The first hints of trouble came as Dan Wolk successfully restored youth recreational funding. Suddenly Stephen Souza was arguing that the city council was going about this budget in the wrong way.
The council got through the Tier 1 reductions despite some acrimony with a 5-0 vote, with Mr. Souza declaring that this just “wasn’t as judicious” as he would have liked.
Within those Tier 1 cuts was the restoration of about $90,000 now that the state budget has passed with out COP grants being cut.
It was during the Tier 2 cuts, that any sense for harmony left. Councilmember Sue Greenwald argued against restorations of funding because this would put us on a course to lay off some 33 people. She said, “I agree with you completely that we need to get those savings, but we should have started this a year ago.”
She argued that it needs to be coordinated with the labor contracts situation. “We need to make these cuts, but the process and timing is everything,” she said. She added, “If we implement this tonight, we are on a course of layoffs, mass layoffs.”
She said that this is not fair to the employees or the organization, it will hurt the level of services provided, and we can only do the kinds of change we need to do in the context of the labor negotiations. She argued that we have “sort of been blindsided by the budget idea.”
Mayor Pro Tem Rochelle Swanson countered, “All during the 2010 campaign every single forum, every single debate, we talked about fiscal sustainability.”
This has been repeatedly brought up, she said, they asked for community conversations. “This isn’t new. It is painful; it should have been before,” she continued. “It is incredibly unfortunate in the way it is happening,” she said, “but we can’t keep kicking this can down the road.”
Councilmember Stephen Souza argued that in June 2004, GASB (Government Accounting Standards Board) 45 was initiated, that made the city aware of the unfunded retiree health liability. “We started that process, we’re halfway there, so I take exception when the comment [is] that there hasn’t been a plan to attack some of these issues,” he said arguing that we need to look at how we go about getting there in a specific planned process. “I totally agree that we have to do this, I’ve seen the numbers, I’m aware of the numbers, we’ve attacked part of those numbers.”
As Mayor Joe Krovoza later pointed out, while it is true that we are “halfway there,” halfway there means halfway to putting the funding in place so that in 30 years we have fully-funded retiree health.
Councilmember Sue Greenwald would put forward a motion that asks that city staff bring back specific proposals by September 30 that would reduce personnel costs by $2.5 million by July 2012.
It was clarified that this proposal would not only delay the $2.5 million in personnel cuts to next fiscal year it would eliminate the Tier 2 cuts and the restoration.
Sue Greenwald would argue that the good thing right now is that we have a council determined to make these changes. She said the question is how to do it in a way that minimizes layoffs. She argued that we have a very heavy-handed layoff approach and that we cannot even choose who we layoff, by law.
Mayor Pro Tem Swanson argued that she was not going to support zero funding for streets. Councilmember Stephen Souza argued that we would not even get the new road contracts until Spring 2012.
However, Paul Navazio pointed out that even though the calendar would be different, it is still in the 2011-12 fiscal year.
Mayor Pro Tem Swanson put forward a substitute motion to adopt the Tier 2 cuts and restoration as recommended and amended by staff. The critical vote came from Councilmember Dan Wolk. He called it “an awful decision” but said that it puts money into the things we need and he would like to see that done.
Councilmember Souza said, “I am not interested in this path, I think there’s a better path.”
Councilmember Greenwald did join the majority on this vote, and the substitute motion passed 4-1 over Stephen Souza’s dissent.
Councilmember Greenwald then put forward a motion that was basically identical to the previous motion except that Tier 2 would now be implemented. The crux was that by September 30 staff was to come back with a way to achieve $2.5 million in savings with the savings going to address unfunded, unmet needs by July 2012.
Mayor Krovoza spoke passionately that this was not a new proposal. He said, “My concern is that the issues that I raised in November didn’t make it into the budget proposal.”
He discussed specifically the issues of OPEB (Other Post Employment Benefits), of CalPERS, and spoke about transportation. Each of these, he pointed out, had a special workshop, council gave direction, and the budget did not address any of them. He pointed out that we are about $15 to $20 million behind on transportation and road maintenance, and the longer they defer maintenance, the more it will cost.
“We are digging a hole for this community that is going to make it harder to get there,” he argued. “There is nothing I want more than to build a stronger Davis,” said arguing that we “need to start making tough decisions.”
Councilmember Greenwald said that she has been saying this for six years, but we are in the middle of a labor contract and there is little we can do.
Councilmember Souza added that they are all “singing the same song, just a different tune, different tone,” adding, “Personally I think there is a better way to get there.”
It came down to Dan Wolk. He argued that it is a difficult decision but it is one that needs to be made, and that he supports the mayor’s motion from a few weeks ago.
He argued, “I see the motion as flexible, it is not just walking down a certain path.”
The Council would vote down Ms. Greenwald’s motion, then break, when they returned Mayor Krovoza moved staff recommendation C that directed staff and council to work to identify $2.5 million in personnel or other savings. He urged close collaboration with employees arguing that it needed to be “as progressive as possible,” meaning the higher paid employees taking the bigger hit. He wanted to see minimal effect on lower level employees and to seek to minimize service reductions to community.
The motion was seconded by the Mayor Pro Tem.
Councilmember Souza argued “We shouldn’t fool ourselves into thinking that we are going to achieve $2.5 million without people losing their jobs.” Unless there are concessions, negotiated people will lose their jobs. He argued you “don’t say you are going to talk to you [sic] at the same time you are targeting them.”
He said he wanted true constructive dialogue and believes the prior path was the right path. “This one is not the right path.”
Dan Wolk agreed that this will create anxiety, which quickly became the buzzword for the night, but pointed out even Sue Greenwald’s motion would have created anxiety. He said that he completely understands anxiety, as a public employee himself.
He again talked about this being a new era, where the old way is not viable anymore. This is to join Governor Jerry Brown’s mantra, “An era of shared sacrifice,” and it is “incumbent upon us as a community to come together to devise a way to ensure the long term fiscal stability of our city.”
