Two weeks ago, Councilmember Lamar Heystek caught the city council and most of city staff off-guard when he moved from the dais to the staff table and began to present a full alternative budget. The crux of his budget was to do what city staff had refused to do shift the burden of the budget deficit from short-term savings plans that would have to be made permanent due to the current projections for the city to longer term structural fixes to the city’s budget.
Following Councilmember Heystek’s lead has been Councilmember Stephen Souza who proposed his own alternative budget. One of the key provisions for that budget however is his projection that the city due in part to Target will actually see an increase in revenue from sales and property taxes. Our analysis on Sunday leads us to conclude that his projected 1% growth in revenues is highly unlikely given the current economy and the city of Davis’ reliance on state and university jobs that figure to impacted by the ongoing crisis at the state level. Instead, it may be more likely that the city experiences another drop in revenue close to the 14% it has suffered during the past fiscal year.
To view Council member Heystek’s proposal, please click on the YouTube video.
One of the few proposals that the City Manager has accepted for consideration is the proposal to re-institute business licenses for property owners who earn rental income from the renting of rooms within single-family homes, duplexes or separate units. According to the staff report: “This program was discontinued in 1996 due to the cost of collections, but authority to impose a business license tax of $25 per property remains within the City’s Business License Tax Ordinance.”
The city estimates this would yield roughly $60,000 gross in revenues that would be offset by staff costs to administer the program.
Staff recommends:
“City Council should direct staff to evaluate options for re-instituting Business Licenses for rental units of four or less, with the goal of maximizing potential new revenues through minimizing administrative and collection costs.”
Second is the proposal for cost-recovery fees for at-fault parties.
“The City currently has authority to seek reimbursements for public safety response costs in limited instances (i.e. DUI convictions, arson convictions, and hazardous materials response). To date, the Fire Department has not pursued cost-recovery for accidents over concern that this could represent a deterrent to reporting of emergencies. Some jurisdictions assess a charge in cases where an at-fault party’s insurance explicitly covers costs of first response (emergency medical calls); however, the legal standing of such cost-recover fees is unclear.”
The city concludes that while this may be possible to explore in the future, it is premature to include the net new revenues for the budget in 2009/10.
Third is revenue from restoring parking enforcement officers.
“De-funding of a vacant Parking Enforcement Officer position is based on experience with most recent addition of enforcement staffing under the assumption that the positions would be – at a minimum – cost-neutral. In fact, the additional parking enforcement staffing has not yielded off-setting parking fine revenues due primarily to increased compliance of parking regulations.”
The city believes that “while the “average per-officer” parking fine revenue may exceed the average cost of an enforcement officer position, the marginal revenue to be generated at this time is not expected to cover the full cost of salaries, benefits, and related operating expenditures.” Thus they recommend it remain de-funded.
One of the key issues is that of the cost to fund overtime. The city recommends that overtime be reduced by $150,000, Councilmember Heystek recommends it be reduced by an additional $200,000. The city disagrees arguing that opportunities for additional reductions in overtime are limited.
“Opportunities for additional reductions in General Fund overtime are limited due to the legal and operational considerations driving the need for overtime in the Police Department (Court appearances, K9 care, special events, training, reimbursed off-duty overtime, training and public safety emergencies), Fire Department (minimum staffing requirements), and Parks and General Services (emergency response during weather and utility emergencies).”
In summary, staff believes they need to review the operational impacts before making further reductions.
Councilmember Heystek wishes to restore de-funded Police Sergeant position.
“By de-funding rather than deleting this position, the City Manager acknowledges the need for this position within the overall structure of the Police Department, but proposes to keep the position vacant until the City’s budget outlook improves.”
Moreover:
“The City Manager acknowledges that this position was one of the last proposals to be included in the budget-balancing plan, and only as a result of a recent retirement at the Lieutenant rank, and the expectation that a Sergeant vacancy will occur upon filling the Lieutenant position.”
They conclude that it needs to remain de-funded:
“The City Manager would recommend that savings from the vacant Sergeant position remain part of the budget-balancing plan, and that the City Council could establish that this position be given the highest priority for funding restoration, either at mid-year, or as part of the FY2010/11 budget.”
The problem is that unless they build in the funding for this position, it is unlikely given the current budget picture that the city is likely to find the money for this proposal somehow.
Councilmember Heystek also suggested moving to a 4/10 work week. Staff’s recommendation is to look to evaluate the operational, fiscal, and environmental impacts of various alternative schedules but in short they believe it is premature to build savings into the current budget.
