Where should the majority of new ownership housing be located for new UCD Faculty and Staff? (Select One)

  • Davis (42%, 361 Votes)
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  • Elsewhere (2%, 21 Votes)

Total Voters: 869

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My View: Tax Discussion Missing Critical Context

Mayor Davis describes the budget at the State of the City address in January

The council had their first discussion this year about taxes and there is already pushback.  Part of the problem is the lack of community understanding that the city faces an $8 million annual shortfall in funding over the next twenty years – a shortfall that includes hundreds of millions of needs in roads, bikepaths, greenbelts, parks, and city buildings.

Some have suggested the need to deal with employee compensation first – but there is no “first” here – there is only ongoing.  There is no final solution.

As the mayor put on Tuesday, “I think what we need to work on is a revenue measure and some clear actionable items on cost containment for this council to act on before the ballot.”  He argued that we need to show good faith that we “are going to be good stewards.”

I couldn’t agree more, but given that we have a large and growing deferred maintenance cost, deferring taxes is actually only going to cost us more in the long run.

Yesterday, Bob Dunning quoted Ronald Reagan saying “taxes should hurt,” adding “if taxes don’t hurt, power-hungry politicians will feel free to tax us willy-nilly to fund every pet project they have in mind.”

Mr. Dunning spent most of his time, of course, discussing the soda tax, but did reference the parks parcel tax as the “most likely measure to appear on a future ballot.”

But nowhere did Mr. Dunning talk about the $8 million shortfall, the $100 million we need for roads, the millions we need on other infrastructure needs.  He then simply launched into a polemic against the soda tax.

This is a good reminder that the council needs to completely separate the question here.  Soda tax is fundamentally different than a parks tax or a parcel tax.

The goal with the soda tax is not to fund ongoing city needs.  Instead, it is to discourage a certain behavior.  There needs to be a discussion about that and an understanding of what impacts that will have and why it is important.

But having that discussion within the context of a broader revenue discussion makes no sense.  I would suggest to the council that they not only separate the question, but that they have the discussions at separate meetings if possible, to create as much separation as possible.

The purpose of the soda tax has nothing to do with any of the other taxes we will be discussing.

So the fact that Bob Dunning can jump to the soda tax, I think, hurts the need for the broader discussion – and that is something the council can and should mitigate.

However, the fact that Mr. Dunning fails to situate the need for the taxes – fails to explain to his readers how grave the city’s financial position is – is a disservice to his readers and the broader community.  I would criticize the Enterprise as a whole for failing to adequately report over the years on the city’s fiscal position, and the result is that many of their readers are simply not aware of the looming crisis.

Alan Pryor points out, “I do not think any large parcel or sales tax measure will be approved in the City until the City proves it is properly managing itself with respect to employee compensation.”

He may be right about this, and certainly the Vanguard has long been a critic of city compensation, but it ignores that the city has actually done quite a bit on this front in the last seven years or so.

Mayor Robb Davis has led the way to argue for cost-containment.  As stated above, he said, “I think what we need to work on is a revenue measure and some clear actionable items on cost containment for this council to act on before the ballot.” He said we need to take actions, along with the ballot measure, that will contain costs. And he argued that we need to show good faith that we “are going to be good stewards.”

As he pointed out in response to compensation to the firefighters, the firefighters last agreed to a new contract in 2009 and, when the council imposed a contract on them back in 2013, they imposed a two percent pay cut.

However, despite this, compensation to the firefighters continues to increase and this is due not to actions of this council, but rather past council decisions along with the increased costs in the pension system.

The key point he made is that, in order to get out from those cost increases, the city would have to get rid of the defined benefit system – something he argued that was not feasible.  He said that they would have to bargain to end the city’s involvement in CalPERS (California Public Employees’ Retirement System) and a defined benefit pension system, and he said that “there is not a bargaining unit in this state that is going to go along with that.”

In fact, the mayor has long argued this point.  In early 2016, he pushed back on Mayor Wolk’s claim, “Our budget is balanced and resilient.”  He noted the large and growing unfunded needs and argued that “we also face the challenge of keeping our annual recurring operating expenses in check. Employee compensation is a large part of these operating expenses.”

He pointed out that, while staff had dropped over the previous decade by 100 positions, “[t]he cost of compensating staff has increased from just over $100,000 to over $150,000 per employee in the same decade.”  But, “The vast majority of staff in the city has seen the amount of their take-home check decrease over the past five years, principally due to increased employee contributions for healthcare insurance and pensions.”

In sum, he writes that “total and per employee costs to the City have increased even while employees take home less AND we have 100 fewer employees.”

In February 2016, Robb Davis put forward a seven point plan for cost containment.

In August, the mayor wrote, “Our inability, given current revenue, to pay for the maintenance and replacement of critical city infrastructure is a weakness. Over the past 15 years, total general fund revenue has grown by 95 percent while general fund expenditures have grown by 92 percent.  Revenue appears to have kept pace with expenditures. However, when we dig into the expenditures — or rather what is not in the expenditures — we see that the picture is not positive.”

In November, Mayor Davis told the Vanguard, “The most updated analysis by the City-contracted actuary indicates that even if employee salaries do not grow at all over the next five years, our required pension contributions across all employee groups (police, fire and miscellaneous) will grow by over $4.8 million per year compared to today.”

