Thursday, July 31, 2014
YOLO COUNTY NEWS
99 CENTS

Options for addressing the city’s fiscal problems

By
From page A13 | February 02, 2014 |

By Dan Carson

Based on my analysis of the five-year fiscal projections for the city of Davis made public in December, City Manager Steve Pinkerton has gotten it fundamentally right. The city faces a serious “structural shortfall” — a risk of spending substantially more money each year than it takes in — that must be addressed in the 2014-15 budget cycle.

Pension and health benefit cost increases for city staff, and recent commitments to improved water systems and road maintenance, threaten to outpace the money coming in to city coffers to pay for it all. Taking these factors into account, Pinkerton projected last month that the city’s structural shortfall could be up to $5 million in 2014-15 and could grow to $7 million by 2018-19.

In response, city staff and a council subcommittee came forward with recommendations to place a $5.4 million sales tax measure before voters in June to address city deficits and a second $4.1 million parcel tax in November to pay for city infrastructure and facility maintenance.

Last Tuesday, the City Council signaled its clear intention to proceed with timely solutions, but asked its staff to come back with various additional revenue options by Feb. 11, its last opportunity to place a ballot measure on the June ballot.

While that work continues, here are my suggestions for addressing the problem, drawn mainly from a recent letter I sent the City Council and the Finance and Budget Commission. The views expressed here are my own and I do not speak for the commission or anyone else.

* Take improving revenues into account. Some additional pain, in the form of new and higher taxes, is unavoidable if our city leaders are going to balance the city’s budget, address critical infrastructure needs and maintain deteriorating city facilities. But, since most every dollar in the government’s pocket comes from the pockets of its citizens and businesses, the economic pain that is inflicted on behalf of the common good should be no more than necessary.

My analysis indicates that marked improvements in revenues from the city’s two largest existing general fund revenue sources, the property tax and the sales tax, are already being realized and that less new money may be needed than first thought to address the deficit.

The Yolo County assessor announced last June that Davis’ 2013-14 property tax assessment roll had increased by 5.75 percent. That was a stronger performance than any other jurisdiction in Yolo County and much better than the statewide average. An initial payment received by the city on Jan. 23 from the county tax collector for secured property tax receipts (the bulk of the money the city receives each year from property taxes) showed growth of roughly 5.7 percent, right in line with the assessment roll increase.

All of this is well above the projected overall property tax growth rate of 1 percent for 2013-14 that was built into the city’s five-year fiscal forecast and the 2 percent to 2.88 percent growth city managers had projected for later years.

The city also has collected more sales taxes revenues than projected. The city manager’s five-year forecast assumes the city will receive sales tax revenues of $9.4 million in 2013-14. However, Davis is already surpassing these assumptions. Sales tax receipts reached almost $10.3 million in 2012-13 and collections for the first five months of this fiscal year so far have remained on track to provide the city comparable revenues in 2013-14.

I made alternative and, I believe, more realistic assumptions about the revenues the city will receive over the next five years. If I’m right, the city will have millions of dollars in additional revenues from existing tax sources over the next five years than first thought. This by no means solves the city’s budget problems, but could make them more manageable. If the City Council so chose, it also means more resources could be available to address the city’s infrastructure needs and deferred maintenance.

* Consider some additional budget reductions. My analysis indicates that city expenditures could be reduced below the level depicted in the five-year projections presented to the City Council last month.

For example, a technical correction to city pension contributions could reduce expenditure projections by $100,000 annually in 2015-16 and later years, by my rough estimate. If the five-year projections built in a 1 percent factor for salary savings, and included some relatively minor and mostly technical budget cuts, the fiscal gap could be narrowed by an additional $700,000 per year.

City officials have done some heavy lifting in recent years, achieving significant reductions in staffing and slowing the growth in employee compensation costs. The incorporation of some modest additional reductions into its budget-balancing package would assure voters who are weighing new revenue measures that city efforts to make their government more efficient are continuing and that the additional tax money will be well spent.

* How it all adds up. I incorporated my revised revenue and expenditure assumptions into an alternative five-year forecast. If my assumptions proved correct, the City Council could consider scaling back the new $5.4 million sales tax revenue measure to about $2.5 million annually to fill the funding gap. It could then tailor a separate parcel tax measure for infrastructure and maintenance of city facilities to whatever level city staff demonstrates is justified.

In the alternative, the City Council could stay the course with the proposed sales tax revenue measure in June of $5.4 million. After using roughly $2.5 million a year in tax proceeds to balance the budget, the council could earmark the remaining $2.9 million in annual revenues for infrastructure and maintenance of city facilities. That would provide at least some added monies for infrastructure and maintenance purposes if a parcel tax did not pass.

* Build public confidence in fiscal plans. City officials face a daunting but not impossible task of building public confidence and support for a new revenue package. Achieving a two-thirds vote for a parcel tax could prove especially challenging.