The centerpiece of Councilmember Heystek’s proposal is of course the personnel cost reductions. The current budget-balancing plan includes General Fund savings of $850,000 from labor negotiations with the bargaining units. Where does this money come from? Apparently that is the sum total of what has been agreed upon to date by the employee groups–in other words, if the city accepted the contracts that were proposed by the bargaining units, that is where we would end up. So from Mr. Heystek’s perspective, why stop there? But the city is unwilling to push harder apparently.
“Personnel costs represent the largest portion of discretionary General Fund expenditures, and under the current budget / fiscal environment, the budget it highly sensitive to outcome of pending labor negotiations.
Nonetheless, it is important to note the distinction between the short- and long-term goals of the city’s negotiations with employee groups, from proposals being made to balance the FY2009/10 budget.”
The staff report continues:
“In the context of the FY2009/10 budget-balancing proposal, the budget makes no specific assumptions about the ultimate outcome of the City’s bargaining process. The projected personnel cost-savings of $850,000 should not be construed as the City’s cost-savings goal for labor negotiations. Rather this figure represents the amount of potential cost-savings that the City Manager recommends as appropriate to include as a portion of the FY2009/10 budget-balancing plan.
For a number or reasons, it is both impractical and inappropriate to directly link the City Council’s objectives in the context of employee contract negotiations and the FY2009/10 budget-balancing plan. In addition to the inherent uncertainty over the ultimate budgetary impacts of successor labor contracts, the full extent of personnel cost savings could not only assist the City Council in maintaining a balanced budget, but also be applied to under-funded areas of the City budget such as unfunded retiree medical liabilities, future CalPERS cost increases, or under-funded programs, or new priority initiatives. Moreover, the full extent of savings could also accrue to the City over a period of time, and not necessarily entirely in FY2009/10.
The $850,000 level of personnel cost savings recommended by the City Manager as part of the General Fund budget-balancing plan is well within the overall level of savings that could result from meeting the Council’s stated objectives for labor negotiations, and is at a level for which alternative budget contingencies can reasonably be implemented. Furthermore, a “discounted” personnel savings assumption also provides some flexibility relative to the timing of agreement on successor contracts, and the probability that the full extent of savings may need to be prorated, if contract negotiations become protracted.”
One can easily guess that the City Manager continues to recommend his $850,000 as the cost-savings from employee negotiations.
The other key portion of Mr. Heystek’s budget is changes to the proposed reductions among these include a $10,000 reduction to the Ombudsman Contract and an increased reduction to the City Attorney’ Contract. The city manager makes no recommendation here.
Councilmember Heystek then recommends a restoration of funding to several cut or slashed programs.
- Restore Funding of Dedicated Lap Swim
- Restore Funding for Skatepark Supervised Hours
- Restore funding for Recreational Swimming at Community Pool
- Restore funding for Camp Putah II, Backpacking, Xtreme Adventures
- Restore funding for Davis Media Access / DJUSD Programming
Again there is no recommendation.
Councilmember Heystek recommends restoration of funding to police department positions:
- Restore funding for Office Assistant
- Restore funding or Parking Enforcement Officer
- Restore Police Records Specialist to Full-Time
While they make no specific recommendations, in their discussion they suggest the following:
“The Office Assistant position reduction represents one of the police department reductions with the least direct service impact to the community.”
Moreover:
“The Parking Enforcement Officer position is proposed to be de-funded, in part due to the fact that when the last such position was added to the budget, costs were expected to be fully-offset by increased parking fine revenues. However, revenues have not increased sufficiently to cover costs of the position, in large measure due to increased compliance with City parking regulations.”
Finally:
“The Police Records Specialist position was reduced to 50% (part-time) upon retirement of the incumbent staff; Saturday public counter hours were eliminated several months ago – on the occasion of the position reduction, and there have been no concerns expressed by the general public over this schedule modification.”
The last two proposal from Councilmember Heystek include a restoration of funding for parks maintenance and a restorations of funding for signal repair and street lighting. The city makes no recommendation on the former and the following on the latter:
“Maintain budget-balancing item ($25,000) related to energy savings already being realized.”
Vanguard Commentary:
The city has to this point been reluctant to take a harder line position on employee compensation and the result of that is going to be that they will likely accept employee contracts that reflect somewhere around $850,000 in savings and they will hope they can restore it when the budget increases in a few years.
From public comments made by the council, the will is clearly not there to engage in stronger negotiations. They have steadfastly refused to employ an independent negotiator.
Moreover, at least two members of the council at the June 9 meeting basically suggested that this is a good budget, they have maintained the company line that the city is in better shape than most, it appears that they see little need to make major changes other than at the margins to balance the budget to compensate for what they see as a short-term decline in revenue stemming from the downturn.
