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Will taxes fix it? Council looks at shoring up budget

By From page A1 | January 28, 2014

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Who: Davis City Council

When: 6:30 p.m. today

Where: Community Chambers, City Hall, 23 Russell Blvd.

Watch it: Live on Comcast Channel 16 and AT&T U-Verse Channel 99; streamed at www.cityofdavis.org/media

The Davis City Council will take on the task Tuesday of considering putting before voters later this year not just a sales tax, but a parcel tax as well.

The city is facing a reported $5.1 million structural deficit for fiscal year 2014-15, with road paving, health care costs and pension costs highlighted as trouble spots. According to Mayor Joe Krovoza’s State of the City presentation earlier this month to the Davis Chamber of Commerce, future years will only get worse if nothing more is done now to stem the tide of red ink.

The council already negotiated savings with most city unions, and imposed terms on the Davis City Employees Association and Davis Professional Firefighters Association Local 3494. During the past six years, 103 full-time-equivalent positions were eliminated at City Hall, mostly through vacancies and by attrition. The savings is pegged at $5.8 million.

According to a report drawn up by City Manager Steve Pinkerton, blame for the shortfall fell on eight items: debt service for infrastructure ($2 million); more money for a street maintenance contract ($505,000); payment for increasing costs of water and sewer ($94,000); funds to replace the city’s fleet ($110,000); wage increases due to cost-of-living adjustments, filled positions and removal of a salary savings adjustment ($1.062 million); benefits ($1.243 million); plus various other costs ($837,500).

Pinkerton has said the city has cut all it can without compromising its ability to provide needed services. Recreation programs, service at the permit counter, crime prevention and tree trimming could all go away, he said. Each department would have to cut 12 percent from its budget, and 52 city employees would lose their jobs because there’s nothing else left to cut, Pinkerton said.

“We would cease doing all the things that make us a city instead of an unincorporated area,” he told the council on Dec. 17.

With all that red ink, City Council members and a subcommittee called on city staff in recent months to come up with data about how tax options might work for the city.

In response, Pinkerton is offering up two measures that could be put before the public at different times later this year that would, in theory, generate $9.5 million annually for at least 10 years. A 3/4-cent sales tax is estimated to bring in $5.4 million per year and could be placed on the June ballot, while a longer-term $150 parcel tax could be placed on the November ballot.

This may seem like déjà vu to some locals. In March 2004, voters approved a half-cent increase to the sales tax, which was renewed in 2010, to deal with budget shortfalls and cover what the city called “expanded service demands.”

But Davis’ new sales tax proposal — combined with the old — is muted compared to the 2 percent raise the law allows.

A subcommittee of Councilmen Dan Wolk and Brett Lee looked at options, including a bond measure, in a bid to raise revenues in a city with a mediocre sales tax base. Ultimately, the committee moved away from a bond.

In the meantime, the city is working on shoring up its tax base by forging ahead on plans for a business park and other “accelerated” economic development, according to Pinkerton’s report, but any potential dividends are years away.

—Reach Dave Ryan at [email protected] or 530-747-8057. Follow him on Twitter at @davewritesnews

 

Dave Ryan

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