The case would be strengthened if city officials develop a specific and credible multi-year fiscal plan before the election that shows exactly where both new and existing tax dollars would go if tax increase measures are approved. The council could direct that either city commissions or a council subcommittee assess the city’s maintenance and infrastructure needs in a comprehensive manner and prioritize them to fit within the resources that will become available.

There will never be enough money to do everything every group in this town would like. The temptation will be strong to pile on eye-catching new civic amenities to attract support for tax hikes. However, the city’s critical infrastructure and deferred maintenance, often as unglamorous as fixing cracked sidewalks and bike paths and replacing faltering pool pumps, should be the priority and would help assure voters that the city’s fiscal house is being put in order.

— Dan Carson is a 25-year resident of Davis. He worked for 17 years in the Legislative Analyst’s Office, a nonpartisan fiscal and policy adviser to the California Legislature, retiring in 2012 as deputy legislative analyst. He was appointed last month to the city’s Budget and Finance Commission.

Comments

comments

Special to The Enterprise

  • Recent Posts

  • Enter your email address to subscribe to this newspaper and receive notifications of new articles by email.

  • .

    News

    Davis area youths learn wilderness survival skills

    By Charlotte Orr | From Page: A1 | Gallery

     
     
    Local therapists bring ‘Daring Greatly’ movement to Davis

    By Anne Ternus-Bellamy | From Page: A1 | Gallery

    Firefighters keep Yosemite blaze far from sequoias

    By The Associated Press | From Page: A2

     
    Police nab three for vehicle theft

    By Lauren Keene | From Page: A2

     
    Crews battle grass fire near Davis

    By Lauren Keene | From Page: A2

    Sorting out the claims after pipe break: Who pays?

    By The Associated Press | From Page: A2

     
    Governor says immigration solution is a priority

    By The Associated Press | From Page: A2

     
    As farmland subsides, aquifer worries mount

    By San Francisco Chronicle | From Page: A3 | Gallery

     
    Pogledich named Yolo County counsel

    By Anne Ternus-Bellamy | From Page: A5 | Gallery

    Tuleyome launches Kickstarter campaign to publish a children’s nature book

    By Special to The Enterprise | From Page: A5 | Gallery

     
    Davis teen on California team for national horticulture competition

    By Special to The Enterprise | From Page: A5 | Gallery

    Truth and authenticity on radio program

    By Special to The Enterprise | From Page: A8

     
    Senior sing-along held monthly

    By Enterprise staff | From Page: A8

    .

    Forum

    A rose by any other name

    By Creators Syndicate | From Page: B5

     
    Ross Douthat: Democrat, Republican patterns are changing

    By New York Times News Service | From Page: A6

    Tom Meyer cartoon

    By Debbie Davis | From Page: A6

     
    Civilians are innocent victims

    By Letters to the Editor | From Page: A6

    Thanks for your kindnesses

    By Letters to the Editor | From Page: A6

     
    Questions, questions, questions

    By Letters to the Editor | From Page: A6

    Speak out

    By Enterprise staff | From Page: A6

     
    .

    Sports

    Davis Water Polo U10 girls are golden

    By Spencer Ault | From Page: B1

     
    Aggie Silva mixed school and strikes; wins Reno tourney

    By Bruce Gallaudet | From Page: B1 | Gallery

    Lucky No. 7: Giants snap losing streak

    By The Associated Press | From Page: B1

     
    River Cats snap three-game losing streak

    By Enterprise staff | From Page: B1 | Gallery

    Davis Rugby teams wrap up summer season

    By Enterprise staff | From Page: B2

     
    DHS tryout schedule updated; physical packets due

    By Enterprise staff | From Page: B2

    49ers WR Brandon Lloyd enjoying return to NFL

    By The Associated Press | From Page: B3

     
    Hammel struggles in A’s loss to Astros

    By The Associated Press | From Page: B8

    .

    Features

    Happy 103rd birthday!

    By Wayne Tilcock | From Page: A2

     
    Fay Libet: 100 years young

    By Spencer Ault | From Page: A3 | Gallery

    Future subscriber: Sonya Theresa Arnold

    By Enterprise staff | From Page: A4

     
    .

    Arts

    Landscape exhibition returns to Davis

    By Special to The Enterprise | From Page: A7

     
    Hear live music at Monticello

    By Enterprise staff | From Page: A7

     
    New KDRT show features touring musicians

    By Enterprise staff | From Page: A7

    Hot City heats up Winters gazebo

    By Enterprise staff | From Page: A7

     
    Enjoy some Mischief at First Saturday event

    By Enterprise staff | From Page: A7

    British organist to play in Davis

    By Enterprise staff | From Page: A7

     
    Native American dancers to perform in Davis

    By Enterprise staff | From Page: A7

    Winters stages ‘All’s Well That Ends Well’

    By Enterprise staff | From Page: A7

     
    .

    Business

    .

    Obituaries

    .

    Comics

    Comics: Thursday, July 31, 2014

    By Creator | From Page: B6