Rochelle Swanson said that anxiety is the right word, and while there is a lot of anxiety, there is no avoiding it. She argued that we have been very blessed not to have seen massive cuts, and maybe we can completely dodge that bullet. She argued that she has a lot of optimism about where we’re going in the process.
Sue Greenwald argued that we are at a crossroads here. She suggested that we still have not solved the structural problems, because this plan is pushing it in the direction of layoffs.
Council would pass the budget 3-2, with Stephen Souza and Sue Greenwald joining in dissent.
—David M. Greenwald reporting
[quote] we can’t keep kicking this can down the road[/quote]
This phrase is now part of our zeitgeist. I hear it all the time, from Greece to local politics. There are no easy choices and layoffs are inefficient and create a hardship, but they also can show that we are serious and they create pressure on future labor negotiations.
The good news here is that four of our City Council people get it… though they might disagree on tactics.
Lets hope the City can save money in other ways–like cutting our fire dept. expenses down to a reasonable level. But this is a signal that the times they are a changin
My summary of last nights “dog and pony show”…Dan is happy that his daughter can still dance and do tumbling thanks to the ‘partial restoration” of recreation programs.Sunset Rotary will pick up movies in the park..Sue was left out of the “field trip”.The people with “the decreasing property values due to poor workmanship and chip seal will be able to skateboard and learn how to ride two wheelers since there was approval of street repair funds to the tune of 850k. 2 records staff and an ombudsman were restored. That was all within the tier 1..which one must note left a surplus of 65k and a balanced budget.The tier 2 items,which don’t need to be addresses until labor contract negotiations are completed left this trail of…
33 “un-named people” will be laid/off. The reserve fund will be kept at 15%. Making decisions based on suspected,anticipated,probably..Fiscally responsible?. I think not.
“Council would pass the budget 3-2, with Stephen Souza and Sue Greenwald joining in dissent.”
Interesting. When it comes down to it, Sue Greenwald talks the talk, but it’s all hot air.
“The good news here is that four of our City Council people get it… though they might disagree on tactics. “
You’re being FAR FAR too nice to Sue. I watched the whole thing, she was pandering to the employees, plain and simple. It was DISGUSTING. I have voted for her five times (I think) and I will not vote for her next year. No way. JR is right, she talks the talk but can’t walk the walk when the going get tough.
[i]”layoffs are inefficient”[/i]
Dr. Wu, I don’t get this point. Layoffs can improve organizational efficiency if done correctly. It is the counter to a human tendency to build bureaucracies for power and protection from change.
[i]”Stephen Souza was arguing that the city council was going about this budget in the wrong way. He argued against restoring the reserve immediately.”[/i]
Sue and Stephen both argued that, and I think they are completely right. First, what is so magical about 15%? What past historical event suggests that we need a 15% g.f. reserve fund, instead of say a 10% fund? Second, the reason we have a g.f. reserve in the first place is to cushion the blow of a recession. That is, when the economy tanks and sales tax dollars and property tax dollars don’t come in as high as was expected, we have the reserve fund to spend down so we don’t need to fire employees who provide necessary services. We can always replenish the reserve fund when times are back to normal.
[i]Mayor Pro Tem Rochelle Swanson countered, “All during the 2010 campaign every single forum, every single debate, we talked about fiscal sustainability.”[/i]
The problem with Rochelle making this argument is that when she had the chance to vote on a labor contract, one which The Vanguard, The Lexicon Artist and her colleague Sue Greenwald explained was fiscally unsustainable, Mrs. Swanson approved the deal. Now she may have been talked into voting in favor of another bad contract for some other good reason. I don’t know. She never explained her vote on that. She never explained how that vote promoted the ‘fiscal responsibility’ of her just finished campaign. So at this point, I think it is hard to accept her words that she is trying to fulfill her campaign promise, on the heels of her not fulfilling her campaign promise. The same, of course, goes for the mayor, who voted the same, wrong way on the last bad labor deal.
[i]Councilmember Stephen Souza argued that in June 2004, GASB (Government Accounting Standards Board) 45 was initiated, that made the city aware of the unfunded retiree health liability.[/i]
He should have said he found out about it by reading it first in my column, which reported the GASB 45 change before Mr. Navazio alerted the council. (I still remember the phone call I got the day before that column ran. The City Manager was frantic that I was spilling the beans before he had a chance to spill the beans. Mr. Emlen wanted to know every last detail I was reporting.)
[i]”Councilmember Sue Greenwald would put forward a motion that asks that city staff bring back specific proposals by September 30 that would reduce personnel costs by $2.5 million by July 2012. It was clarified that this proposal would not only delay the $2.5 million in personnel cuts to next fiscal year it would eliminate the Tier 2 cuts and the restoration.”[/i]
Anyone who has followed the school district budgeting troubles should recognize what Sue Greenwald is getting at. The school district, facing ongoing revenue shortfall for the last 3-4 years, has had two choices all along: one, they could have revised their labor contracts, with teachers and other personnel, so that everyone’s job was safe, but they would have to make across the board cuts in salary; or they could, as they mostly have, kept salary costs exactly where they were (after they jacked up salaries in 2008), while laying off the teachers and other personnel with less time on the job. The DJUSD has consistently followed the second course. The DTA, with the very minor exception of a small amount of furlough, has never budged. They have regularly refused cuts in compensation levels. And the members of our school board, all afraid of fighting with the DTA, have gone along with that approach of firing the last people hired.
More-less, this is what the $2.5 million cut in personnel costs come this September represents. It is the City Council, save Greenwald and Souza, following the course of the school board.
It will not result in reduced cafeteria costs per employee. It will not result in reduced salary costs per employee. It will not result in reduced pension costs per employee. It will not result in reduced retiree medical costs per employee.
What is will result in is firing a score or more employees, probably those with the least seniority in most cases. And that means, for the public at large, worse city services: less well kept parks; less police protection; and fewer programs, such as swimming, gymnastics, and senior center services.
