In typical Davis city tradition, the city council is up against a deadline tonight – they have to act to put a sales tax measure on the ballot or by state law they would have to wait until June of 2016. We can quibble that the city should have engaged the public process sooner. They waited until the last moment to deal with this matter, and anyone who wishes to believe those things will have justification.
The bottom line, though, is that the city is $5.1 million in the hole for 2014-15, and that number will only increase in the coming years. The city has worked hard to reduce its workforce by 20%, cutting $5.2 million from the budget in the process and another $5.8 million through its last round of MOUs.
The public officials are said to have very little stomach for more cuts and frankly, as we have suggested previously, the public bears responsibility for the fiscal mess just as the public officials and city employees do. We have asked the city employees to take pay cuts while they have been asked to do more with less compensation, and now it is time for the public to step up to the plate.
For six years the city has balanced its budget through cuts and attrition and this is the first time the city goes before the voters asking for revenue increase.
The sales tax measure would generate around $5.4 million in revenue. That is enough to cover the structural deficit. However, the city staff has placed before the council a second proposal for a $130 parcel tax. While that could go on in November, its timing has been undetermined.
We suggest the city council wait for a little bit on that. We do not see any real possibility of the parcel tax going on for June – city staff has told council they need more time, and that buys time for the council to look at its options.
A sales tax has a huge advantage over all other options because it requires a simple majority. Even with pushback from the anti-tax forces and the business community, the city figures to easily pass the sales tax and address the short term structural needs.
Why complicate matters by putting two tax measures on the ballot at the same time – even if they end up on different elections – one in June and one in November?
Recent history suggests it might be difficult to pass a parcel tax. It requires a 2/3rds vote. That means just 34% of the voters can block it. Had the water initiative required a 2/3rds vote, it would have been defeated.
The school district managed to pass all five of its parcel tax measures between 2007 and 2012, but at times it got hairy for them when they requested new money. Measure C passed by the skin of its teeth in 2011. The city lacks the built-in PTA support network and it lacks the sympathetic call of “for the children.”
Waiting gives the city additional options. The Enterprise last week called for the city to look into outsourcing options. The Chamber survey lists about $2.5 million in potential cuts. Both of these proposals at this time seem premature and potentially politically hazardous. We cannot delay on the sales tax measure.
But what if the city passed the sales tax measure and then found $2.5 million in additional cuts that could go into infrastructure like roads and parks? The city might then be able to pass, instead of a $125 a year parcel tax, another $50 one like the previous parks tax.
Furthermore, waiting until past November could allow the city to see if the public is willing to support a business park. We expect to see Mace 200 on the ballot for November. While the expected revenue boost would be further down the line, three to five years at minimum, the commitment showed by both city and public to address revenue issues might give voters additional confidence that things were moving in the right direction.
With all of that in mind, the city, following the November elections, would be able to draft an initiative that it could put on as an all-mail ballot in the Spring of 2015 that could help the city with its broader infrastructure needs.
The advantage of that strategy would be as follows: (1) separation in tax measures, (2) time to study the feasibility of additional cuts, (3) time for the city to get a business parks proposal approved, and then going into a parcel tax election with certainty of needs and a fuller backing of confidence.
But there are still two additional pitfalls that the city has to work out tonight.
First, the city has to make a commitment that tax money goes to fill needs, and does not go to increase the salary and compensation of city employee groups. We see no problem with the notion that, if the economy improves, employees get a cost of living adjustment. But what we do not want to see is what happened in 2005, when no sooner had the voters approved a half cent sales tax as an emergency measure when the council turned around and gave it to the firefighters in a massive 36% pay hike from 2005 to 2009.
Second, the city needs to put the water initiative on the ballot. It is unclear at this point what such an initiative would even do. The council would likely simply be able to put a new Prop 218 process out with new rates. But why leave that process hanging a moment longer than necessary? We believe the initiative, especially in a time of drought, will be soundly defeated, so get it over with and let the voters decide in June.
Bottom line, we urge the council to put the full three-quarters cent tax measure on the ballot for June, an advisory measure that makes it clear what the voters want and do not want, and the water initiative in June, as well.
The council should postpone action on the parcel tax, and deal with finding ways to further streamline city services and allow the voters time to decide on a business park. The council should revisit the parcel tax issue in November.
—David M. Greenwald reporting