In February he would add, “It is no exaggeration to say that over the coming 5 years (and beyond) we need $15-29 million each year to cover all these costs combined.”

The mayor writes, “We have a dire fiscal situation in our city.”

He adds, “The previous and current City Councils have begun to deal with this situation by seeking voter support of an increased sales tax (passed), and through increases in all city fees (inspections, parks programs, space rentals, etc.) and utility rates. These increases are not popular but they are part of our plan to address shortfalls using all the tools at our disposal.”

Yesterday a reader wrote in, “Respectfully, you are nuts to support $200 new parcel tax without dealing with employee compensation.”

The problem I have with that view is that, first, I completely support the mayor’s call for tangible and actionable steps to be taken on cost containment.

However, as I argued back in the winter, cost containment alone will not solve our fiscal problems.

Without cost containment any revenue measure is likely to be eaten up by other needs.  In 2004, the voters passed a sales tax sold to them as necessary to keep funding fire and police and parks.  The tax measure went to increased employee compensation.

So I completely agree that we do need to contain costs.  But I see cost containment as a strategy that caps the growth of expenditures – it is not going to close the funding gap.

To close the funding gap we need to increase revenues.  In the short term that will mean taxes, but my hope is in the long term that means economic development.

At the same time, simply raising tax revenue is not enough.  That revenue will easily be crowded out by increased expenditures and costs to provide current levels of service and current levels of compensation.

As Mayor Davis put it last December, “[W]hile it is true that we are ‘keeping up’ as things stand currently, the cost of ‘keeping up’ continues to grow and that crowds out funding for other projects our community needs to maintain the level of service citizens expect.”

The Vanguard fully supports a new revenue measure, but there must be with it a commitment to contain costs, otherwise the new revenue won’t be going to pay down the current $8 million annual gap – it will go to keeping up with current costs and commitments.

—David M. Greenwald reporting



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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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93 thoughts on “My View: Tax Discussion Missing Critical Context”

  1. Michael Bisch

    Those “pushing back” on revenue measures without the city first taking action on cost containment are being completely disingenuous. The mayor’s repeated public calls for implementation of actionable cost containment measures has been met with deafening silence across the political spectrum. For anyone to now say that they won’t support revenue measures unless cost containment is implemented first is being intellectually dishonest. These individuals have not supported cost containment and now they don’t support revenue measures either.  What they effectively support is the dysfunctional fiscal status quo.

    1. David Greenwald

      Good point Michael.  Robb Davis has been pushing cost-containment since February 2016, at least, and has gotten little traction on it.

      1. David Greenwald

        What steps has the council taken since February to implement Robb Davis’ cost-containment plan?

        I’m not saying the council has been horrible, I think the Bob Leland hire and modeling the long term costs is a huge step forward, but I would criticize the council for being slow to respond to the continued unfunded liabilities / unmet needs crisis.

  2. David Greenwald

    One point not made here is that those arguing we need fiscal responsibility first – the delay in revenues is increasing the amount we have to pay.  To use roads as a clear example, we are paying about $4 million a year in roads, but need closer to $8 to $10 million.  Each year that means there is about a $4 to $6 million gap.  The cost of roads goes up around 8 percent per year.  Add to that the decline in roadway conditions, and you are probably look at a half to a million increase each year you don’t enact a tax.  That’s just on roads.

    So just in the last four years, we have added several million to our roads costs b failing to put a measure on the ballot in 2014 or 2016.

  3. Dianne C Tobias

    Can someone describe in more detail what Alan Pryor meant by ?the recently adopted budget increasing compensation by 8M. Is that accurate?

    1. Matt Williams

      Dianne, What Alan said about increased compensation was a bit different.  Specifically,

      As an example, last night we learned at the Finance and Budget Commission meeting that the Fire Department budget included a compensation increase raising the average total compensation (inc. salary and benefits) for department employees from $196,500 to almost $205,000 per year – that’s a 5% increase for a union with no contract with the City. We also know from transparent california.org that the total compensation costs for City employees in 2016 was up about 5% per employee, now totaling $44,000,000 out of a $60,000,000 general fund.

      The $8 million figure is from page 4.9 of the Forecast portion of the Proposed Budget (see http://documents.cityofdavis.org/Media/Default/Documents/PDF/Finance/2017-2018-Budget/Proposed/04.-Financial-Forecast-Proposed-17-18-Budget.pdf), which says:

      Future Operating Workload – In addition to infrastructure concerns, the City should endeavor to keep staffing levels per capita relatively constant so that workload increases caused by population growth and other service demands can be adequately addressed. This will avoid diminishing levels of service over time. Currently, most services are provided by City employees, but even if services were contracted for, additional funding will be required over time. The forecast funds one FTE increase a year, although two FTE would be required to hold staffing levels per capita constant over time. Thus, 50% of the $87 million in service increase costs over the next 20 years would be funded. 

      The following chart compares the funding levels as described above. 

      http://www.davisvanguard.org/wp-content/uploads/2017/07/Screen-Shot-2017-07-15-at-12.22.13-PM.png

      The annual shortfall in funding for all of the above infrastructure and service categories is shown in the chart below. The average annual shortfall in funding is $7.8 million.