What Sue Greenwald is arguing for is the approach the school board never had the courage to take: to make changes in the labor contracts so that we can achieve our savings there and we won’t have to fire so many good employees, harming them especially and harming the citizens who depend on the work they do.
The one possible good which might come out of the September proposal would be for the city to go back to the old staffing model for the fire department. We used to schedule 3 men on a truck. For the last dozen years it has been 4. That change results in a 33% higher cost of labor for firefighters and fire captains. The savings achieved by a change in staffing will be more than a million dollars a year, every year.
If that is achieved*, then we should lock in that money as a permanent, ongoing source of funds** to maintain our roads and other infrastructure which depends on general fund dollars.
I need to add one more thing about this road fixing business: yes, it is shameful that for the last 4 years we have underfunded road maintenance. However, I suggest everyone reading this to look at the list of streets which the city says are in horrific shape and decide for themselves, as drivers and pedestrians, whether the list makes good sense. I live on Cornell Drive, and it is on the list. The part of Cornell where the city says it is among the worst streets in the city is, in my opinion, perfectly okay.
I have to wonder if the people from public works who are telling us we need hundreds of thousands of dollars for this repair and that are not, to some degree, making sh!t up or that they just have unrealistically high expectations for how well a peripheral street needs to be maintained?
I know of a few major streets–B Street from 5th to 8th, for example, which are in poor shape in parts and should be high on the list. But I suspect not every street the city says is in bad shape cannot wait a year or two, if need be.
—————
*I don’t expect it is possible to make that change in the next 3-4 months. I think the city will take at least a year to make such a major change and fire that large of a group of firefighters, which no one should forget will be devastating to that group of people who really did nothing wrong.
**Speaking of sources of funds for the roads …. The City pays about 80% of the budget for Unitrans. Bet you didn’t know that. I think perhaps the City needs to start charging Unitrans a road maintenance tax, because those giant buses do a hell of a lot of damage to the City’s streets. Maybe instead of giving Unitrans $4 million a year, we could give them $3 million and we could repair our streets with that last $1 million?
How much the City of Davis has funded Unitrans, the bus service which takes kids off of their bicycles so they can burn CO2 on the bus in order to be a green city:
2009— $5,514,381.00
2008— $4,051,796.50
2007— $1,255,450.10
2006— $2,880,475.00
2005— $2,313,172.70
2004— $4,344,418.20
2003— $2,178,942.30
2002— $1,522,340.70
2001— $3,395,333.00
[quote]Councilmember Souza added that they are all “singing the same song, just a different tune, different tone,” adding, “Personally I think there is a better way to get there.”[/quote]
I don’t agree the City Council is all “singing the same song”. Some on the City Council favored kicking the can down the road as per usual/the same old sad song, while the “new kids on the block” favored putting fiscal responsibility front and center – a brand new tune. As Rochelle Swanson so eloquently put it, fiscal responsibility is what the “new kids on the block” campaigned for – and they intended on keeping that collective campaign promise.
Last night was not easy for anyone – many in the room had to be dragged kicking and screaming into our city’s new fiscal reality. But I was very heartened to hear some solid suggestions from city employees themselves, as to how to effect serious budget cuts. I believe last night was the very beginning of what I hope will prove to be a productive collaboration between the bargaining groups and the City Council, with input from citizen groups who might step up to the plate to fill some city service gaps.
It took great courage for Mayor Krovoza to lead the way towards fiscal responsibility, in the face of a sea of very disgruntled city employees who see a grim future for themselves. But the message has been sent, loud and clear, it cannot be business as usual…
[quote]Sue and Stephen both argued that, and I think they are completely right. First, what is so magical about 15%? What past historical event suggests that we need a 15% g.f. reserve fund, instead of say a 10% fund? Second, the reason we have a g.f. reserve in the first place is to cushion the blow of a recession. That is, when the economy tanks and sales tax dollars and property tax dollars don’t come in as high as was expected, we have the reserve fund to spend down so we don’t need to fire employees who provide necessary services. We can always replenish the reserve fund when times are back to normal. [/quote]
If you listened carefully to what Mayor Krovoza said last night, he left the option open of possibly dipping into the reserves. This is to be an open ended discussion between now and Sept. 30, with all options on the table. However, a clear message has been sent to the bargaining groups they are going to have to get creative within the budget constraints given or there will be personnel cuts. Getting creative could mean opening up bargaining discussions early, for instance…
The bottom line is that taxpayers don’t have bottomless pockets anymore… this is a new fiscal reality.
[quote]The problem with Rochelle making this argument is that when she had the chance to vote on a labor contract, one which The Vanguard, The Lexicon Artist and her colleague Sue Greenwald explained was fiscally unsustainable, Mrs. Swanson approved the deal. [/quote]
What labor contracts are you referring to, how long had Rochelle been on the CC before voting; what were the circumstances surrounding the issue? Sorry, my mind is hazy on details here – call it a senior moment!
[quote]**Speaking of sources of funds for the roads …. The City pays about 80% of the budget for Unitrans. Bet you didn’t know that. I think perhaps the City needs to start charging Unitrans a road maintenance tax, because those giant buses do a hell of a lot of damage to the City’s streets. Maybe instead of giving Unitrans $4 million a year, we could give them $3 million and we could repair our streets with that last $1 million?
[/quote]
All citizens of Davis can use Unitrans. Because the UCD students use Unitrans, it keeps that many more cars off the road to cause damage to the roads. So I’m not getting your point here…
[quote]I need to add one more thing about this road fixing business: yes, it is shameful that for the last 4 years we have underfunded road maintenance. [/quote]
And now we are at least on some sort of trajectory towards providing more funding for street maintenance.
[i]”However, a clear message has been sent to the bargaining groups they are going to have to get creative within the budget constraints given or there will be personnel cuts.”[/i]
Elaine, I presume you have enough experience in life to understand the way human nature works. What will happen, of course, is the bargaining groups, given the choice between small cuts for all and layoffs for some will ALWAYS choose layoffs for some. Human nature will not change between July and September. It has never changed for the Davis Teachers Association, which has long faced this question.
