Wednesday, October 22, 2014
YOLO COUNTY NEWS
99 CENTS

Upcoming year’s budget bears long-term fiscal implications

By
From page A1 | June 26, 2013 |

Though it’s the fiscal year 2013-14 budget that the City Council must adopt in two weeks, the council has more than just the next 12 months to consider when deciding how to manage city funds.

The council worked late into the night Tuesday pouring over the details of City Manager Steve Pinkerton’s budget proposal for the upcoming year, which was illustrated by presentations given by the heads of the city’s various departments on what resources each will need.

But in addition to the departmental presentations, council members also learned from Pinkerton that several unfunded liabilities, the costs of which will continue to escalate for years to come, must receive immediate attention.

Among other consequences of that reality, departments have been asked by the city manager to reduce their operating costs for next year by 5 to 8 percent.

“Even though we’ve done a lot of great things to address expenditures … we’ve still got a real uphill battle in the future if we want to balance our budget and address all of our unmet needs,” Pinkerton said.

The three expenses that will be most difficult to corral are the city’s future annual contributions to CalPERS, the agency that manages retirement plans throughout the state for public employees; retiree medical costs — despite the city making headway on those costs through labor negotiations over the past year — and road and bike path pavement maintenance.

As Pinkerton has stressed all along, the actuaries for CalPERS who project the rate of return on the investments that generate part of that entity’s cash flow have painted an unrealistically rosy picture in the past and will soon begin to ease away from previously optimistic expectations.

That means local jurisdictions will have to pick up the slack.

“The sobering news is the fact that PERS has, as you know, reduced the rate of return,” Pinkerton said. “Our actuarial believes they’re probably going to be reducing the rate of return another quarter of a percent (this year) and they’re likely finally going to acknowledge that people live longer, and that certainly impacts the PERS liability as well.”

The city manager illustrated for the council on a graph that in five years the city will be paying 30 percent of payroll into retirement, or about a 60 percent increase for miscellaneous employees and slightly less than that for public safety employees who have agreed to pay more of their share of the costs.

Though, Pinkerton added that Davis could be in better shape than other jurisdictions in the state that have projected dedicating 50 percent of payroll to employee retirement costs.

Retiree medical costs, meanwhile, will continue to consume a large chunk of the city’s general fund, despite several of the city’s labor groups agreeing to help share those costs in the future as well. Pinkerton projects a 4 percent net increase in those costs per year over the next five years.

“We made huge strides this year with the labor agreements that have been agreed to, to date,” Pinkerton said. “The good news is we’re about a half million (dollars) less this year (for retiree medical costs) than we would have been had we not reached settlement with our bargaining units.

“The challenge is that those medical costs continue to increase.”

As for road and bike path pavement maintenance costs, an unmet need that the council already has committed to spending $25 million on during the next two years, Pinkerton projects that the city will have to spend just under $4 million per year after that initial infusion from the general fund in order to keep the city’s pavement infrastructure system from failing.

A city consultant came before the council late last year to warn that if the city ignores its road and bikeways any longer, it could build up a backlog of work worth more than $440 million in the next 20 years.

Then, continuing the theme of fronting dollars in this year’s budget to save on costs down the road, Pinkerton also has dedicated about $500,000 in this year’s budget for investment in the city’s water conservation efforts.

With the city beginning to pay for its water use this year, coupled with a drastic increase in water rates driven by the debt service on the $113 million Woodland-Davis Clean Water Agency surface water project, the city could be paying between $2 million and $3 million per year on water.

“Our (hope is) that it becomes significantly less,” Pinkerton said.

If the projections hold true for CalPERS, retiree medical, roads and water costs, Pinkerton estimates that the city will build about a $5 million structural deficit by fiscal year 2017-18.

The council is expected to approve the first reading of the ordinance that would adopt the fiscal year 2013-14 budget at its meeting  July 9. The council won’t officially adopt the budget, however, until it returns from recess in late August.

Instead, the council approved allocating $70 million for the city manager to be able to fund day-to-day operations over the next few months until the budget is adopted.

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

Comments

comments

Tom Sakash

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

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

  • .