       

    2. Matt Williams

      With that said Dianne, I believe the $7.8 million annual shortfall is a significant understatement.  On the very next page 4.9 of the Forecast appears the following graph.  As you can see the shortfalls grow to as much as $17 million per year as the years progress.

      http://www.davisvanguard.org/wp-content/uploads/2017/07/Screen-Shot-2017-07-15-at-12.21.53-PM.png

      Further, those shortfalls are for Infrastructure maintenance only.  They don’t include the escalating annual costs for employee pensions (CalPERS) shown on the following table at the top of page 4.6 of the Budget Forecast.  So you can add at least $5 million a year for Pensions to the $7.8 million per year for Infrastructure.

      http://www.davisvanguard.org/wp-content/uploads/2017/07/Screen-Shot-2017-07-15-at-12.36.32-PM.png

      Further, in one of the quarterly updates to the Budget, a similar table of escalating annual costs will be provided for the retiree medical (OPEB), which could add another $3 million to $4 million to the shortfall.

  4. Mark West

    “So the fact that Bob Dunning can jump to the soda tax, I think, hurts the need for the broader discussion – and that is something the council can and should mitigate.”

    Don’t blame Bob, look at those who gift wrapped his opposition piece for him. Regardless of your view of its merits, the Soda Tax is an unnecessary distraction that will do nothing but interfere with the City’s need to address its fiscal shortfalls. As long as the Soda Tax is being discussed, it will militate passage of the more fiscally important tax proposals. If your goal is to forward the ‘no-change’ agenda, pushing the Soda Tax now is a great approach. If your goal is fiscal responsibility, not so much.

      1. Mark West

         “I think the discussion at least needs to be separate”

        It is naive to think that the discussions can be separate. As long as the Soda Tax is on the agenda it will work against the broader goal of fiscal responsibility. Bob Dunning did the community a service by aptly demonstrating that fact with his column.

        1. Don Shor

          It will just be money on the table when the bargaining starts with the employee groups. I strongly suggest all contracts be in place before taxes are placed before the voters. We now have two taxes passed that were immediately followed by pay increases. If the council wishes to give pay increases, it should do so now and be prepared to explain them.

        2. Keith O

          Don Shor is right.  As the saying goes:

          Fool me once shame on you,

          Fool me twice shame on me,

          Fool me three times……

          Fill in the blank.

          The two tax hikes mentioned by Don were followed by increased employee compensation much to the chagrin of the taxpayers.  We would be fools to fall for this a third time.  We want safeguards put in place or the contracts to have already been negotiated so we can decide if we want to pay another tax if raises were once again given.

        3. Matt Williams

          Don Shor said . . . “It will just be money on the table when the bargaining starts with the employee groups. I strongly suggest all contracts be in place before taxes are placed before the voters. We now have two taxes passed that were immediately followed by pay increases. If the council wishes to give pay increases, it should do so now and be prepared to explain them.”

          That is a really good idea Don.  A really practical, transparent, confidence-building, trust-building idea.  I am going to ask the FBC to agendize a formal recommendation to that effect in their September meeting.

        4. Howard P

          Don is wrong re: “sugary drink tax” (which will also likely be charged to those of us who only drink unsweetened iced tea as most food places have the “sugary drinks” in same place – they just give you the cup).

          Proponents have made it clear that they want the tax to discourage consumption of sugary drinks, AND use all proceeds to educate, prevent, and/or treat obesity and Type 2 diabetes.  None of which are City functions.

          I hope they get it on the ballot, so it can get voted down 75%-25%. As proposed thus far, it does not address the fact that nearly all the FF establishments, and many restaurants sell you the cup,and you get unlimited refills… one kid could get a small cup, pay for it at that rate, then refill it enough to let him/her and five of their best friends have a quart each.  While those buying the same cup and imbibing only unsweetened iced tea pay the same tax.  It does not address the sugar content of a given type of drink.  It does nothing to stop families from using unsugared flavoring, added to water,then adding sugar (which would not be taxed).  That’s how Kool-Aid was made when I was young.

          To be effective, such a ‘tax’ would necessarily be state-wide, and the revenue going to expand/enhance existing efforts.  The local measure is just “silly”.

          But, if it is on the same ballot as measure(s) that could actually help mitigate local fiscal issues, they too would be looked at askance, and fail.

        5. David Greenwald

          Howard: That has been addressed.  The tax is on the supplier’s end.  Then the restaurant will have to figure out how to pass it on to the consumer.

        6. Howard P

          Well David, since restaurants/FF places will unlikely change their pricing, you made my point… my unsweetened iced tea will ‘cover’ a portion of the costs… a disproportionate portion.

          It also ‘dilutes’ the likely impact to the consumers whose behavior is to be modified.

          Just can’t see how a supplier will follow up with deliveries of syrup or drinks to Davis, as opposed to elsewhere.. how would it be ‘monitored’?  These are items proponents need to credible address to avoid my opposition or get my vote.

    1. Matt Williams

      Mark makes a good point, and the same “distraction” logic applies to any thoughts of an increase in the Transient Occupancy Tax, as well as a Utility Users Tax that doesn’t include water, sewer and electricity.  Both of those provide such small amounts of tax revenue that the damage they do as distractions from the more fiscally important discussions overwhelms the small revenue help they provide.

        1. Matt Williams

          It is a tax nonetheless, and having the voters talk about two taxes is much more likely to produce knee-jerk “no” votes than talking about one tax.

  5. Richard C

    …. I completely support the mayor’s call for tangible and actionable steps to be taken on cost containment.