[i]”What labor contracts are you referring to, how long had Rochelle been on the CC before voting; what were the circumstances surrounding the issue? Sorry, my mind is hazy on details here – call it a senior moment!”[/i]
By a 4-1 vote, Swanson, Krovoza, Saylor and Souza approved the DPOA contract last year ([url]http://davisvanguard.com/~vanguard/index.php?option=com_content&view=article&id=3637:early-test-for-new-council-dpoas-new-contract-set-for-ratification&catid=58:budgetfiscal&Itemid=79[/url]). Did it include any reforms to the pension formula for new hires? Did it sensibly deal with retiree health care, such as discouraging early retirement or delaying the city paying for retiree health care until a retiree is age 65? Did it deal with the growth of total compensation? No. No. No. and No.
[i]”All citizens of Davis can use Unitrans.”[/i]
No one ever said they couldn’t. All citizens of Woodland and Winters and Redding can use Unitrans.
However, it is the citizens of Davis who pay most of the cost (80%) for Unitrans, and we are poorly served by a system which has two hubs, both on campus. A disabled rider or a senior rider or a group of kids who live in most parts of Davis cannot get direct service to most other parts of Davis. Instead, they need to take a bus to the campus, wait and then transfer to a second bus to get downtown or get to the other part of town they want to go.
Since Unitrans has two hubs, would it not make a lot of sense for one of those hubs to be in downtown Davis? Why do both of them have to be on campus, when it is the City paying for the system?
[i]”Because the UCD students use Unitrans, it keeps that many more cars off the road to cause damage to the roads.”[/i]
This is false. It is the propaganda of Unitrans and its director. The students who are riding the bus would not be driving to campus. You know it costs about $600 a year for a parking permit for a student? They would instead be riding bikes on most days. I have lived in Davis long enough to know that is how all students got to campus before Unitrans. They all rode bikes. Now about half the students take the bus. And you know those students on the bus and not on the bus are FORCED to buy a bus pass. If you gave all students the option of buying a bus pass or not buying one, almost none would buy a pass. They would just walk or bike.
“Dan is happy that his daughter can still dance and do tumbling thanks to the ‘partial restoration” of recreation programs”
Dan puts the kids first. Good for him. Helps kids other than his own too. It does take a village and Dan kept this one from turning its back on its kids.
Thanks Dan!
[i]”And now we are at least on some sort of trajectory towards providing more funding for street maintenance.”[/i]
Maybe. Maybe not. Unless the council adopts cuts which are permanent and the council dedicates the funds from those cuts to street maintenance on a permanent basis, we don’t really know if there will be a trajectory, as such, at all.
What we do know is that if the council finds this money by firing low-level employees in public works, programs, planning, parks and the police, we will get better streets at the expense of worse services in all other areas.
Rich:
I disagree with you on the reserve policy. It is not recession insurance. If you use it that way, it will be gone in no time. It has two practical purposes. One, in an emergency it can be used. Second, in case of unexpected expenses or unexpected revenue shortfalls, it can be used to prevent midyear cuts. However, you seem to be suggesting that it be used to brace what are going to essentially be permanent cuts and that makes no sense to me.
“What we do know is that if the council finds this money by firing low-level employees in public works, programs, planning, parks and the police, we will get better streets at the expense of worse services in all other areas. “
I suspect a good chunk of the cuts are going to come from reorganizing fire staff to 3 per engine and some sort of cut for the management. Then then they will scrap to find the last million in a lot of different ways. This is not quite the crisis some are making it.
Obama speech yesterday:
[quote]“And that’s why I’m so glad to be here at Alcoa. All of you are showing the future we can build here in eastern Iowa and all across the country. Almost every airplane in the world has some kind of Alcoa product in it. Think about that. Every airplane in the world, you guys have something to do with.”[/quote]
Then in his press conference today, “corporate jets” was the main class warfare theme for making a case to increase taxes on the wealthy. It has been mouthed by enough Democrat politicians over the last few days to prove that the Party apparatus is coordinated in their methods to enflame envy over jet ownership for political gain.
Forgetting for the moment the consideration that Obama might really be in this to destroy the economy and incite class warfare… or that he is much more ignorant about economic matters than his education and presentation would indicate… taxing corporate jets will cripple the very company that Obama was spouting about. It will also wipe out the few US jet manufacturers still struggling to survive after the Great Recession.
Remember the yacht industry after the luxury tax signed by Bush #1? After the luxury tax introduction, the 5-year tax revenue was estimated to be $9 billion. However, in its first year, the tax revenue was only a few tenths of a million dollars. In addition, the government also had to pay unemployment benefits… and it decimated the US yacht industry.
Bringing this back to the local level, our choices are clear. We cannot raise taxes sufficiently to come close to reducing our debt and deficits without hurting the middle class or without hurting employment. Therefore the only solution is to cut. The entire debate should have shifted long ago to WHAT we need to cut, not IF we need to cut. Politicians that fail to focus their efforts deciding what to cut are doing more harm than good.
Obama has not proposed “taxing corporate jets.” He has, along with many others, proposed that tax rates for those wealthy enough to own corporate jets return to the levels they were at before the Bush tax cuts.
[i]We cannot raise taxes sufficiently to come close to reducing our debt and deficits without hurting the middle class or without hurting employment.[/i]
We cannot cut significantly from social service programs without seriously eroding the social safety net and public education.
[i]Therefore the only solution is to cut. [/i]
Therefore a balance of tax increases and program cuts will reduce the deficit with less harm to those who rely on the social services, as well as to education. Both nationally and statewide the public generally supports public leaders working together to solve problems. That means compromise.
[i]Politicians that fail to focus their efforts deciding what to cut are doing more harm than good.[/i]
You are aware that the budget contains significant program cuts, right?
