By Dan Carson
The budget package officially released late Friday afternoon by the City of Davis is, in a number of respects, a placeholder. (The Davis Vanguard provided its readers with the city manager’s summary of the plan on Saturday.)
Released as it was on the eve of a critical city election, the document does not attempt to offer a resolution of the structural budget shortfall affecting its $48 million General Fund. It simply plugs in $4 million from the city’s carryover reserve funds to balance the books for one more year. Under this scenario, the city’s General Fund reserve fund would become critically, and dangerously, low. This, of course, will wisely not be allowed to happen. What will happen instead?
If Measure O passes next Tuesday, city staff will quickly drop in the $2.7 million in revenues that the half-cent sales tax increase measure will generate in 2014-15. (A full year of revenues, $3.6 million, is projected to come the following year.)
The City Council will deliberate, probably in a few weeks’ time, on how the relatively small remaining structural budget shortfall of about $1 million should be addressed. The options include fine-tuning revenue estimates to account for a still-improving city revenue base, adopting further budget efficiencies, shifting special funds around, or some combination of the above. Exactly what should happen next is not spelled out in the new spending plan, however.
After knocking on hundreds of doors in support of the measure, I am convinced that Measure O will pass, and pass easily. But with no actual poll data to go on, and probably a low-turnout election in the offing in an atmosphere of great concern over city finances, you can never be sure about how things will turn out.
The budget plan does not clearly spell out exactly what would happen if Measure O loses. If it does lose, however, be prepared for months of chaos and uproar about how city finances can be rearranged to limp through 2014-15.
The city’s fiscal managers will dust off the $4 million in cuts remaining on its original list of $5 million in budget actions to see what will fly with the City Council. This includes proposed reductions in parks, recreation, police and fire services; staff layoffs; further fee increases; and a host of other severe budget-balancing actions. This will provoke every special interest group in the city will rush down to City Hall and agitate to save its programs and payroll.
Although City Council candidates have talked (and I think appropriately) about the need to scale back compensation for city staff, it would be just about impossible to deliver major givebacks from city contracts in time to bail out the 2014-15 budget. City labor negotiations are so procedurally complex and time-consuming, with state officials ready to pounce on any misstep, that it could easily take a year or more to hammer out fresh concessions needed to help close the budget gap, even with the real threat of layoffs looming. The pressure would be great to save city services and instead scale back infrastructure commitments, as has happened before.
A placeholder budget relying on spending down the city’s budget reserve could be put in place temporarily to meet the city’s legal obligation to pass a budget, but the real work of addressing the structural budget shortfall would go on well into the summer.
This would become the responsibility of a City Council that will include at least one, and possibly two, new members. As I’ve commented here before, the dynamic of the City Council could be significantly impacted by who wins those two council seats. There is no way to know for sure what they will do to solve the problem if Measure O goes down the tubes.
Just one more thing you may want to think about before you cast your ballots on Tuesday.
Dan Carson is a member of the city Finance and Budget Commission and a supporter of Measure O. This article represents his viesw only and does not necessarily represent the views of any other members of the commission.