    Yes, I think that voters are much more likely to approve additional taxes (“revenue enhancements”) if they see some really hard hitting cost containment steps including the area of city employee salaries and benefits.

    1. Howard P

      Can you be a bit more ‘concrete’ as to what “hard-hitting” look like?   Sounds like zero increase in total comp for many years,where there are no salary increases, and take-home is reduced by increases in health premiums, pension contributions, and inflation are insufficient to you.

      You were quite vague as to what a policy direction would look like.

  6. Ron

    Again, unfunded liabilities are a problem faced by most cities and counties in California (as well as the state, itself).  The “solution(s)” (whatever they end up being) are likely going to look similar, throughout California.  It’s not likely that a small burg like Davis will successfully “reinvent the wheel”, on its own. (Given the statewide scope of the problem.)

    One idea (for those who constantly worry about this, on a local level):  Continue to impose salary reductions, as pension and medical costs increase.  (The one thing that can be controlled, on a completely local level.)  The city will still find qualified workers, up to a point at least. Of course this will bypass collective bargaining agreements, as the city is already doing with firefighters.

    1. David Greenwald

      A variant on that makes sense – if you hold salaries stable over time, they are gradually reduced via inflation.  That makes sense.  Actually reducing salaries I don’t think is viable.

      1. Howard P

        Ron said,

        Continue to impose salary reductions, as pension and medical costs increase.

        Hard to parse… one could conclude that take home salary would decrease if employees covered the other increases (base salary static), or one could conclude reduction of base salary in addition to employees covering all increased benefit costs is what Ron (and others) propose… that would truly be “hard-hitting”…

        Why cannot someone say what they mean?  Clearly.

        David… do you remember the 70’s where inflation was ~ 8-11%/year?  40 years ago.

        1. Ron

          Howard:  My understanding is that cities (such as Davis) are bearing the costs related to pensions and medical benefits, and are essentially “on the hook” for these costs, which keep rising.  (Employees are not bearing these costs, or increases in them.)  That’s what’s causing the “unfunded liability” crisis, throughout California.

          Since employees are having the increased costs covered by the city, that is a “de facto” raise.  Since cities cannot afford this, then yes – I’d suggest imposing salary reductions as needed (as was already done with firefighters, to a minimal degree).  (Especially for employees with relatively high salaries and benefits – such as firefighters.)

          FYI: Federal employee medical benefits are handled differently. The government covers premiums up to certain levels, with employees/retirees responsible for increases in costs beyond that point.

           

        2. Ron

          Actually, I misspoke (regarding Federal employees).

          I understand that Federal employees/retirees ALWAYS pay a portion of health care premium costs.  Above a certain point (which varies depending upon plan), employees/retirees pay 100% of the cost, and the government pays nothing.

          At least, that’s how it works for employees that started working under the newer system (FERS).

          The retirement benefits changed under FERS, as well. That’s when a 401K-type plan was instituted, along with a minimal defined benefit (and social security).

           

        3. Howard P

          You dissemble again Ron (true to pattern)

          My understanding is that cities (such as Davis) are bearing the costs related to pensions and medical benefits, and are essentially “on the hook” for these costs, which keep rising.  (Employees are not bearing these costs, or increases in them.) 

          Untrue… in general… so surprise there…

          In Davis, almost all MOU’s call for the employer to cover first 3% increase in health insurance premiums, employees the second 3 %, thereafter 50-50 split.  Your falsehood #1.

          In Davis, over the last few (10) years, employer picked up the employees’ share, previously paid by the City, in lieu (when the city did that) to avoid salary increases that would have led to higher pension costs.  Somewhat of a “win-win”.  Employees used to pay 100% of the employees’ share, waiver of that was used to offset lack of salary increases.  Now employees pay 100% of employee share (generally 8%, and that is still taxable).  New employees (not ‘grandfathered’) are under reduced pension formulas.  Less contributions by both employer and employee… Falsehood # 2

          Since employees are having the increased costs covered by the city, that is a “de facto” raise.  

          Dissembling #1:  you have not distinguished between total comp and salary.  No surprise there… modus operandi?

          And,

          FYI: Federal employee medical benefits are handled differently. The government covers premiums up to certain levels, with employees/retirees responsible for increases in costs beyond that point.

          Your point?  Perhaps federal and State, UC, and local employees should be treated the same as private employees, Medicare folk, and the homeless with none of the above… all should be equal?  Go to the bottom?

          Do you receive any Federal, State, UC, State college, school district (Cal STRS, less funded than CalPers)  or private pension, Medicare, Medical benefits?  All taxpayer supported, one way or the other…

          Or, do you have a particular problem with City employees?  God forbid you ever consider another poster(s)’ concept of basic income or universal health care.   That must be abhorrent to you.

          I respect the apparent fact that you receive no public benefits at all…  or that you are jealous that some get more, and have no problem that some get less…

           

           

        4. Ron

          Howard:  In Davis, over the last few (10) years, employer picked up the employees’ share, previously paid by the City, in lieu (when the city did that) to avoid salary increases that would have led to higher pension costs.

          So, you’re confirming that the employer (the city) now pays 100% of the employee’s share.  (Yes, that’s the problem.)

          Employees used to pay 100% of the employees’ share, waiver of that was used to offset lack of salary increases.

          I don’t understand this.  You’re stating that “Employees used to pay 100% of the employee’s share?”

