Enterprise Endorses Yes on Measure O, No on Measure P with Qualifications

Davis-Mailer-2014b-1Amid signs of a flagging campaign, Measure O got a boost on Tuesday when the Davis Enterprise endorsed the half-cent sales tax measure – albeit tenuously.

“Davis voters have an opportunity to say yes to a relatively painless tax and stave off deep cuts to our city’s workforce,” the editorial wrote. “Through gritted teeth, we recommend a yes vote on Measure O, which asks voters to extend an existing half-percent sales tax increase and impose a new half-percent tax, through Dec. 31, 2020.”

If approved, Measure O would increase the existing sales tax rate from 8 to 8.5 percent, which will generate an estimated $3.7 million annually to balance the budget funding necessary services. The paper notes, “While city literature says the tax will go to parks, landscaping and street maintenance, it’s actually destined for the general fund, which is suffering from a $4.99 million deficit.”

It adds, “The general fund has been wracked by the cost of unsustainable pension and health benefits for retirees. Street maintenance is due to be addressed in a parcel tax proposed for the November ballot.”

“Have our city leaders been good stewards of our money?” the paper pointedly asks. “Past councils gave away the store to employees, offering rich pension and health benefits that could lead our city to bankruptcy if we don’t start moving much faster down a path to economic sustainability.” However, they add, “This current council has done a relatively good job of getting employees to bear a greater share of these spiraling benefit costs, but there’s much more to be done to right the ship.”

For some reason the paper adds, “Add to that the ill-advised expenditure of $400,000 — with up to $600,000 more authorized — on a public power study, and we wonder whether our city leaders have their priorities in order. Why now for that study?”

With that said, however, the Enterprise argues, “ We see no good to come of carving 12 percent out of all city departments — including police and fire — or 25 percent out of non-public-safety departments if those two areas are protected. This is on top of a major reduction in the municipal workforce — 22 percent — during the past several lean-budget years.”

They continue, “And of all the choices for raising revenue, a sales tax puts the least amount of pain on our residents’ pocketbooks. Visitors to town — and there are more and more each year — will help us bear this expense. And after all, a half-percent hike amounts to only $5 on a $1,000 purchase.”

In conclusion they write, “We Can Afford this, Davis. It will buy our city leaders some time to continue getting our fiscal house in order. And that is absolutely necessary.”

No-on-P-bannerPaper Argues “very real possibility that Measure P, which asks the city to toss out its current water rates, will pass”

Their solution: Throw Out CBFR, Vote Down Measure P

The Enterprise writes, “Voters are worried about the rising cost of water, and they’re confused about the consumption-based fixed rate that will take effect in January.”

However, they argue, “We do not support Measure P. And we absolutely do not support scuttling the water project, as many of the initiative’s supporters fervently hope. We, and all informed residents of Davis, recognize the water rates must generate enough revenue to finance, build and operate this project. Rates must go up.”

However, at the same time, “We are worried about the political ramifications of pressing on with a confusing rate structure that continues to generate complaints of unfairness.”

So, they offer their own solution.

First, “Vote no on Measure P. Passing this initiative will guarantee new rates, sure, but every other consequence is a negative one. Davis could default on its obligations to the surface water project. The city also could miss out on opportunities for extremely low-interest loans that could cost the ratepayers more than $100 million in long-term project costs.”

“Do you want to see your water bills truly skyrocket in the coming decade? If so, vote yes on P,” they write.

Second, “Move forward with a plan floated by city staff last month, and supported by the council, to ask the newly constituted Utility Rate Advisory Committee to review a new series of rate changes based on revised revenue requirements for the project.”

They write, “In the year since the council approved the current rates, Davis’ share of the water project has dropped from $114 million to $107 million and interest rates are lower than projected. One more bright spot: Davis still may qualify for 2-percent long-term financing from the state if all threats to the project (lawsuits, initiative challenges) are removed.”

They continue, “If work begins now — a month before the election — on a new rate structure, then a new ordinance could be ready for council action in June, a Proposition 218 hearing could be held in late July and rates could take effect in August. That timeline would mean no threat of default because the city would be collecting enough money to meet its responsibilities to the water project.”

