Analysis: A Look at the Measure O Op-Ed and What the Authors Don’t Tell the Public


Davis-Mailer-2014b-1On Sunday a co-authored piece that featured Lucas Frerichs and Brett Lee, among others, argued in favor of Measure O.

As most reading this know, Measure O would increase the sales tax in Davis by one-half cent from 8 percent to 8.5 percent for the next six years. As the authors note, “This modest increase in our sales tax rate will go into the city’s general fund to help pay for essential community needs that will be far more costly if further delayed.”

While the authors write, “These include repair of roads, sidewalks, bike paths and street lights; parks and landscaping projects; and water conservation projects,” most of the sales tax will go to cover increased pension and health care costs to employees, and most of the infrastructure needs would have to be covered with a separate parcel tax.

Whether that parcel tax even occurs is dependent on how the sales tax measure performs. Lucas Frerichs, during the long-range calendar discussion, suggested that the decision to put a parcel tax on the ballot has not been made yet.

The authors continue, “Revenue from this modest increase will provide a crucial $3.6 million per year toward our current $5.1 million structural budget deficit. Even with the passage of this increase, the 2014-15-budget plan now being drafted includes an additional $1.2 million in budget reductions, with likely further cuts yet to be determined.”

However, the city did lay out a potential cut list if Measure O passes and a larger one if Measure O does not pass.

As the authors note, “Without Measure O’s approval, much more severe cuts will be unavoidable. Basic services (including police, fire, parks and recreation) will suffer very severe reductions of up to 12.5 percent across the board, or 25 percent if public safety programs are left intact. There is no question that Davis will become a less safe and less pleasant place to live if Measure O fails to pass.”

The city council has been criticized in recent years for failing to deal with the structural deficits. Indeed, a key factor in the article, “How We Got Here,” was the council’s reluctance to take an aggressive approach, both before the economic collapse and after.

Nevertheless, as our analysis last week noted, since 2010, the city council has gotten more serious.

The authors note, “The current City Council recently restructured all employee labor contracts for major cost savings and long-term fiscal sustainability. City employees are paying significantly more toward their retirement. The savings from the restructured contracts will amount to approximately $7 million over their duration.”

They continue, “The city of Davis also has reduced its workforce by 22 percent, or 103 full-time employees — going from a high of 464 employees in 2008 down to 361 in 2014 — to help address the city’s serious fiscal problems.”

They add, “The cuts made by the City Council over the past several years total approximately $11 million in savings and have brought our spending much more in line with our revenues. But the longer the city defers major road repairs, parks maintenance and water conservation projects, these essential activities will become much more costly in the future.”

What concerns me in this argument is the following: (1) as the council candidates acknowledged last week, while city employees are fewer in number and are picking up more of their costs, the costs to employ those employees has gone up to provide them with similar levels of benefits; (2) Measure O really does not deal with major road repairs or parks maintenance – it allows the city to pay for the increased costs of providing those benefits to the employees.

This issue is not really addressed to the public and it will be detrimental if the city moves toward a parcel tax.

The other side of the coin is the economic development plan.

“We recognize that increased sales taxes are only a temporary (yet necessary) solution,” they write. “The City Council and the city are focused on generating new revenue from new sources. As a longer-term solution to the city’s current challenges, Davis is aggressively moving forward with economic development to generate additional revenue.”

“How are we doing this?” they ask. They respond: “We have increased collaboration with UC Davis and regional research institutions to provide a highly trained workforce and increased entrepreneurship in this city. We have worked to promote existing technology and innovation companies locally (e.g., Marrone Bio Innovations, FMC Schilling Robotics, HM Clause, Arcadia Biosciences). We also have helped companies locate in Davis (e.g., DMG Mori-Seiki, Expression Systems, BioConsortia and Agrinos).”

They continue, “The city has developed strategies for increased investment for business accelerators and research facilities in conjunction with UCD and local entrepreneur organizations. This includes our ongoing support of Davis Roots, which just graduated its second class of startup companies, including Barobo and Fishrock Laboratories, and introduced its incoming third class.”

Additionally, they add, “Perhaps most importantly, we have worked to identify areas for continued growth of existing companies to keep businesses here in Davis. There is also a movement afoot for the potential development and creation of an innovation center — not simply a typical business park — where homegrown companies can expand, and we will further foster our innovation economy.”

But this doesn’t paint a full picture. They fail to mention, at the same time, the council was slow to act on some of these challenges. The failure to plan for growth of businesses led, last summer, to the loss of AgraQuest and the failure of Mace 391, of which both Lucas Frerichs and Brett Lee would vote against.

While it is natural to put one’s best foot forward in these articles, the failure to acknowledge failures will lead to questions by the more observant public.

They close with a strong argument that ameliorates concern that Davis will tax itself out of competitive business situations through increased taxes.