          Howard: “Now employees pay 100% of employee share (generally 8%, and that is still taxable).”

          Again, makes no sense. (Too late to put your quote above in block format.)

          employees (not ‘grandfathered’) are under reduced pension formulas.  Less contributions by both employer and employee… Falsehood # 2

          Huh?

          Your point?  Perhaps federal and State, UC, and local employees should be treated the same as private employees, Medicare folk, and the homeless with none of the above… all should be equal?  Go to the bottom?

          Do you receive any Federal, State, UC, State college, school district (Cal STRS, less funded than CalPers)  or private pension, Medicare, Medical benefits?  All taxpayer supported, one way or the other…

          Or, do you have a particular problem with City employees?  God forbid you ever consider another poster(s)’ concept of basic income or universal health care.   That must be abhorrent to you.

          I respect the apparent fact that you receive no public benefits at all…  or that you are jealous that some get more, and have no problem that some get less…

          Howard:  You’re making this way too personal, and are engaging in attacks that make zero sense.  Only you know why.

          This isn’t “my idea”, alone.  Matt and Alan Pryor are making similar comments.  And yet, you’re uniquely focused on me, once again.

          Cities cannot forever assume increased costs from pension and medical benefits (for current and retired employees).  As pension and medical costs rise, it makes sense to control (and if necessary, reduce) the only thing that cities can apparently control, which is salaries.

          Or, do you prefer that cities continue to assume all of the risks of rising pension and medical costs, without requiring employees to (at least) share in that risk?

           

        5. Ron

          Howard:  If you’re going to provide details, I’d also suggest that you write them in a manner that makes sense.

          And, if you continue to engage in nonsensical, personal attacks, it’s really the responsibility of the moderator, to step in.  (In fact, I think I’ll go ahead and report your rambling comment, now.)

          Seems like you’ve got some continuing personal issues, to deal with. As I recall, I’m not the only one who has experienced your unnecessary, illogical attacks. (Nor am I the only one who has directly and repeatedly pointed it out, to you.)

          (I realize that this comment should be deleted, as well.)

           

        6. Howard P

          Ron… if you understood context, you’d have realized that when I wrote,

          Employees used to pay 100% of the employees’ share, waiver of that was used to offset lack of salary increases.

          To which you responded,

          I don’t understand this.  You’re stating that “Employees used to pay 100% of the employee’s share?”

          The first referent was obviously “employers”… a typo (“e”is next to the “r”, on a standard keyboard),
          [moderator] edited

          Then there is,

          Howard:  In Davis, over the last few (10) years, employer picked up the employees’ share, previously paid by the City, in lieu (when the city did that) to avoid salary increases that would have led to higher pension costs.

          So, you’re confirming that the employer (the city) now pays 100% of the employee’s share.  (Yes, that’s the problem.)

          No, that was my bad parse… from late ’80s until ~ 2011, the employer did pay the employee share (in lieu of salary increases, COLA’s)… soon after 2011, that was phased out, and now for most, if not all groups, employees pay the full employee share… so, not surprisingly, “So, you’re confirming that the employer (the city) now pays 100% of the employee’s share.” is wrong.  David has provided link to the MOU’s where you can see for yourself.
          you wondered,

          employees (not ‘grandfathered’) are under reduced pension formulas.  Less contributions by both employer and employee… (me)
          Huh? (you)

          Guess ignorance is bliss… due to State laws passed (PERPA), [from PERS website]

          If your membership date with us is December 31, 2012, or before, you are considered a classic member with a classic retirement formula. You are a PEPRA member with a PEPRA formula if: • You were brought into CalPERS membership for the first time on or after January 1, 2013, and you had no prior membership with any other California public retirement system. • You were brought into CalPERS membership for the first time on or after January 1, 2013, and you were not eligible for reciprocity with another California public retirement system. • You became a member on or before December 31, 2012, left CalPERS employment for six months or more, and then returned to membership on or after January 1, 2013, with a CalPERS employer you did not previously work for.

          So, someone not ‘grandfathered’ as above are hired @ rates no higher than,

          setting the maximum benefit allowable for employees first hired on or after January 1, 2013, as a formula commonly known as 2.5% at age 67 for non-safety members, one of 3 formulas for safety members, 2% at age 57, 2.5% at age 57, or 2.7% at age 57 [AB340]

          The old rates in Davis were 2.5 @ 55 (Misc) and 3% @ 50 (PS).

          [moderator] edited

        7. Ron

          Howard:

          Honestly, I’m not going through this crap again, on a point-by-point basis.

          All you’ve done here is to (somewhat) clarify what you wrote previously, some of which is still confusing, and most of which doesn’t address the underlying point:

          The “employer share” is apparently the primary problem, at this point. (It’s outrageous that any city would pay the “employee” share, at any point in time.)  Since cities have no control over increases in employer share, it has to be “made up”, somewhere.

          I (and others) have suggested that one way to make up for “de facto” raises (resulting from increased contributions from the city, for pensions and medical benefits) is to adjust (possibly reduce) salaries as needed, going forward.  (Especially for groups like firefighters, some of whom apparently make more than $200,000 per year in salaries and benefits – as cited by Matt, I believe.)

          Do you disagree with that approach?  If so, why?  Do you believe that taxpayers should be entirely “on the hook” for such increases?