    News

    Marathon specialist Winter heads to cycling shrine

    By Bruce Gallaudet | From Page: A1 | Gallery

     
     
    County to fund pilot project for West Sac homeless

    By Anne Ternus-Bellamy | From Page: A1

    Pumpkin patch: a favorite tradition every autumn

    By Enterprise staff | From Page: A1 | Gallery

     
    Tuesday’s smoky air hailed from Colusa County

    By Lauren Keene | From Page: A2

     
    Vandals damage two Woodland schools

    By Enterprise staff | From Page: A2

    Hearing postponed for man suspected in 7 killings

    By The Associated Press | From Page: A2 | Gallery

     
    Canadian soldier shot at war memorial

    By The Associated Press | From Page: A2 | Gallery

    Heavy metal

    By Lauren Keene | From Page: A2 | Gallery

     
    Pedal around Davis on weekly bike ride

    By Enterprise staff | From Page: A3

    Apply soon to be a Master Gardener

    By Enterprise staff | From Page: A3

     
    Terez will perform at Wine’d Down Thursday

    By Enterprise staff | From Page: A3

    Super-fun 5K run will support UCD students

    By Enterprise staff | From Page: A3

     
    Davis Arts Center: a call to artists for Holiday Sale Wall of Art

    By Erie Vitiello | From Page: A3 | Gallery

    Author showcases field biology as he revels in nature

    By Special to The Enterprise | From Page: A3 | Gallery

     
    Entries due Nov. 1 in VFW essay contests

    By Enterprise staff | From Page: A4

    Teen services grant applications due this week

    By Anne Ternus-Bellamy | From Page: A4

     
    Voice of the Wood plans family Halloween show

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

     
    Wine-tasting and auction benefit Advanced Treble Choir

    By Anne Ternus-Bellamy | From Page: A4

    Garamendi will speak at U.N. Day event

    By Special to The Enterprise | From Page: A4

     
    Kids form a lifelong habit of drinking water

    By Special to The Enterprise | From Page: A5

    Farmers Market hosts Fall Festival

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

     
    A Taste of India dinner benefits Davis Community Meals

    By Enterprise staff | From Page: A5 | Gallery

    Wolk sets ‘Morning with the Mayor’

    By Enterprise staff | From Page: A5

     
    Volunteers sought to chip in on parks cleanup

    By Enterprise staff | From Page: A5

    Composting workshop set at Grace Garden

    By Enterprise staff | From Page: A5

     
    Setting a good example

    By Sue Cockrell | From Page: A5

    No-till doesn’t help cold, wet farmlands

    By Special to The Enterprise | From Page: A5

     
    Women and men want the same things in cars … usually

    By The Associated Press | From Page: A6

    California state parks show off fall color

    By Kimberly Yarris | From Page: A7

     
    October is fall car care month

    By Special to The Enterprise | From Page: A7

    Soda bottlers spend big to fight S.F. ban

    By San Francisco Chronicle | From Page: A9

     
    Railroad work will close Eighth Street

    By Special to The Enterprise | From Page: A9

    Special education information night scheduled

    By Jeff Hudson | From Page: A9

     
    Soroptimists offer ‘Living Your Dream’ grants

    By Enterprise staff | From Page: A9

    Halloween Carnival planned Oct. 26

    By Enterprise staff | From Page: A9

     
    Mondavi Center gift shop plans holiday sale

    By Enterprise staff | From Page: A9

    Clinton sounding like a candidate in S.F. appearance

    By San Francisco Chronicle | From Page: A12

     
    .

    Forum

    Bad business over the phone

    By Creators Syndicate | From Page: B5

     
    Vote no on Prop. 1, because it’s no solution

    By Special to The Enterprise | From Page: A8

    Slower travel on new stretch

    By Letters to the Editor | From Page: A8

     
    David Fitzsimmons cartoon

    By Debbie Davis | From Page: A8

    Support choruses in schools

    By Letters to the Editor | From Page: A8

     
    Archer’s the go-to person

    By Letters to the Editor | From Page: A8

    Adams has what we need

    By Letters to the Editor | From Page: A8

     
    Life vests are a must when rafting

    By Letters to the Editor | From Page: A8

     
    .

    Sports

    UCD women’s soccer postseason hopes flickering

    By Bruce Gallaudet | From Page: B1 | Gallery

     
    A typical Blue Devil girls water polo win

    By Enterprise staff | From Page: B1

    DHS boys hold off Rio Americano in the pool

    By Enterprise staff | From Page: B1

     
    Devils are on track for volleyball playoffs after win

    By Evan Ream | From Page: B1 | Gallery

    Giants rip Royals in Game 1

    By The Associated Press | From Page: B1 | Gallery

     
    AYSO roundup: Local winners have the Eye of the Tiger

    By Enterprise staff | From Page: B3 | Gallery

    Alliance/Legacy roundup: Italia cruises past Chico

    By Enterprise staff | From Page: B3 | Gallery

     
    Sports briefs: Fipps earns another preseason hoops award

    By Enterprise staff | From Page: B8

    .

    Features

    .

    Business

    .

    Obituaries

    Clement ‘George’ Hebert

    By Special to The Enterprise | From Page: A4

     
    Mariana Brumbaugh Henwood

    By Special to The Enterprise | From Page: A4

    .

    Comics