Wednesday, August 27, 2014
YOLO COUNTY NEWS
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City may propose taxes to help balance its budget

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From page A1 | December 18, 2013 |

For the past few years, the City Council essentially has mandated that the city tighten its belt. So, Davis has cut, reorganized and negotiated its way to serious cost savings.

On Tuesday, however, the council learned that all of those efforts combined, which have saved the city’s general fund almost $6 million per year, likely are still not enough to keep Davis standing on stable fiscal ground.

City Manager Steve Pinkerton came before the council to explain that with the cost of CalPERS contributions expected to rise, with water rates expected to climb and with retiree medical costs continuing to compound, next year Davis still will face a $5.1 million shortfall.

As expenditures far outpace revenues, if the city can’t find an influx of cash, each department will have to find a way to trim 12 percent from their respective budgets.

“We’d have far fewer recreation programs, less service at the permit center, browning out of fire stations, crime prevention programs would go away, tree trimming would be certainly greatly at risk again,” Pinkerton said.

The city manager also estimates that if the council wanted to cut its way to a balanced budget, the city would have to lay off 52 employees “because there’s nothing left” to cut.

“We would cease doing all the things that makes us a city instead of an unincorporated area,” Pinkerton said.

The answer to this problem, it seems, is to raise revenue somehow.

But Pinkerton said Tuesday that revenue derived from economic development efforts is still at least five years out, meaning that the city probably will have to turn squarely to raising taxes in the very near future.

Options include a half-cent increase in sales tax, which would require only 50.1 percent of the vote if it goes on the June ballot with the council election. The increase would generate more than $3.5 million in annual revenue for the general fund.

Combined with the state’s cut of the sales tax, if the voters approved the measure it would bump Davis’ tax rate from 8 to 8.5 percent.

Or, the council could look at proposing a parcel tax, which Davis voters historically have supported. In 2012, 84 percent of voters approved the $49-per-year parks maintenance tax. The Davis Joint Unified School District, meanwhile, has passed a bevy of parcel taxes over the past few years to help fund public education programs.

A parcel tax of about $135 per year, Pinkerton calculates, would generate more than $3.5 million per year as well, but that would require a two-thirds majority vote.

Either way, the council likely must travel down one of these roads.

“We’ve really cut to the bone in many ways, so what I appreciate about this is that it shows clearly that we have a need for more revenue,” said Mayor Pro Tem Dan Wolk.

One of the obstacles the city faces in meeting this challenge, council members believe, is engaging the public and informing them about the state of the city’s finances and, subsequently, the desperate need for additional revenue.

Pinkerton said he’s planning a “road show” where he and city staff and council members will tour Davis to meet and talk with various groups and organizations to begin getting people on board for some type of tax measure.

Councilman Lucas Frerichs, who again touched on his desire to implement some sort of citywide participatory budgeting program where citizens can vote on what the city chooses to fund, feels strongly about getting the public involved.

“We need to actually have our budget very easily accessible to the average citizen, particularly if we’re going to ask them for additional revenues in 2014,” Frerichs said.

City imposes terms on fire union

Though it appears the two sides were close to a deal, the City Council voted unanimously Tuesday to impose terms on the Davis Professional Firefighters Association Local 3494, unilaterally slashing its benefits, and for some members, take-home pay.

While most of the council members expressed disappointment about being in this situation, they said they had no other choice, given the fiscal situation facing the city.

“This past year and a half there have been a number of items where I have disagreed with proposed cuts and contracting out of services that have ultimately been enacted and I’ve been opposed to those because I felt they weren’t in the best interest in the community,” Frerichs said.

“But I think one of our many roles as a council is to make sure the city’s fiscal house is in order and that we’re able to do that primarily through the negotiations of employee contracts.”

Pinkerton calculates that it costs the city about $28,000 monthly without an agreement in place with the fire union.

The city locked in deals with almost all other major employee groups almost a full year ago. The exceptions are the firefighters and the Davis City Employees Association, upon which the council imposed terms last month. Contracts for each group expired in June 2012.

The terms that were imposed on the fire union Tuesday include a phase-down of the cafeteria cash-out benefit from a maximum of about $1,400 per month to $500 by June 30, 2015.

Through the cash-out, the city gives employees money to buy health insurance every month. If the employees are covered by a spouse’s insurance plan and elect not to buy the city’s insurance, they can take that benefit in cash.

Davis firefighters average about $93,000 in annual salary. Any firefighter who was taking the maximum cash-out pocketed an extra $16,800 each year. By 2015, the employees will have lost about $10,000 of that benefit annually.

The terms imposed by the council also require union members to pay 3 percent more of their pension costs. However, employees could instead opt to take a 3 percent salary reduction.

Meanwhile, the city still would like to install a two-tiered system for retiree health benefits for firefighters, where new employees receive far less in health care once they retire. But similar to DCEA, the city doesn’t believe it can legally impose those terms.

Consequently, the city would not extend the salary increases it has given the other employee groups until a new agreement with those terms is in place. Council members said they hope the two sides can reconvene right away to continue negotiations for a full contract.

— Reach Tom Sakash at tsakash@davisenterprise.net or 530-747-8057. Follow him on Twitter at @TomSakash

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Tom Sakash

Tom Sakash covers the city beat for The Davis Enterprise. Reach him at tsakash@davisenterprise.net, (530) 747-8057 or @TomSakash.
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