They write, “Many cities have implemented similar local sales tax measures: Sacramento’s sales tax is 8.5 percent; San Francisco and Berkeley have higher rates. The Great Recession of the past several years has resulted in major declines in local sales tax revenue. Also, the state of California’s ongoing shift of responsibilities to local governments, concurrent with shifting property tax revenues away from cities through the abolition of redevelopment agencies, makes it crucial and necessary to increase local funding for core city functions through a temporary sales tax increase.”

They accurately note, “Of all the choices for raising revenue, a small increase in sales tax puts the least amount of pain on our residents’ wallets, because visitors to Davis also will be contributing when they shop here. A half-percent sales tax increase amounts to just 50 cents on a $100 purchase.”

“It should be noted that, despite some arguments to the contrary, Measure O will not push Davis consumers to make major purchases — such as autos, for example — outside the city. Under state law, such purchases are taxed according to one’s hometown tax rate, not the rate where the purchase is made,” they conclude. “This modest sales tax increase will have little effect on the local Davis business climate, while greatly helping to maintain the high quality of life we enjoy here in Davis.”

Overall, it is a decent argument. Missing from it is a history of how we got to this point, although they do write about the changes they have implemented. The most problematic area is that they have conflated Measure O with the parcel tax in terms of what it funds.

Measure O primarily covers increased labor costs while the parcel tax would primarily deal with roads, parks and other infrastructure issues. We believe this will make it far more difficult for the city to pass a parcel tax. Already, Lucas Frerichs seems to be moving away from that anyway, but if that’s the case, how do infrastructure needs get met?

—David M. Greenwald reporting


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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17 thoughts on “Analysis: A Look at the Measure O Op-Ed and What the Authors Don’t Tell the Public”

  1. Michelle Millet

    “These include repair of roads, sidewalks, bike paths”

    Good luck passing a parcel tax to pay for these in fall by a 2/3 majority after people have been told that this is what the sales tax is paying for.

    1. Davis Progressive

      agreed. this is apparently lucas, why is he insisting that the campaign focus on funding things that measure o does not fund?

      measure o funds the increased cost of employee compensation, not sexy but unless we want to lay off tons of employees and cut services – necessary.

      1. Michelle Millet

        I don’t know whose idea this was, but I think its a mistake.

        It was my understanding that the reason council did not approve a larger sales tax-which would have generated some money for roads maintenance- was because they were going to address this with a parcel tax in the fall.

        Getting a parcel tax to pay for roads maintenance passed by a 2/3 majority was going to be hard enough already. Trying to do it, 5 months after a sales tax increase, which people were told was going to pay for roads, is going to make it much more challenging.

  2. Mark West

    “This modest increase in our sales tax rate will go into the city’s general fund to help pay for essential community needs that will be far more costly if further delayed. These include repair of roads, sidewalks, bike paths and street lights; parks and landscaping projects; and water conservation projects.”

    It is difficult to accept anything that these authors have to say when they lead with this piece of fiction. The sales tax increase will predominantly be used to pay for increasing compensation costs, not roads, sidewalks, etc. I am extremely disappointed that two sitting members of the City Council would put their name to this op-ed, as they both clearly know that the statement is at best misleading. This is yet another example of why there is so much distrust between the public and our City’s leadership.

    What is completely baffling to me is why our leaders don’t think we can accept and understand the truth?

  3. South of Davis

    Mark West wrote:

    > It is difficult to accept anything that these authors have
    > to say when they lead with this piece of fiction.

    They NEED to lead with “this piece of fiction” since the tax would have no chance of passing if the ballot said:

    “This modest increase in our sales tax rate will go into the city’s general fund to help pay city workers most of who make more than you and pay for their Cadillac heath care plans that are better than the health care plans that most of you have”…

    1. Michelle Millet

      Or we could have gone with, “despite that fact that we have laid off 100 employees and renegotiated employee contracts so that employes are paying more towards their retirement and health care coverage employee costs have continued to rise, and while employees are paying more its not enough to cover these increased cost, a lot of which our out of the city’s control. The sales tax will go to cover these cost”.

      1. Mark West

        ” a lot of which our out of the city’s control.”

        This is another of the pieces of fiction that keeps popping into the debate. The costs to the City are entirely within the control of the City, it just requires better contract negotiations and control over the continued expansion of total compensation.

        1. Davis Progressive

          that’s a more interesting debate. i still think you can’t go impasse on seven bargaining and expect to be able to win the debate at the end of the day.

        2. South of Davis

          Mark wrote:

          > The costs to the City are entirely within the control of the City

          True, but they are “out of the control” of ANY elected official that ever wants to get re-elected or elected to higher office in a union run/one party area of California.

          For most of my life the system of unions giving more and more money and campaign help to politicians in return for higher and higher pay and more and better benefits worked great.