[quote]It was during the Tier 2 cuts, that any sense for harmony left.- David Greenwald[/quote]I guess that “any sense of harmony” refers to disagreeing with the David Greenwald budget reduction plan. If I were disagreeing with a council majority proposal to eliminate the police ombudsman, or support taking a teenager in pajamas for police questioning, would David Greenwald refer to that disagreement as disharmonious? I don’t think so…..
For Boone: [i]. . said he had not sold a boat priced over $100,000 for two years. But immediately after Congress repealed the luxury tax as part of the [b]Clinton[/b] economic package, customers began calling. [/i]
From the Baltimore Sun, October 07, 1993. Bush I couldn’t get the repeal through, Clinton did.
[quote]ERM: ….the “new kids [Krovoza, Swanson & Wolk] on the block” favored putting fiscal responsibility front and center – a brand new tune. As Rochelle Swanson so eloquently put it, fiscal responsibility is what the “new kids on the block” campaigned for – and they intended on keeping that collective campaign promise.
It took great courage for Mayor Krovoza to lead the way towards fiscal responsibility, in the face of a sea of very disgruntled city employees who see a grim future for themselves. But the message has been sent, loud and clear, it cannot be business as usual…[/quote]
Well said Elaine! The new council majority is committed to repairing the fiscal mess they inherited. By living within our means they are asking for shared sacrifice from all employees and their bargaining groups to protect existing pensions and save jobs.
It is clear that the root cause of municipal financial woes throughout California and in Davis is due in large part to the [b]excessive public safety pay & retirement packages[/b] that are based upon an irresponsible and unaffordable retirement formula that begins at 50 years of age; multiplied by 3% of their ending salary for every year worked, plus cost of living adjustments and lifetime medical benefits for themselves and their spouses. This creates retirements for most firefighters and policemen in their early 50’s to be able to get from 80% to 100% of their annual pay received in their final year for the remainder of their lives. 80% of expenses of most city budgets is devoted to labor costs (salaries, benefits including costly health care & retirements) and the lion share of those labor cost are firefighters, etc. This is simply unaffordable and unsustainable. The Davis city council is doing the right thing by warning higher management and the firefighters who make the most money that their days of gorging on the City’s coffers is ending. They either agree to salary and benefit cuts and reorganization or risk layoffs.
Again, Joe, Rochelle and Dan inherited this mess, but must clean it up. Prior council majorities of Asmundson, Saylor and Souza took no action to address the dangerous fiscal trends that these labor MOU’s were creating and in fact kept voting for policies that obligated the City to finance the unaffordable.
[i]”Obama has not proposed “taxing corporate jets.”[/i]
Don, you are wrong here. Obama wants to repeal tax breaks for corporate jets, which is a tax increase on corporate jets. He and other members of the Democrat party have also used the corporate jet owner as imagery to wage their class warfare.
The point is that Obama lauded Alcoa making specific reference to the plant investments they made and their connection to the aircraft industry, and then the next day pushes his idea to increase the jet tax that will hurt jet sales. This is another example of why more companies are not expanding… they do not have confidence in this President. His actions and words indicate that he is not a business friendly, or is not a business savvy president. In either case, it means business would hedge their risks for what he might do or say next.
[i]”We cannot cut significantly from social service programs without seriously eroding the social safety net and public education.”[/i]
The safety net has grown too large and needs to be scaled back. More people on the public dole need to be working. Also, our education system is inefficient and does a crappy job… it sucks too much and returns too little. If it is not going to reform, then I support a reduction in what we spend on it.
[i]”the public generally supports public leaders working together to solve problems. That means compromise.”[/i]
Compromise over which programs to cut is doable, but there should be no compromise over raising taxes. Sorry, but you tax and spend folk have been given more than enough. Spending and debt as a percent of GDP has risen steadily in the state to be near 40%. Even in the boom times we spent more than we had. All government budgets should have been running a significant surplus during the boom times of the 90s and again 2003-2008. They were not. They were spending too much then, but the real pain for those spending decisions is upon us now.
[i]” You are aware that the budget contains significant program cuts, right?”[/i]
Yes, and I applaud those cuts and the politicians that support them.
[quote]Layoffs can improve organizational efficiency if done correctly.[/quote]
Layoffs are rarely efficient–they are usually last hired first fired.
Politics, like sausage making is messy.
What we saw last night was a commitment to cut expenditures. In the long run I hope we end up with a rational outcome. In the short run, it won’t be.
[i]”Bush I couldn’t get the repeal through, Clinton did.”[/i]
neutral: Clinton was more a fiscal conservative than Bush in my opinion. His record certainly had something to do with the GOP Congress, but I think Clinton’s record on fiscal issues has always been considered strong enough based on conservative’s expectations for a Democrat President. Bush senior lost the election to Clinton precisely because he allowed Congress to raise taxes on his watch. My problem with Clinton is that I think he significantly damaged the moral compass of the country with his bald faced lie on camera about his affair with Ms. Lewinski. It sent the message that any behavior is okay as long as you get away with it. I wonder if Bernie Madoff was watching TV that day…
However, thanks for confirming my point that increases taxes on goods results in less demand for those goods, and decreasing taxes does the opposite.
My motion, seconded by Stephen Souza, was:
[quote]Direct staff to return on Sept. 30 with alternatives, as specific as possible given labor negotiation process, for achieving $2.5 in savings by July 1, 2012, with a detailed statement of the effects – pros cons — of the various options, with the savings going to address unfunded liabilities and other unmet needs such as transportation. [/quote] The difference between my motion and the Krovosa/Swanson motion is that most of our labor contracts don’t expire until July 1, 2012. By insisting on achieving those savings now, it is hard to see how staff can come up with options other than laying off around 20 employees, since we have already made most other acceptable reductions.
And we don’t even have a free hand with regard to who we lay off – according to our city attorney, we are constrained by our personnel rules. This raises the specter of a dysfunctional government and lower level of services.
