertheless, this is largely a side issue. The city manager has set the tone at least for now, that he is not going to be asking for more money during tough economic times.

The larger question though goes well beyond the tens of thousands in dollars in the midst of a budget deficit that will extend into the millions that the city manager saved the city. The larger question is whether Mr. Emlen can deliver for the city good strong employee contracts that will lead to a sustainable budget into the future. The larger question is whether Mr. Emlen can do a better job of handling crises that arise such as the Fire Department Grand Jury investigation.

The bottom line here is that while we applaud one single aspect of Mr. Emlen's conduct, namely his professionalism with regards to his own contract, we have to question and somewhat harshly the overall job he has done.

At the same time we applaud the job that Mr. Colby has done, we question his priorities when it comes to his own contract situation.

---David M. Greenwald reporting

City Needs to Press For Restructuring City Employee Contracts During Economic Crisis

Last night the Davis Enterprise had an interesting article on the status of city countrols for the department heads. The city has put on hold the new contract for department heads.

'We just decided to put it on hold while we deal with the budget issues,' said Human Resources Administrator Melissa Chaney. 'There's nothing pending right now.'

That means the seven people heading up the city's departments are operating under the old contract signed in 2005. Under that contract, the city budgets about $1,478,000 for salaries, health benefits, unemployment, workman's compensation and other items for the city's top employees.

'Right now, we're just trying to figure out where we are with the budget and what ramifications are with the current budget and the current fiscal situation,' Chaney said.

More interesting is that several of the bargaining units in Davis have to renegotiate their contracts this year. The city is facing a $1.5 million shortfall this year and up to $3 or $4 million for next year.

The retirement benefit issue has been a heavy topic of conversation on the Vanguard in recent months. The Enterprise article mentions Antioch has gone to a two-tier system which has dropped the formula from 2.7% at 55 for current employees to 2.5% at 55.

The other possibility is that the employees themselves are asked to contribute more to their retirement than they presently do. That is probably going to have to occur as the CalPers system which had been superfunded during the early part of this decade is now running in a deep hole with the struggles of the markets and other problems.

The two-tier system is generally strongly opposed to by public employee unions, so increased contributions for all might be the way to go.

One pressure that the current city management staff and the council are going to have to fight is going to be the pressure placed on them by the bargaining groups to simply extend the current contracts for a few years until fiscal times are better. That would enable employee groups to wait out the current economic downturn and essentially punt on the tough issues.

Instead the city needs to take advantage of this crisis to fix the structural problems with the compensation system--particularly retirement pensions.

The city is going to need to be tough in negotiations this time because there are not only current bargaining issues of a looming budget deficit for the city, but there are structural problems that will end up further stressing the city's fiscal condition.

As the Vanguard reported last summer, employee salaries rose 50% from 2000 to 2008. Total compensation to employees went from $27 million to $49 million over that period. However, retirement pensions fueled by the increase of the pensions to 3% at 50 for public safety have risen nearly six fold over that time. It is that factor that will further strain the city, especially as it has employees retire at 50 and 55 meaning the city may end up paying pensions for decades after retirement.

Is the city prepared to drag out these negotiations until they solve the problems in the contracts?

Looming ominously is a quote from HR Administrator Melissa Chaney:

"We haven't sat down with any of the bargaining groups. We would probably be looking at sitting down with them at this time of year, we just haven't done it yet."

One of the big questions is the extent to which the bargaining process can have transparency. Bargaining itself occurs behind closed doors. However, the city is looking into ways to make the process more transparent.

Under past conditions, the bargaining took place behind closed doors, a contract agreement was reached and the item was placed on the consent calendar for approval by the city council. That means that unless someone pulled the item off the consent calendar there would be no public discussion of the contract and the only time the council saw it would be at the end of the process.

Some possible changes include a status report to the council on the bargaining process given through out negotiations. Having a public presentation at some point along the way about the contract. Requiring the council to approve contracts like they do city ordinances--a full public hearing on the first reading and then a second reading.

One of the important ideas here is to sufficiently put public scrutiny into the process that both sides realize and recognize they have to defend the contract that they have arrived at. What has happened in the past is that the agreement is made behind closed doors and then the city staff become de facto advocates for the contract. That has produced some extraordinarily generous contracts over the last eight years and has allowed city employees to reap huge benefits at the expense of taxpayers and other projects.

The city in addition to the budget deficit in the general fund also is running about $13 million short on a variety of projects--often repairs and infrastructure upgrades--they have referred to these as unmet needs. Part of the reason for the unmet needs is an increasing portion of the general fund goes to city employees.