          I’m just starting to see many on the left start to ask why am I voting for the Democrats who are cutting aid to poor and other programs so they can pay more and more union members more per year than the Governor of the state (before they retire with a retirement package worth MILLIONS)…

          1. South of Davis

            Michelle wrote:

            > It is my understanding that is illegal for local agencies to
            > defer or reduce their required contributions to the CalPers.

            The local agencies are allowed to “reduce” contributions to CalPers if the workers “increase” their contributions by an equal amount.

            Even if the workers made 100% of the contribution they should be happy since the GUARANTEED ROI of a California union pension is better than 99%+ returns regular people get investing their own money (that does not come with any kind of GUARANTEED payments after you retire).

  4. Dan Carson

    I appreciate the fair-minded critique of the Yes on Measure O op-ed piece that ran in the Davis Enterprise on Sunday. I agree with some of your points, but I disagree with your assertion that “Measure O really does not deal with major road repairs or parks maintenance” and only relates to paying for increased costs for city employees. You additionally assert that the op-ed erred because its authors “have conflated Measure O with the parcel tax in terms of what it funds.” I think all of those statements are in error.

    The fact of the matter is that if Measure O fails, leaving the city with an immediate $2.7 million budget hole in 2014-15 and a $3.6 million gap to fill in subsequent years, all bets are off. The City Council could choose to balance the books with deep cuts entirely to city operations, but it might also choose to scale back road and other maintenance and infrastructure projects. No one can know what will happen for sure, in part because we don’t even know who will be making that decision. Two seats on the City Council are also up for a June 3 vote.

    A little review is in order here. When the City Council wrestled in January and February with how to address the city’s estimated $5 million structural budget shortfall, it considered a two-part package comprised of (1) a sales tax providing general support for city services and operations and (2) a parcel tax devoted to deferred maintenance and infrastructure. There was lots of council discussion about what level of taxes to levy, what kind of parcel tax to adopt, and what budget items would be funded from the different funding sources. At the end of the day, however, here is what actually happened:

    1. The council approved only the sales tax measure for June and deferred action on a possible parcel tax measure to November or some other future date.

    2. The base budget being prepared by the city manager included another $1.2 million in budget reductions in April, but left untouched the $2.5 million included in the base budget for the road improvement program and another $500,000 for water conservation infrastructure projects. You can see this for yourself in the footnotes to the five-year forecast presented to the City Council at its meeting on December 17, 2013. (See Attachment B, page 1 at

    If Measure O fails, the city manager has provided a blueprint of the types of cuts to city operations that he is building into the budget plan that will be finalized in June. And that blueprint makes it clear that the city would have to make difficult reductions in services that every Davis citizen will see.

    But those cuts in city operations will not necessarily be the only choices that the City Council could make if Measure O falls short. In January and February, the City Council openly and publicly discussed the possibility that its newly inaugurated road improvement program – money already built into the city budget — might also have to be severely scaled back if it did not have enough revenue to close the structural budget shortfall.

    The op-ed piece that ran Sunday fairly and accurately put voters on notice that these important projects are also at risk if Measure O fails.

    One last point: A parcel tax may still need to be considered even if Measure O passes in order to undertake a more ambitious effort to address city deferred maintenance and infrastructure projects. But if Measure O, a simple majority-vote measure, is voted down in June, in my opinion, the new City Council will have to think long and hard about putting a parcel tax requiring two-thirds voter approval before city voters anytime soon.

    1. Michelle Millet

      A parcel tax may still need to be considered even if Measure O passes in order to undertake a more ambitious effort to address city deferred maintenance and infrastructure projects.

      Dan, thanks for your response and clarification. I do realize that some of the money generated from the sales tax would go toward road maintenance, but understand from council deliberations that a majority of the funding for this would and could not be covered by .5% sales tax increase, that instead a separate parcel tax would be needed if we wanted to cover the $10million dollar estimated cost of road repair. So I don’t understand why we are now saying that we “may” need to consider a parcel tax to cover theses costs. I understand that the longer we wait to maintain the roads the cost to do so go up exponentially. Besides a parcel tax what other short term solution is there?

  5. Dan Carson

    Here is one possible scenario that I hope addresses your question as to how the road improvements could still be tied to a parcel tax in November. In January and February, the council considered the option of expanding the existing landscape and lighting parcel tax instead of adopting a second new parcel tax. That would allow parcel tax money to be used in lieu of General Fund support for certain parks operations. That, in turn, could free up General Fund monies ow used for the support of parks for road and other infrastructure maintenance and improvements. The freed-up revenue stream could be used , for example, for repayment of bonds to front-end infrastructure improvements. We don’t know what approach will be taken because the City Council has not made that decision yet. Lots of options are possible if Measure O passes. If it fails, our options for addressing our fiscal problems narrow considerably.

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