My motion reflected my belief that we need to work within the framework of our labor negotiations to achieve the structural changes that we need in order to make the long-term adjustments necessary for a sustainable future.
Again, in my opinion, laying off around 20 people now is not going to achieve a fiscally sustainable budget, and I don’t see any realistic alternative if we adhere to the motion that was passed.
As the only council member to have actually voted against labor contracts – repeatedly and consistently – that failed to make the necessary structural changes required to achieve fiscal stability, it is hard for me to understand how I can be accused of “kicking the can” down the road. I am trying to be realistic and to commit to solving this problem in the only way that is legally open to us. I don’t think that the anticipated lay offs will solve our long-term sustainability problems.
[quote]Councilmember Greenwald said that she has been saying this for six years, but we are in the middle of a labor contract and there is little we can do.– David Greenwald[/quote]I did not say there is little we can do. I made a motion that described the strongest action that a city council has ever taken that could lead to fiscal sustainability.
“Obama has not proposed “taxing corporate jets.”
Don, you are wrong here. Obama wants to repeal tax breaks for corporate jets, which is a tax increase on corporate jets.
Jeff, a targeted tax break such as this is a tax subsidy to one class paid for by another. Why should I pay such a subsidy when I receive no benefit from a Corporate Jet. I also fail to see any benefit provided to society as a whole from this subsidy. I do receive a benefit however from a social safety net, not directly fortunately, but indirectly as a member of society.
You seem to equate removing a subsidy with raising a tax. The tax is already on the books, it has been artificially lowered to benefit corporations that own private jets over everyone else.
Sue Greenwald: “And we don’t even have a free hand with regard to who we lay off – according to our city attorney, we are constrained by our personnel rules.”
Are these rules mandated by State or Federal laws or are they a function of past decisions by the City Council?
[quote]Sue Greenwald: “And we don’t even have a free hand with regard to who we lay off – according to our city attorney, we are constrained by our personnel rules.”
Are these rules mandated by State or Federal laws or are they a function of past decisions by the City Council? — Mark West[/quote]This is what I was told by the city attorney last week. I don’t think the attorneys have thoroughly analyzed our constraints yet, but they say that lay-offs in reverse order of seniority is written into our personnel rules. I have asked for a more complete review of this issue.
Mark, so based on this logic, any tax deduction or tax credit that exists today that is subsequently disallowed would not result in what you would consider a tax increase? I think you are stretching to the point of breaking on this path. If the government removes a tax break that you can use, it will result in you paying increased taxes: hence the term “tax increase”.
You can make the case that you didn’t support that particular tax break, but removing that tax break certainly results in a tax increase. And, more importantly, it will impact the sales of jets and that will impact the jet manufacturers and Alcoa.
Was the corporate jet tax break (whatever that is) ever approved as a temporary measure with a sunset date?
Mark:
Also, you do receive a benefit when the jet business is more robust and hiring more people and paying more taxes.
DG: [i]”I disagree with you on the reserve policy. … you seem to be suggesting that it be used to brace what are going to essentially be permanent cuts and that makes no sense to me.”[/i]
I am saying that while we are in a recession–defined here by me as when city revenues are nominally increasing at less than 2% per year–I am okay with spending down the city’s general reserve fund from 15% to 10% the first year of the recession and from 10% to 5% the second year. I would have our policy be to replenish the reserve fund as soon as nominal revenue growth returns to 3% or more per year.
What would I suggest that reserve money be spent on?
1. Restore the $135,000 being cut (Tier 2) for a patrol officer. That is not a permanent cut, as you imply. It’s taking away a job just during this recession. It is making Davis less safe.
2. Restore the 2 part-time police records specialist positions ($58,000). By eliminating these sorts of lower lever staff jobs we are not only hurting the women who do them. We are taking cops off the street to fill out paperwork they now don’t have to do.
3. Restore the K9 and the police community services officer ($50,000).
The truth of the matter is that if the majority which voted in favor of the September plan has its way, we will be cutting a lot of city workers who do important jobs now and we will suffer for their loss.
I would much rather keep them employed by properly managing our total cost of compensation for all city workers who do vital work.
As you know, I don’t feel the same way about marginal firefighters, but only because we have 133% of the staffing we need to do the job. I feel very badly about any of them who would be fired when we go back to normal staffing.
DG: [i]”I suspect a good chunk of the cuts are going to come from reorganizing fire staff to 3 per engine …”[/i]
I’ll bet you a coffee drink of your choice that the City will NOT formally agree before October 1, 2011 to go back to 3 per truck staffing.
I’ll bet you a second coffee drink of your choice that the City will not have laid off any firefighters or fire captains by January 1. 2012 as a means of implementing a 3-on-a-truck firefighting staffing regime.
[i]… and some sort of cut for the management.”[/i]
I’ll bet you a third coffee drink of your choice that the City will not come to terms with its management personnel to take a cut in pay by October 1, 2011.
DON SHOR: [b]Obama has not proposed “taxing corporate jets.” He has, along with many others, proposed that tax rates for those wealthy enough to own corporate jets return to the levels they were at before the Bush tax cuts.[/b]
Here is what the National Journal reports: [quote] One of the ideas emphasized by Democratic negotiators and Obama, who mentioned corporate jets repeatedly during his press conference, is [u]changing how the government taxes company planes in order to gain more revenue[/u].
The shift may seem like a flip-flop, but the administration highlights the difference between changes in overall depreciation schedules, which help stimulate the economy broadly across many sectors, and [u]the special treatment of corporate jets, which depreciate for tax purposes two years faster than regular commercial aircraft[/u]. The administration maintains that favoritism is different from the broader question of economic stimulus.
