Wednesday, November 26, 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

    Food fight … in a good way

    By Tanya Perez | From Page: A1 | Gallery

     
    Fremont Weir parking lot remains closed

    By Elizabeth Case | From Page: A1

    Occupy movement settles in at UC Davis

    By Tanya Perez | From Page: A1 | Gallery

     
    Time to give thanks for nature’s beauty

    By Enterprise staff | From Page: A1 | Gallery

     
    Second cat-hoarding suspect arrested

    By Lauren Keene | From Page: A2

    Guard reinforcements contain damage in Ferguson

    By The Associated Press | From Page: A2 | Gallery

     
    Weather affecting Thanksgiving travelers

    By The Associated Press | From Page: A2 | Gallery

    Year-end films to see, or not, on KDRT

    By Enterprise staff | From Page: A3 | Gallery

     
    LCI marks 50 years with special service

    By Enterprise staff | From Page: A3

    Pedal around Davis on weekly bike ride

    By Enterprise staff | From Page: A3

     
    Happy Thanksgiving from The Enterprise

    By Enterprise staff | From Page: A3

     
    Learn to use Skype at Connections Café

    By Enterprise staff | From Page: A4

    Girls who volunteer may apply for grant

    By Enterprise staff | From Page: A4

     
    Round up at the registers for Davis schools

    By Enterprise staff | From Page: A4

    Davis Community Gift Project brightens holidays for children

    By Anne Ternus-Bellamy | From Page: A4

     
    Speaker proposes changes in humanities doctorate

    By Special to The Enterprise | From Page: A4 | Gallery

    Senior Center hosts holiday sing-along

    By Enterprise staff | From Page: A4

     
    Sutter sponsors qigong for holiday de-stress

    By Enterprise staff | From Page: A4

    Boy Scouts start Christmas tree sales on Friday

    By Enterprise staff | From Page: A5

     
    Volunteers needed to grow plants for habitat restoration

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

    Rainbow City community meeting set Dec. 1

    By Special to The Enterprise | From Page: A12

     
    .

    Forum

    She wants more from him

    By Creators Syndicate | From Page: B5

     
    Tom Meyer cartoon

    By Debbie Davis | From Page: A6

    Musings in the wake of Ferguson decision

    By Special to The Enterprise | From Page: A6

     
    Rich Rifkin: Is it time to be a bear or a bull?

    By Rich Rifkin | From Page: A6

    Planting love at new home

    By Letters to the Editor | From Page: A6

     
    Innovation parks comparison

    By Letters to the Editor | From Page: A6

    .

    Sports

    Blue Devils prepare for a new season on the mat

    By Evan Ream | From Page: B1 | Gallery

     
    No excuses, but there’s hope for UCD after 2-9 season

    By Bruce Gallaudet | From Page: B1

    Joseph, Manzanares lead 10 All-Big Sky Aggie picks

    By Bruce Gallaudet | From Page: B1 | Gallery

     
    DHS wrestling is not just for boys

    By Evan Ream | From Page: B1 | Gallery

    Let’s not lose another good DHS coach

    By Chris Saur | From Page: B1

     
    Davis Little League offers early sign-up discounts

    By Enterprise staff | From Page: B2

     
    Kings get past Pelicans

    By The Associated Press | From Page: B6

    .

    Features

    Salute to non-steamed broccoli

    By Dan Kennedy | From Page: A7 | Gallery

     
    .

    Arts

    It really is ‘The Best Christmas Pageant Ever’

    By Debra DeAngelo | From Page: A11 | Gallery

     
    .

    Business

    .

    Obituaries

    Elzyne Thompson

    By Special to The Enterprise | From Page: A4

     
    Death notice: Buddy Ralph Mills

    By Special to The Enterprise | From Page: A4

    .

    Comics

    Comics: Wednesday, November 26, 2014

    By Creator | From Page: A9

     
    .

    Ready, Set, Shop!

    Shop locally: You can have your pie and eat it too

    By Enterprise staff | From Page: RSS1

    Santa’s little helper: secrets to happy holiday shopping

    By San Francisco Chronicle | From Page: RSS2

    Make sure it gets there: deadlines for shopping and shipping

    By The Associated Press | From Page: RSS2

    Downtown lights up at holiday open house

    By Enterprise staff | From Page: RSS3

    Full of warm wishes and over-sharing, the holiday card lives on

    By The Associated Press | From Page: RSS4

    Shop smart: Protect your wallet and your identity this shopping season

    By Special to The Enterprise | From Page: RSS5

    Woodland celebrates the holidays downtown

    By Special to The Enterprise | From Page: RSS5