The city is facing very serious issues and it will be vital that the public be engaged in this process as they are really the only oversight the city has on contracts to public employees. The Vanguard will continue to press for ways to make this process more open and transparent in hopes that the interests of the taxpayers and citizens of Davis are represented in the process.

---David M. Greenwald reporting

Commentary: Don't We Need Three in Town?

If you are one of those who is easily offended at any hint of criticism, stop reading right now. There are a few things that need to be said. Tuesday was an historic day. For those who missed the Vanguard radio show last night, listen to it when the podcast is available. I spoke with Tansey Thomas, who everyone knows and with Wayne Lindsey, who no one has heard of. Wayne is a 21 year old UC Davis student. And yes he's African American. It was neat listening to someone born during the depression and someone born when I was in high school talking about what the election of Barack Obama means to them and for African-Americans.

But now it is time to get back to work, back to the real world. For my other job, I had the priviledge of sitting in a teleconference with Speaker of the California Assembly Karen Bass and Senate Leader Darrell Steinberg. They were flying back from the Inauguration. One of the reporters who wasn't me asked them if they thought the California voters were better served by them going to the Inauguration or given the budget crisis being back in Sacramento and trying to get a budget agreement.

It was a tough but fair question. They gave in my opinion a strong answer. The President is formulating his stimulus plan in the coming days. The California legislative leaders came to Washington basically to see that the President and his team put money into the stimulus plan to help the states. No one has money of course, but at least the feds have the ability to deficit spend.

I relay that story because of what I read later yesterday evening about our leaders from Davis who also went to the Inauguration. I do not want to begrudge them a trip to Washington to watch history. I watched on my couch on Tuesday morning with Cecilia, and we were both glad to be on our warm couch watching it on TV rather than standing in the cold without easy access to bathrooms watching it on a giant monitor. Anyone who knows me, knows crowds are not my thing.

But a few things struck me about the article in the Enterprise. First, unlike the state leaders, there was no official business involved in this trip for our three city leaders.

One line from the article in particular seemed to stick in my craw:

"Saylor chatted after the ceremony from bleachers across from the White House. He was playing a quiz game, and had just correctly named the eight U.S. states that begin with the letter M."

I guess I am glad he can name all eight states that begin with the letter M. I am pretty sure I could have done that in first grade, not that that means anything. I am not sure I would really be sharing that with anyone.

A couple of things that come to mind on all of this. Councilmember Lamar Heystek, if he had said that, would have been lampooned in the local press to no end. He was lampooned for being Max Headroom by Hudson Sangree of the Sacramento Bee after representing the city of Davis in Arkansas and still having the diligence to serve our community and attend the council meeting in a virtual way that was unfortunately a bit technologically challenged.

This was not meant as a shot at Councilmember Saylor. He didn't choose for the paper to actually print that, but I would hope he would be embarrassed that they did. He was probably just making small talk with the reporter. What disturbs me and apparently others a bit more is that the newspaper gave more coverage to this story than they did Davis' City MLK event the day before. 399 words for this story to the 107 word caption under the MLK day festivities.

More seriously, with three councilmembers out of town simultaneously, obviously the city manager runs the city on a day-to-day basis, but what if there were an emergency? Apparently I was told in an emergency we do not need a quorum. So let's say in the unlikely event of a riot, we could have Lamar Heystek and Sue Greenwald decide by themselves that we need a curfew. I can only imagine what else they can do.

You know for years traveling on the plane, passengers were greeted with the instructions, "in the unlikely event of a water landing you can use your seat cushion as a floatation device." I'm sure there are 155 passengers last week glad that that message was drilled into their heads. Fortunately they didn't have to jump into the very cold Hudson River.

Shouldn't we have some kind of rule in this town that precludes three councilmembers from leaving town at the same time? Should we not require there always to be three councilmembers in town so we never have a situation where two councilmembers are calling the shot in case of an emergency? It was just last year in January that we had massive power outages and a city that was not ready to respond.

While I am at it, also wanted to comment on a blurb from Bob Dunning in his column last night.

"FIREFIGHTER ABUSE - my friend Larry writes to say he read in this very newspaper that 'the firefighters had to sit and wait until midnight to hear the summary of the Grand Jury report because it was preceded by 70 speeches concerning a council resolution to end the violence in Gaza.'

That's what happened, Larry - 'Hey, if the Davis City Council is going to take over running America's foreign policy, couldn't it at least adopt Obama's new policy of 'no torture.' ' - well said, my friend -"

First of all, in retrospect, I think the city should have pushed back the discussion on the Grand Jury report given the late hour as they did with the two workshops including the budget workshop that ought to be a huge priority at this point in time.