While the revenue effects of the idea are relatively small – [u]it would save perhaps $3 billion dollars[/u] — its political value is high: The White House argues that few Americans would support cuts to government programs they consider vital while profitable corporations avoid making a contribution to deficit reduction.[/quote]
[quote]I suspect a good chunk of the cuts are going to come from …. some sort of cut for the management. David Greenwald[/quote]Put this one on your watch list, David.
it is not surprising that there are seniority rules for layoffs. They are written into many labor contracts to provide a measure of fairness to the process, and, I assume, to keep people with the most experience and highest wages from being tossed out to save money. If you wanted to change this system you could do it but if you wanted to be fair about it you would need to have a flat pay scale where everyone gets the same pay regardless of experience.
[quote]Elaine, I presume you have enough experience in life to understand the way human nature works. What will happen, of course, is the bargaining groups, given the choice between small cuts for all and layoffs for some will ALWAYS choose layoffs for some.[/quote]
Lets see where this all goes – the ball is currently in the city staff court. I heard some positive suggestions from city staffers and service clubs/citizens on ways to facilitate budget cuts. Interesting how city staffers were able to work hard with the aquatics community, and come up with a creative solution to the closure of Community Pool – which will save the city money and not seriously impact any one swim group. You have to give employees some time to digest what has just happened, and this process a chance to evolve into a collaborative process…
Up until now, from what I can tell, there have been no serious efforts by the City Council as a whole to get the city back on track to fiscal sustainability. Both Council members Greenwald and Heystek fought a valiant but losing effort at responsible budgeting, to no avail. Fast forward to the era of the “new kids on the block”, who are trying to send a clear message to city employees that it cannot be business as usual, and they do mean business. The pressure is on; the numbers are stark; the picture is not pretty.
Now comes the hard work; the real nuts and bolts of hammering out a plan that everyone can live with. Unfortunately pandering to the “disrepected”; cries that this cannot be done; foreshadowing of the ascendency of pure self-interest above shared sacrifice, is counterproductive to a collaborative process. I’m ever the optimist; a cheerleader by nature; and believe a can-do attitude is far more productive than a can’t do view. Just my take… 🙂
[quote]I am saying that while we are in a recession–defined here by me as when city revenues are nominally increasing at less than 2% per year–I am okay with spending down the city’s general reserve fund from 15% to 10% the first year of the recession and from 10% to 5% the second year. I would have our policy be to replenish the reserve fund as soon as nominal revenue growth returns to 3% or more per year. [/quote]
The hair on the back of my neck is standing on end at this suggestion – just a visceral reaction…
Sue: [i]By insisting on achieving those savings now, it is hard to see how staff can come up with options other than laying off around 20 employees, since we have already made most other acceptable reductions. [/i]
Can the contract negotiations be re-opened during the current contract period?
Rich: [i]given the choice between small cuts for all and layoffs for some will ALWAYS choose layoffs for some.[/i]
That has nearly always been the case. But someone told me that when the teachers voted on this, it was not a strong margin. Maybe some union members are seeing things differently:
[url]http://coronadelmar.patch.com/articles/newport-beach-lifeguards-accept-reduced-pension-benefits-to-avoid-layoffs[/url]
Jeff Boone: “Mark, so based on this logic, any tax deduction or tax credit that exists today that is subsequently disallowed would not result in what you would consider a tax increase?”
There are many tax breaks and deductions that [b]arguably[/b] offer a value to society as a whole, i.e. the home mortgage deduction, or a value only to a small class of people, i.e. the mortgage deduction for a second home. In either case, the underlying tax rate is on the books and the government has decided to provide a specific subsidy to a specific group alone. A change in the deduction only impacts those individuals who have previously benefited from the subsidy. Would this change impact the amount of tax they pay in the future, obviously yes. Would it change the underlying tax rate, not one bit. However, it could well be argued that if we get rid of all the special benefits/subsidies/tax breaks, that the underlying tax rate could then be decreased significantly for everyone (whether or not that would actually happen is a separate issue).
There is no societal benefit for a corporate jet subsidy. Without a corporate jet, management would have to use commercial flights like the rest of us unwashed, increasing the demand for commercial flights, and subsequently improve the financial health of the commercial carriers, and increase demand for commercial airplanes. The impact on Alcoa’s airplane based business would, in the long run, likely be a wash.
Those who believe that they just have to own a corporate jet will buy one anyway, with or without the subsidy.
[quote]By a 4-1 vote, Swanson, Krovoza, Saylor and Souza approved the DPOA contract last year. Did it include any reforms to the pension formula for new hires? Did it sensibly deal with retiree health care, such as discouraging early retirement or delaying the city paying for retiree health care until a retiree is age 65? Did it deal with the growth of total compensation? No.[/quote]
Thanks for the link, which confirmed what I was thinking. When that vote was taken, Wolk wasn’t even on board and Krovoza and Swanson were newbies on the City Council dais. The article you referred me to was written Aug 2, 2010 and the CC elections were in June, 2010 barely 2 months prior. To a certain extent, I think you have to give new City Council members a grace period to get their feet wet – certainly a mere 2 months is asking a lot.
From dmg’s article:
“My educated guess is that the new councilmembers are not going to make waves on this issue and they will punt the issue down two years for the MOUs. [b]This would be defensible from a fairness standpoint[/b] and put a huge burden on the next council to get things right or face possible bankruptcy.
That said, it looks like this council is less likely to be an agent of true change than their campaign rhetoric seemed to indicate. But we shall see over the long run how those promises hold up against the reality that they find themselves in. Now could be the time to draw the line in the sand, and if they did, the council and city staff would have to change very quickly the way they do business.”
[quote]Can the contract negotiations be re-opened during the current contract period?[/quote]
From what I heard last night, the contract negotiations can be re-opened TODAY – if and only if the bargaining groups are willing…
Mr. Toad: “If you wanted to change this system you could do it but if you wanted to be fair about it you would need to have a flat pay scale where everyone gets the same pay regardless of experience.”
Not necessarily. All you would need is to make pay based on merit rather than longevity, and determine your layoffs by job classification rather than the total number of employees in a department. I suspect that a large proportion of the needed cost saving could be found by reducing the number of supervisor/management position, rather than front line workers.