          [moderator] edited

    2. Robb Davis

      This is a bit misleading.  Imposition is not an action that a City can take without meeting, conferring and bargaining in good faith.  Imposition requires a well-defined process and can (and often is) appealed by labor groups.

      1. Ron

        Robb:  “Honest” questions:

        Does “bargaining in good faith” include consideration of the long-term viability of city funding?  How was the city able to impose a 2% decrease on firefighters?  Who “decides” appeals launched by labor groups (and are city finances considered, regarding such appeals)?

        Seems strange that any outside entity can “force” a city to provide any specific/minimum salary going forward, unless already under contract to do so. (Especially if there’s insufficient funding available.)

        Seems like other cities might be going through this process, as well.  Wondering how it’s working out for them, so far.

         

        1. David Greenwald

          To elaborate on Robb’s answer the city imposed on DCEA in 2010 and had it overturned by PERB in 2011. The contract was retroactively reversed and employees reimbursed.

        2. Ron

          Robb and David:

          I suspect that your responses need additional flushing out, to fully understand the situation.  (Perhaps more than can be accomplished on this blog.)

          But, if an outside organization can “force” a given level of salary (to employees who aren’t even under a current contract, and without considering the viability of city finances), then all California cities, counties, and the state itself are equally screwed. 

          This will eventually become a statewide disaster, essentially forcing a statewide, systemic response.  Davis won’t be alone, in that.

        3. Ron

          And, given the uncontrolled rises in pension/medical costs for public employees, this might cause cities and counties to essentially “do away” with them, for the most part.  (Use contractors, instead.)

          Perhaps that’s what cities and counties will turn to, if the problem is not addressed in a timely and systemic manner.

        4. David Greenwald

          “But, if an outside organization can “force” a given level of salar”

          That’s not exactly what’s happening here.  What Robb stated is that there are rules for imposition – PERB in this case ruled that the city violated the rules for imposing a contract – they skipped some important steps.

        5. Alan Pryor

          The reason PERB disallowed impasse in 2010 was because the City did not follow the legally required procedures. From the article David cited,

          In a tentative ruling handed down by the Public Employment Relations Board, they ruled that the city improperly canceled fact-finding and imposed the last, best and final offer on DCEA.PERB ruled: “It has been found that the City violated MMBA sections 3503, 3505, 3506, and 3509(b) and PERB Regulation 32603(a), (b), (c), and (g) when it passed Resolution 10-070 on May 25, 2010, before exhausting the fact-finding process set forth in its local rules.”

          It’s my understanding that the City corrected its legal errors and reimposed impasse and it was upheld and is currently the reason why the Firefighters and DCEA are currently without contracts. Am I right here?

          If so, it seems that declaring impasse and holding to its best and final offer is a viable option to reduce excessive compensation but only if the City has competent negotiators and legal counsel so it does not stumble over itself again.

          But this will never be done unless the City hires an outside negotiator (and not just an outside “consultant”) to negotiate its employee contracts. Every time we use upper management to negotiate union contracts, the City ends up on the short end of the stick…Will we ever learn?

        6. Ron

          David:  Alan’s follow-up points are important, and are kind of a strange thing to “omit” from the initial explanation (and in your ongoing series of Vanguard articles, regarding this subject).

          For the most part, it seems that you focus largely on the “need” for more funds to resolve the problem, without fully exploring alternatives like the one discussed above.

        7. Howard P

          Ron… for the purposes of clarity, could you distinguish between “salary” and “total comp” (total cost to City) when you write?  It would be helpful.

    1. Matt Williams

      In addition, the proponents for the soda tax have not come forward with a clearly defined plan for how the revenues generated by the soda tax will be spent.  They have proposed no metrics or milestones for how the citizens will be able to judge whether the tax has been a success or not.

      So far the soda tax appears to be long on concept and short on details.  The public health advocates who support this tax need to start doing some heavy lifting.  Their proposal has very little accountability components thus far.

      1. Robb Davis

        The discussion of this tax never got far enough to warrant the discussion you are requesting Matt.  At this point we can do that because the CC has said that we want to examine this more closely.  As a result, staff can dig in and do the work you are requesting.  That was not the case last time around, and we have more time to do it this time.

        I appreciate the idea of this article.

        1. Matt Williams

          I understand Robb, and the responsibility for coming up with the spending plan does not rest with the Council. 

          The reality of sugary beverage taxes is that they are not “charting new territory.”  The public health advocates who have championed them in Berkeley and Philadelphia and elsewhere should have a pretty clear idea of how to most optimally spend the revenues in the interests of public health. 

          Modifying an existing spending template and metrics and milestones to the Davis reality is a step that those advocates should have already moved forward on . . . they should be presenting both template and milestones and metrics at Council meetings already.  I’m not sure why they are sleeping.

        2. Matt Williams

          David, if you are going to create a Culture of Accountability, you need to start somewhere.  The Finance and Budget Commission was very clear in its December 2015 advice to Council.  Specifically,

          That the F& B C is recommending that the Davis City Council not approve any new tax measures or utility rate increases for placement on a ballot measure until such time that:
           
          1.  The staff provides a detailed scope of proposed and/or deferred capital infrastructure projects, as well as proposed new services.

          —      Said scope document shall include specific measurable success metrics for the proposed new services and projects, along with an inventory of the specific costs that will be incurred to provide said proposed services or complete said projects.
          —      The scope document will be updated each year as part of the Budget adoption process.
           