But second, no one forced the firefighters to sit and wait until midnight. They were not required to be there. In fact only two of them spoke--the fire chief and the union President. They were there for effect and to remind certain councilmembers that they had worked to get them elected and suggest in a not so subtle way not to let them down.

There is more. This notion that the Davis City Council is running foreign policy is preposterous and irresponsible. They are doing no such thing. As Souza pointed out last week, the Davis City Council is the closest body to the citizens of Davis. They are our closest representatives in Government. They are not running foreign policy, they are acting as the voice of the citizens, representing our values to other bodies in government that do not meet in our town.

What we saw the other night is that this is a community that is divided on a key issue in our time. This is a value to the community and now the Human Relations Commission tonight will take up this item and see about creating the type of community forum that can help bring our community together and bridge the gap.

I literally spoke with hundreds of people on Tuesday throughout town at various parties and this was the most common topic of conversation. It is an issue that needed to be addressed. I agree with council's ultimate decision. The council cannot speak for a divided community and should not. And thus discovering the divisions as they did on Tuesday night, they pulled back and realized that a letter was not the appropriate solution at this time and on this issue. But that does not mean this is a topic they should not have discussed even if it meant the delay of vital city business until after three councilmembers came back from having their fun and frivolity in Washington, DC.

If that display of democracy meant this blogger had to be up until 2 am and get only three hours sleep, that's part of the duty. If the firefighters wanted to impact public policy and had to stay there until the wee hours of the morning, well poor them? Give me a break. These guys are getting paid big time by this city, they can wait for their meeting like the rest of us if they choose, keyword is CHOOSE, to attend.

---David M. Greenwald reporting

Obama's Call to Action: Why We Cannot Wait

A generation ago in 1961, President John F. Kennedy exhorted the country to take out a new spirit of public service as a new generation took the helm of the United States. Inspired by his call to action, many young Americans would span out across the globe in the Peace Corps and at home came calls for social justice, racial equality, and eventually peace.

In just a few hours today, a new President will take office with as much excitement if not more than that day in 1961. There will be other days to reflect on the pitfalls ahead. There will be other times to reflect on how Camelot and the "Best and the Brightest" to coin the phrase of David Halberstam would end up in the 1960s.

Today we enter a new era with hope and anticipation. We enter a new time where a black President is a reality just as Kennedy ushered in a time when a Catholic President was a reality.

However, there is so much more to the inspiration of President Barack Obama. One of the enduring moments this week, among many which including throngs of well-wishers and supporters gathering in Washington and as notably along his train route, was the image yesterday of the President taking off his coat and painting. Symbolic to be sure, but it was a sign that this President is going to roll up his sleeves and get into the dirty work.

In the midst of all of his excitement was his call to service. He called on people of all ages to give 50 hours to community service a year.

As much as we need a new era of sacrifice by Americans, as much as we need a new call to action, a new call for us to ask what we can do for our country, there is so much more that needs to be done.

For a moment though, contrast this picture with what we saw on September 11, 2001 and the coming days. The country was ready for action. The country was yearning to come together for a national purpose. The country would have heeded any call to sacrifice. One of the big failings of the past administration was the failure to take advantage of that collective moment of unity. Instead it dissolved into polarization. The world was behind us that day and instead we divided it with our ill-considered war against Iraq.

But today I want to talk about the future, not the past. Our communities need Obama's help. Our communities are struggling. We can start at the State level and work our way down. We cannot afford to wait any longer.

California faces a 40 billion dollar deficit in the coming year. It cannot go into debt. Its legislature is polarized by partisan differences and agendas. Its Governor gained not a single vote in support of his budget proposal from his own party. Workers are facing furloughs, pay cuts, and the very real prospect of the loss of jobs during the toughest economic crisis in recent memory.

We need to take back our state. We need the kind of change at the state level that we have at the federal level and the next election is a distant two years away. We cannot wait.

Banks are failing. Businesses that have long histories are filing for bankruptcy and many are closing their doors. We cannot wait.

Our cities are going bankrupt. Our schools are laying off teachers and cutting classes. Our universities are turning away students. Our counties that are relied on to provide for the least of us, are in the worst shape of all. We cannot wait.

Our local community is probably in better shape than most. Just this past weekend, I was down in San Luis Obispo and read about the schools there facing massive layoffs. Our own district is probably going to avoid that fate the next year and a half. But still we will have to find a way to absorb multimillion dollars of revenue cuts. The children are the future of this nation, they cannot afford to become a victim in the line of cuts. We cannot wait.

The city of Davis, long thought to be immune from economic downturn is facing over one million in deficits by next year and over three million the following year. We can always question decisions made and the reforms needed, but the fact remains, even the city of Davis needs help. Our roads will go unrepaired. Our infrustructure aging. And while a few are prospering, the citizens of this town are in need of help just like everyone else.