[quote]That has nearly always been the case. But someone told me that when the teachers voted on this, it was not a strong margin. Maybe some union members are seeing things differently:
http://coronadelmar.patch.com/…id-layoffs[/quote]
Yes, I saw this article this morning…
[quote] I suspect that a large proportion of the needed cost saving could be found by reducing the number of supervisor/management position, rather than front line workers.[/quote]
One of the speakers last night made just this point…
[i]”Can the contract negotiations be re-opened during the current contract period?”[/i]
Yes, but only if BOTH sides agree to do so. I can imagine that happening with some or even most of the bargaining units. However, I am very skeptical of a majority of members of any bargaining units–including the management group–agreeing to cut their own salaries and or benefits in order to save a few jobs of people with less seniority. In other words, just entering talks does not mean anything will change in these contracts.
Every MOU expires June 30, 2012. My optimistic hope is that before they expire, the City Council and the various bargaining units will agree to reforms which place us on a sustainable path BEGINNING July 1, 2012. My pessimistic expectation is that most of the bargaining groups, if not all of them, will be unwilling to accept the necessary changes.
That leads to one of two likely outcomes: the City holds on to its goals and it imposes new contracts, as state law allows; or the City caves and the contracts are not sufficiently reformed and services decline further and further as the City makes more and more small cuts, as it has been doing for the last 3 years and we accumulate more and more debt.
As things are now, Davis has an unfunded pension debt to its employees and retirees of $93,686,725. The City additionally has a retiree medical debt of approximately $54,000,000. If we don’t make serious changes in our labor contracts, those numbers will go up, until we reach the point of insolvency, or the City simply guts the parks department, the public works department and the police department.
[i]”I suspect that a large proportion of the needed cost saving could be found by reducing the number of supervisor/management position, rather than front line workers.”[/i]
There is a lot of truth in this. Davis (though not nearly as much as Yolo County) has a number of supervisors/managers who probably could be let go and the levels of service provided to citizens would not be noticed so much.
However, my observation–granted, it is from the perspective of an outsider, though I get information from city employees on this, as well–is that in some cases the people being paid as “managers” or “supervisors” are not managing or supervising any personnel at all. What has happened to them is that they reached a maximum in pay scale in their position. So in order to keep them happy, they were elevated to a higher sounding job title, even though their duties remained the same. With the better sounding title, they get much higher salaries (and pension). But we, as taxpayers, don’t get more productivity.
I don’t think it is exactly fair to fire someone like this. How can you blame an individual for accepting a promotion? But nevertheless, it remains the case that these are the sorts of deals where savings can be achieved without great harm to the corporation, but would cause great harm to the individuals in question.
On a human level, I don’t know how you crack this nut.
“in some cases the people being paid as “managers” or “supervisors” are not managing or supervising any personnel at all.”
I think it’s worse than that. I think in a number of cases, these people are managing or trying to supervise personnel and just are not competent to do it.
“I guess that “any sense of harmony” refers to disagreeing with the David Greenwald budget reduction plan. “
Sue you are being over-sensitive.
Here’s Crystal’s description: “Passing a balanced budget was easy, but Davis City Council members butted heads Tuesday night over the decision to find another $2.5 million in savings by Sept. 30.”
Rifkin: “is that in some cases the people being paid as “managers” or “supervisors” are not managing or supervising any personnel at all. What has happened to them is that they reached a maximum in pay scale in their position. So in order to keep them happy, they were elevated to a higher sounding job title, even though their duties remained the same.”
If this is true, this is an example of bad management. You don’t create a supervisory position just to keep an front line employee happy. If they have reached the limit of their job title they either need to qualify for and obtain a higher level position, leave for another opportunity or be stuck in the position they have. The supervisor who offered the promotion is the one who needs to be removed however, not the employee who accepted it.
[i]”If this is true, this is an example of bad management.”[/i]
Agreed. I should note the same kind of thing happens in large corporations, too. It’s why some companies have an ungodly number of vice presidents and presidents. I happen to own some ExxonMobil stock. I’ve noticed they have 12 different presidents and even more VPs. Here are some of the current Exxon VPs:
•M. W. Albers — Senior Vice President (1)
•M. J. Dolan — Senior Vice President (1)
•D. D. Humphreys — Senior Vice President (1)
•A. P. Swiger — Senior Vice President (1)
•S. J. Balagia — Vice President and General Counsel (1)
•L. J. Cavanaugh — Vice President-Human Resources
•K. P. Cohen — Vice President-Public and Government Affairs
•W. M. Colton — Vice President-Corporate Strategic Planning (1)
•H. R. Cramer — Vice President (1)
•T. M. Fariello — Vice President-Washington Office
•R. S. Franklin — Vice President and President, ExxonMobil Upstream Ventures (1)
•S. J. Glass, Jr. — Vice President (1)
•S. M. Greenlee — Vice President (1)
•A. J. Kelly — Vice President (1)
•R. M. Kruger — Vice President (1)
•P. T. Mulva — Vice President and Controller (1)
•O. K. Owen — Vice President-Safety, Security, Health and Environment
•S. D. Pryor — Vice President (1)
•D. S. Rosenthal — Vice President-Investor Relations and Secretary (1)
•R. N. Schleckser — Vice President and Treasurer (1)
•J. M. Spellings, Jr. — Vice President and General Tax Counsel (1)
•S. K. Stuewer — Vice President-Environmental Policy & Planning
•T. R. Walters — Vice President (1)
[quote]Sue you are being over-sensitive. Here’s Crystal’s description: “Passing a balanced budget was easy, but Davis City Council members butted heads Tuesday night over the decision to find another $2.5 million in savings by Sept. 30.[/quote]Yes David, I agree. Reporters frequently focus on form over substance.
[quote]Can the contract negotiations be re-opened during the current contract period?[/quote]As others have pointed out, the city cannot unilaterally reopen these contracts.