“Should those rates continue to be based on the controversial CBFR model?” they ask. “We say no.”

“Experts say CBFR guarantees the fairest rates for the greatest number of utility customers. While that may be true, the community doesn’t trust them. And sometimes, the most politically expedient path is the right one to take,” they paper continues. “We remain uncomfortable with basing part of a future year’s rates entirely on summer usage. And, figures show there wouldn’t be a huge difference if rates were calculated on a traditional 12-month base instead. We encourage the new advisory committee to look seriously at this option.”

The bottom line: “We know how much money we have to raise to cover all of the water project costs. Ratepayers will be shelling out substantially more in the coming years no matter what structure we agree on.”

They conclude: “Measure P does not deliver salvation from higher rates. Instead, it could result in costly bridge financing to avoid default penalties and increased interest rates long-term. It’s not the way to go, Davis. Vote no on Measure P.”

—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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7 Comments

  1. Davis Progressive

    how can a paper write a weaker endorsement of two measures (in one case a weak opposition)?

    once again everyone brings up the pou which would add at most $60K per year to a budget imbalanced in the millions – quit feeding this insanity. we get it that you don’t think the city should do this, but in terms of the millions in the hole, this is a drop in the bucket.

    ” We see no good to come of carving 12 percent out of all city departments — including police and fire — or 25 percent out of non-public-safety departments if those two areas are protected. This is on top of a major reduction in the municipal workforce — 22 percent — during the past several lean-budget years.””

    this was the point that they needed to expound on – what is the impact if this fails? answer? ugly. davis will no longer resemble davis. but no one wants to go there.

  2. Davis Progressive

    as for measure p…

    The Enterprise writes, “Voters are worried about the rising cost of water, and they’re confused about the consumption-based fixed rate that will take effect in January.”

    what evidence do we really have that this is true? the voters passed measure i comfortably. the prop 218 was not heavily opposed. so what evidence do we have…

    However, at the same time, “We are worried about the political ramifications of pressing on with a confusing rate structure that continues to generate complaints of unfairness.”

    what is the political ramifications – it has already been passed. people will get used to it. it’s not that complicated.

    “Experts say CBFR guarantees the fairest rates for the greatest number of utility customers. While that may be true, the community doesn’t trust them. And sometimes, the most politically expedient path is the right one to take,” they paper continues.

    bullspit. the community doesn’t trust them? evidence? mcnoughton and dunning don’t trust it, i challenge anyone to find evidence that it goes deeper than the malcontents that have tried to thwart the project.

  3. Davis Progressive

    this is the point that they should have highlighted, not the bs about cbfr that they reconstitute.

    “Vote no on Measure P. Passing this initiative will guarantee new rates, sure, but every other consequence is a negative one. Davis could default on its obligations to the surface water project. The city also could miss out on opportunities for extremely low-interest loans that could cost the ratepayers more than $100 million in long-term project costs.”

  4. Michelle Millet

    “Experts say CBFR guarantees the fairest rates for the greatest number of utility customers. While that may be true, the community doesn’t trust them. And sometimes, the most politically expedient path is the right one to take,” they paper continues.

    If the rates are fair then the public not trusting them is NOT a good reason to change them. Instead I would encourage more community engagement.

    1. Davis Progressive

      the enterprise’s view here is ridiculous, fortunately they are smart enough not to oppose it. i was on the fence for much of the campaign worrying about costs, but we made the decision to go for it, now we have to do it.

  5. hpierce

    My thought is No on P. If P fails, as an initiative, the City can change the rate structure at any time in the future, subject to a 218 process. If P passes, there may well could be negative consequences, which I don’t look forward to.

    1. Matt Williams

      Not even subject to a 218 process, pierce. If the rates are going down or sating level, no 218 process is needed/required.

      Vote No on P. Don’t subject Davis to $25 million to $60 million of default liability. If the rates need to be tweaked, and even I the author of the rates believe they need tweaking, do it through the URAC (Utility Rate Advisory Commiision) process. No risk and lots of reward.

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