          2.  The staff provides detailed report/s in conjunction with or as a part of the annual Budget adoption process documents submitted to City Council that reports the specific work done (accomplishments) the prior Fiscal Year on staff proposed services and project/s associated with item #1.
           
          3.  The staff provides detailed report/s in conjunction with or as a part of the annual Budget adoption process documents submitted to City Council that defines where the revenues collected from any new tax/increased tax measure(s) spent on services and/or projects other than the services and/or projects associated with item #1.

        3. David Greenwald

          My question is really about timing.  I don’t disagree on the creation of it at some point, but why now rather than in six months?

        4. David Greenwald

          You’re misreading my comment.  You said that the proponents have not come forward with a plan for how to spend the revenues and no metric, I don’t disagree with that.  But we’re not putting the measure on the ballot today, so I don’t see the need to do that until January/ February when the council votes to put it on the ballot.

    2. Tia Will

      Leanna

      I understand your point, and that made by Mark and largely concurred with by David. However, I would like to point out that this is a major public health issue. I do not know when we should discuss it if not now. The last time we tried to bring it forward, the majority of the council used the reasoning that there had not been public discussion. Never mind that the reason there had not been public discussion was that our council, as city leaders, had not chosen to bring it to the public for that discussion.

      Now we hear objections to discussing it again. So when should we discuss it ? We are at an epidemic of obesity, Type II diabetes and many other obesity related illnesses. We are seeing these problems which used to be only in a small minority of our adult population now affecting children in middle school. When do you believe this discussion should be held ?

      1. Mark West

        “However, I would like to point out that this is a major public health issue. I do not know when we should discuss it if not now.

        Diabetes and obesity are major public health issues, the Soda Tax is not. You are conflating two very different things that are only minimally connected (if that). Further discussions of the Soda Tax will have minimal (if any) impact on the incidence of diabetes and obesity in local children.

        In contrast, the fiscal health of the City is a major concern for all and is directly impacted by our discussion on new revenues. If your Soda Tax discussion has the impact of harming our opportunity to address our very real fiscal concerns, then it is much worse than useless.

      2. Howard P

        Tia, with all due respect, I could support a well-thought-out state-wide measure.  I will oppose a Davis only one that would be taking a costly cup of water out of the Pacific to stop rise in sea-levels…

  7. Tia Will

    Matt

    This are items that are being worked on. However, I would like to point out that there is little point in elaborating before a council that is not willing to listen, for whatever reason. It has been very recently that the council signaled its readiness to take this issue up again. For that, I commend them. From my perspective, this is only the beginning. However, we are already getting the pushback as you can see from previous comments that this is not the time to discuss it.

    1. Matt Williams

      Tia, correct me if I am wrong, but wouldn’t the same public health metrics and milestones that exist in Berkeley and Philadelphia, etc. exist in Davis?  I’m prepared to be wrong, but it seems intuitive to me that Davis won’t be reinventing the wheel in laying out how the tax revenues will be spent.

      I personally never felt that Council had a deaf ear to a well articulated sugary beverage tax, it was just that the prior effort was so off the cuff in delineating its implementation while being long on idealistic aspiration. As they say, the devil is in the details.

  8. Alan Miller

    The goal with the soda tax is not to fund ongoing city needs.  Instead, it is to discourage a certain behavior.

    If that is the goal, then why not outlaw soda?  Soda taxes only discourage a small percentage from drinking soda.

      1. Keith O

        How do they know that?  Were questionaires sent out?  Did retailers show a decline in soda sales?  Did people buy their soda elsewhere?  Who did the study, are they to be trusted?  We’ve learned to be skeptical about studies these days because a lot depends on the agenda of those performing the study.

        1. David Greenwald

          Based on sales Keith and I believe they analyzed them against surrounding areas

          Mark – Preliminary in that you ideally want several years of data

        2. Mark West

          Preliminary in that you cannot draw accurate conclusions from an incomplete data set. Had you stated that ‘the preliminary data suggests that consumption was reduced…’ you would be on better footing. The conclusion you made was inappropriate based on the published data that I have seen.

      2. Mark West

        “In Berkeley consumption went way down.”

        The reported results were preliminary, as the authors of the study stated, so your conclusion here is overly optimistic and premature.

      3. Alan Miller

        In Berkeley consumption went way down.

        Maybe so, but unless it was “waaaaaaaaaaaaaaaaaaaaaaaaay down” that really isn’t enough to justify the tax.  Just sayin’

        1. Mark West

          Quotes from your posted article:

          “Analysis of consumption was limited by the small effect size in relation to high standard error and Berkeley’s low baseline consumption.”

          “Post-tax self-reported SSB intake did not change significantly compared to baseline.”

          Translation…the impact (if any) was small relative to baseline consumption and the standard error.

          Your conclusion that “consumption went way down” is not reflected in the data.

           

           

           

    1. Howard P

      And, given the City, County, regional, State, and national rates of consumption, unless we have all those ‘baselines’, how do we measure the effectiveness of a ‘mouse that roared’?

      In this household of 3 adults, there is maybe 32 oz. of sugary drink consumption per year… total.

      Am thinking am in 99.5 % agreement with you Alan…

  9. Ron

    David:  “I believe that all employees except fire and DCEA, who have not agreed to new contract, now contribute the full employee share of the pensions.”