From our perspective the city is ignoring or at least postponing having to deal with real issues in this budget. A majority of the general fund goes to employee compensation and any budget deal that does not address those issues is missing a golden opportunity to fix a system that has increasingly become disproportionate.
Unfortunately, we have seen largely what the Council majority is willing to do, and that probably rests on where Councilmember Stephen Souza who has generally been the deciding vote this council is willing to go. He believes as he stated in the Enterprise that the city will actually experience revenue growth. Our analysis again, shows that to be highly unlikely, but the result is probably going to be that we cut less rather than more. This will decrease the pressure on employee groups and the result will be that what we see today is largely what we are going to get.
—David M. Greenwald reporting
Some of Heystek’s suggestions are not well thought out, such as the overtime issue. However, his main thrust is to cut more from city employee salaries/benefits, which is exactly correct. It is clear Bill Emlen/City Council majority are unwilling to negotiate in good faith ON BEHALF OF THE CITIZENS OF DAVIS. Rather they are negotiating ON BEHALF OF THE CITY EMPLOYEES. No one is negotiating ON BEHALF OF DAVIS CITIZENS.
Fine, and when the “fit hits the shan” so to speak, and the revenue projections are negative, and not as much tax revenue comes from the state, then whatever City Council is sitting at that time/Bill Emlen, will have to face the music then. And the most likely scenario that will evolve is both drastic cuts to programs and many layoffs. So be it.
Just remember, Council Majority – this happened ON YOUR WATCH! Voters will remember.
I am not an accountant, and thus not in a positon to evaluate the details, but I do admire Lamar for taking a leadership role and his attempt to address the structural problems with the city budget. A nip here and a tuck there isn’t going to do it. Tough issues like employee compensation and the reduction or elimination of programs will have to be addressed. I don’t see most of the city council being willing to do this.
As a first step, the city could always incentivize the cuts by allowing a series of annual onetime payments to staff if the revenue exceeds expenses sufficiently enough on an annual basis. This is difficult to implement as one must set the initial thresholds, but the benefit to employees is that they potentially get an additional “bonus” if the groups weather the economic storm together. In general, I don’t favor this kind of structure for public employees, but the economic landscape has changed enough to look at new onetime models. I believe the school district did this with employees a few times in the early 2000s.
Anon at 9:52 this morning, you are wrong. Overtime is a very serious issue that needs to be looked at. I find it rather alarming that full-time staff who are salaried are getting paid overtime!!! WTF!!
When one takes on a managerial, supervisory, or department head role, or fire captian, chief, etc. you expect to be working overtime and you expect to get a salary. You are NOT paid by the hour. You should NOT expect to get paid overtime!!!
These are OUR TAX PAYER DOLLARS BEING GIVEN AWAY AS BONUSES!!! Wake up people. Demand that the city council and this lousy city manager and CFO do a better job representing us.
How in the world does an employee earning over $100,000 get overtime?
David
can you comment on 4:42 comment. WHO exactly is getting OT?
Observer: “I am not an accountant, and thus not in a positon to evaluate the details….”
The problem is, neither are any of the members of the city council, and having city staff analyze a budget that was proposed as an alternative to their own staff budget is an inherent conflict of interest.
It would be nice if some outside analysts could assess the two budgets and make proposals for short- and long-term changes to the city’s fiscal situation. It may be that Lamar’s ideas regarding employee compensation can’t be entirely implemented in the current budget year, but I would feel more comfortable hearing any conclusions from someone who doesn’t have a stake in the process.
I hesitate to out anyone, but I know we have retired staff from the legislative analyst’s office living in Davis. We also have numerous CPA’s and business school faculty here. Davis has a budget crisis, and with all due respect to the councilmembers I don’t think they are really up to the task of major reform. Perhaps it’s time for them to tap some outside help.
“Davis has a budget crisis, and with all due respect to the councilmembers I don’t think they are really up to the task of major reform. Perhaps it’s time for them to tap some outside help.”
This is exactly right. We should have also had an independent negotiator at the labor bargaining table.
“Anon at 9:52 this morning, you are wrong. Overtime is a very serious issue that needs to be looked at. I find it rather alarming that full-time staff who are salaried are getting paid overtime!!! WTF!!”
The problem with Lamar’s analysis on this issue is that oftentimes the law requires the overtime. It will actually take legislative change to be able to reduce the overtime. That is why Lamar’s analysis on the overtime issue was not necessarily well thought out. However, at least he is willing to identify the problem, which is half the battle. The other half is figuring out how to fix it.
Where Lamar was absolutely right was in suggesting pushing for the 5% paycut of city employee salaries. I would try for 10%. Ultimately city employees are going to be laid off – but where Bill Emlen will start is the low paying jobs, instead of upper management in the city, which is bloated.
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