But worst of all is the County of Yolo. It is facing an $18 million deficit, that is one-third of its general fund operating budget. The County of Yolo is in charge of providing for the least of us. It is in charge of feeding the hungry, clothing the poor, and giving medicine to the sick and the old. Our county as it stands right now will not be able to carry on its commitments to the needy in our population.

These are tough times indeed. It is great to serve food at a homeless shelter. It is great to volunteer at a hospital. It is wonderful to donate food for the soup kitchen and clothes to thrift shop. But we must do more. For if the county has to cut services, then there will be more hungry, more homeless, more needy, more sick, and less services to help these people. We cannot wait.

So today as Barack Obama gets sworn in let us celebrate, but tomorrow, we must work.

---David M. Greenwald reporting

City Now Facing Crisis of "Unmet Needs"

The Davis Enterprise on Monday ran a story entitled, "When to tax?" The general thrust of the story is two-fold. First, the city has a growing deficit of $1.2 million followed by as much as $3 million the next year.

On the other hand, the city has a long list of "unmet needs."

The city staff report for tonight's budget workshop says:

"While the growing list of unmet needs – both one-time and recurring – remains a significant concern, current economic and budgetary realities suggest that emphasis should be placed on securing existing revenues over seeking new revenue sources that could, potentially, jeopardize revenues relied upon to provide existing City services."

The general idea at this point, and it was shared by Finance Director and Assistant City Manager Paul Navazio, is that the city recognizes at this time that hey cannot ask for additional revenues. Last year they were proposing and exploring a number of new taxes to deal with some of the growing list of unmet needs. However, that is largely off the table now.

The staff report reads:

"At this time, staff is suggesting that the highest priority related to future ballot measures should be the renewal of the ½ Sales Tax (Measure P), approved by the voters in June 2004, with a 6-year sunset provision. This measure currently provides roughly $3 million in General Fund revenues to the City.

Secondly, priority should be given to options for renewing or replacing the Parks
Maintenance Tax (Measure G), which was re-authorized by the voters in June 2006, with a 6-year sunset provision. This measure provides roughly $1.3 million in dedicated funding in support of park maintenance activities. In the past, some concerns have been expressed over the appropriateness of assessing this tax on the basis of a flat $49 tax on parcels within the City. Staff has previously been directed to explore alternative funding mechanisms, to the point where the text of Measure G provides that the measure would be repealed in the event that the City secures an alternative means of funding parks maintenance activities."

In other words, right now the city will be focusing on renewing rather than expanding the existing revenue base. That puts a tremendous strain on city resources and city services. One of the keys will be the round of negotiations that the city has to engage in this year with most of the city employees' bargaining units.

There will be a tremendous pressure on the city and the bargaining units to simply punt on these negotiations. Meaning that they would simply negotiate the same agreement as before and extend the current contract. The hope by the employees would be that in a year or two the economy will have improved and then they can negotiate a better contract.

However, many recognize that the current trajectory is not sustainable. At some point we will have fuller discussion of the retirement system, but the strain on PERS may necessitate changes in who funds the retirement pensions and the breakdown of employee payments to employer payments into PERS.

The city at this time would be better holding fast to the negotiations and go to the mat for changes even if that process takes two years and requires a de facto rather than a de jure extension of the current contract.

From our standpoint the biggest problem right now are the growing list of unmet needs. The growing list was concerning last year. The fact at that point was that the city separated this list of needs from the budget, meaning that it appeared we had a fund balance with a reserve. But that fund balance was an illusion. It belied the fact that the city lacked the resources to meet these needs.

These needs include infrastructure upgrade and repair, basic road maintenance, and a whole host of other short and long term needs. Allowing these to go unaddressed means more cost down the line.

Now the city finds itself in an operating budget deficit that will grow to large proportions in the next two fiscal years. The city cannot rely on the taxpayers to pay more during these very difficult economic times. So the city is in a real jam.

The city has really put itself into a tight place by being overly generous with salary increases and retirement pensions that occurred during better economic times. The city lacks the revenue now to be able to address serious needs and they also recognize that the taxpayers lack the resources and probably the inclination to vote for tax increases during these challenging fiscal times.

Where does that leave the city? We will have to watch as the council tries to grapple with these kinds of issues. It would have helped if a year ago, the council had been more upfront about the tenuous nature of the city's fiscal situation it was touting during the council elections of 2008.

The Vanguard has been warning about this impending problem for some time. The council is just now considering looking into it.

---David M. Greenwald reporting

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 dot.com 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