    I would hope so, regarding “employee share”.  However, if there’s also an “employer share” (which keeps rising beyond a city’s control), then that doesn’t solve the problem.

    Also, why on earth would the city STILL be contributing the full employee share, for fire and DCEA? Especially in the absence of a contract?

    Salary adjustments appear to be the only way to offset increasing pension/medical costs, for the city.  (Whenever contracts expire, and/or are not renewed).

    The more I know about the underlying problems, the less inclined I am to support a tax increase to address them. (And definitely not some ill-advised development as a “solution”, either.)

    Every once in awhile, systemic problems become so severe that there’s essentially a revolution, to address them.  (Examples include Proposition 13, the newer FERS retirement system for federal employees – which I believe was implemented under President Reagan, etc.)  Since so many cities and counties are experiencing the same problem, I suspect that California is (once again) on track for such a revolution.

     

    1. Keith O

       Since so many cities and counties are experiencing the same problem, I suspect that California is (once again) on track for such a revolution.

      Yes, each new tax gets us closer and closer to that revolution.  I’m waiting for the day that Davis taxpayers finally revolt and say “no”!

       

      1. Ron

        Keith:  Haven’t heard from you in awhile.  Welcome back.

        Given the statewide magnitude of the problem, I suspect that the revolutionary change will (ultimately) far exceed Davis’ boundaries. (And, that unfunded liabilities will continue to grow, before that point is reached.)

    2. Howard P

      Salary adjustments appear to be the only way to offset increasing pension/medical costs, for the city.  (Whenever contracts expire, and/or are not renewed).

      Wrong again in large part… new MOU’s (they are not “contracts” in the full sense of that term… wrong again), can provide for employees paying increased premiums… and/or the city capitating City contributions (similar way of doing it).  Theoretically, can also be imposed if/when impass is reached… but the latter needs fact-finding and proper process.

      There is no legal mandate about the level the City pays for those things… there are ‘standards’, and history (customs), but not legal mandates.

      1. Ron

        Great!  I’m happy to be “wrong”, in this case.

        Seems like the city has more than one option, to keep costs in check.  Why don’t we hear more about these options, on the Vanguard? (And/or, from some of those “constantly worried” about city finances?)

        Why does it seem that tax increases (or ill-advised developments) are constantly being “pushed” by some, as the “only solution”?

        Is there a lack of honesty in general, regarding this issue?

         

         

         

        1. David Greenwald

          No one has pushed for tax increases as the only solution.  I have always viewed the approach as three pronged – tax increase, cost containment, economic development.

        2. Ron

          David:  From my perspective, you’ve primarily focused on “innovation centers” and “tax increases”.  That, and the “severity” of the problem.

          You’ve provided very little detail, regarding the options that the city has for cost containment.  (Even when I’ve engaged you, on the subject.)  An example can be seen above, when Alan Pryor essentially had to “drag out” an important acknowledgement from you, regarding the ultimately successful resolution of the city’s efforts to reign in costs for firefighters.

          I don’t recall you mentioning Howard’s point in the past, either.  Pretty important, don’t you think?

          (In all fairness, perhaps you’ve noted these points in prior years, before I started reading the Vanguard regularly.) However, I’d suggest that you continue acknowledging these points, whenever you create a new “doom and gloom” article. (Of which there have been many, lately.)

          1. Don Shor

            From my perspective, you’ve primarily focused on “innovation centers” and “tax increases”. That, and the “severity” of the problem.
            You’ve provided very little detail, regarding the options that the city has for cost containment.

            I suggest you type “Davis Vanguard budget issues” into Google and see what comes up. We’ve been talking about this stuff for a decade here.

        3. David Greenwald

          Consider that the current discussion is over what tax increase to put on the ballot.

          You’ve also joined the conversation after eight years of cost containment pushed largely by the Vanguard.

          So I don’t think you have the perspective to judge really.

        4. Ron

          Regarding a tax increase, it’s difficult to know if this is actually justified (or, what “amount” is justified), when it simultaneously appears that cost containment has not been adequately implemented. These two issues are intimately related. (In general, this also makes it difficult to trust data that’s presented.)

          I’ve already acknowledged that you probably discussed cost containment options in more detail, in the past.  (Not so much, lately.)  In general, I am aware that you’ve brought up concerns regarding firefighter compensation in particular, in the past.  (And, I appreciate that.)

          I’ve been reading the Vanguard pretty regularly for more than a year, now. (Maybe two years.)

        5. Ron

          I would also point out that other cities/counties (and the state itself) are experiencing the same concerns regarding unfunded liabilities.  However, you rarely note this (and I certainly did not learn of this on the Vanguard).  Other cities can provide examples of solutions, and the fact that it’s a statewide problem means that there might have to be a systemic solution, at some point.

          I still suspect that you don’t always paint a complete picture, before jumping to advocacy in some form (e.g., the constant “crisis” terminology). (That’s my primary “complaint”.) But then, I have to remind myself that this is an opinion blog, and not intended to be an unbiased source of information.

        6. Howard P

          Some of us were bringing forward concerns about ‘unfunded liabilities’ [then called ‘deferred maintenance’ – vocabularies change with time], related to streets and other infrastructure to the CM and CC for over 30 years now!.[But who listens to professional staff?]

          Welcome aboard, y’all!

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