New Year’s Day is a time of rebirth, where we remember the past year and prepare for the new world ahead. We like to think of it as a blank slate, but I’m always cognizant of the U2 song from now over 30 years ago, “All is quiet on New Year’s Day… A world in white gets underway… Nothing changes on New Year’s Day.”
I have shared with many individually some of my concerns going forward. I am going to lay out those concerns here.
The first concern I have is on the fire issue. In 2013, the city council pushed through several reforms including boundary drop, increased response time goals, staffing reductions and the shared management agreement with UC Davis. The last two were approved on 3-2 votes.
However, there was tremendous struggle to get the last two changes through. Not only were they 3-2 votes, but the firefighters’ union pulled out all of the stops from walking precincts to forming an astroturf group, Friends of the Davis Firefighters, to picketing city hall to trying to get the city manager fired (which ultimately led the city manager to leave) to getting ten elected officials to co-sign separate letters opposing shared management.
Going into 2015, we know the following. First, we know that the firefighters have engaged in work slowdowns in response to these changes and the installation of UC Davis Fire Chief Nathan Trauernicht, in charge of the shared management services Along the same lines, Davis firefighters’ union president Bobby Weist, along with statewide California Professional Firefighters President Lou Paulson, attempted to pressure UC Davis to end the agreement.
The critical date will be July 1. That is the date after which the agreement rolls to December 31, 2016, if no one opts out of the agreement. On the city side, there are at least three strong votes to continue the agreement. However, it appears the union is attempting to play hardball to convince UC Davis to end the agreement on their end.
With concerns about employee morale and firefighter morale being at epic lows, it will be interesting to see how the new city manager attempts to remedy the situation – will he shore up support for Mr. Trauernicht or will the efforts to improve morale seek to undermine it and return the city of Davis fire to the command of a city-only chief?
This figures to be a very intriguing but mostly behind-the-scenes battle this year.
It took the Vanguard a number of years to get the public and the council’s attention on road situations. For years, the Vanguard warned that road repairs were under-funded and would drive down the quality of the roads. Finally, in 2011, the council budgeted $1 million in general fund dollars into road repairs.
By 2013, the city hired consultants from Nichols who estimated that the city faced at least $154 million in deferred maintenance on roads, figures that would more than triple if the city did not act. The council after considerable discussion finally opted for a modified plan that would call on the city to spent $25 million in two years up front and then another $3 million per year – but even that level of spending was only expected to slow down the rate of pavement deterioration.
To get that money, the council was to put a measure on the ballot for a parcel tax that the city would bond against. After much discussion, however, there is no parcel tax planned for the ballot and the city is still figuring out the terms, amount, and what would be funded by such a tax.
In the meantime, the council has been able to secure about $4 million per year in general fund money for roads – a huge accomplishment. In addition, Dan Carson, a member of the Finance and Budget Commission, believes that the “inflation assumptions contained in the Nichols report significantly overstate the costs the city would incur in the future to fix its streets and bike paths.”
Updating the cost projection model that Nichols used, Mr. Carson finds that “the original Nichols report overestimated what it had identified as the ‘budget needs’ for the road and bike path work by as much as a third.”
He argues, “Rather than facing a $154 million bill to do the needed work, the ‘budget needs’ may be as low as $103 million, or more than $50 million less than estimated by Nichols.”
The Vanguard does not necessarily disagree with Mr. Carson, although we argue that evaluating what will happen with asphalt prices over a 20-year-period based on two years of data is problematic.
At the end of the day, whether the true cost is $100 million or $150 million, or more realistically somewhere in between, those are big numbers that we do not have. Our concern is that, with revised projections, the council’s urgency to pass the needed parcel tax will decline and the public’s desire to increase taxes will dissipate.
In the meantime, with the renewal of winter rains and winter weather this year, we are seeing a large number of potholes and other cracks in the pavement – conditions are rapidly worsening.
In November, the city and, in particular, Mayor Dan Wolk were pumping the “unexpected good budget news,” as the city ended up with nearly $850,000 in additional revenue.
The mayor wrote, “Like other communities, we were hit hard by the Great Recession, which resulted in cuts in city services, difficult concessions from our employees, and a painful 24 percent workforce reduction. But with the strength in our property and sales tax revenue — mirrored at the state and regional levels — I believe our community has begun to emerge from the downturn.”
“We are on our way to eliminating our structural deficit,” the mayor continued. “Our general fund deficit — a chronic imbalance between revenues and expenditures — was estimated to be about $1.5 million this fiscal year and was forecast to drop in the coming four years. However, the improved financial picture means we have immediately taken a large bite out of the deficit and are moving toward eliminating it completely.”
While this is good news, there are concerns. For example, Mayor Pro Tem Robb Davis expressed concern that these were more one-time numbers due to “pent-up demand during the recession.”
He also spoke about PERS (Public Employees’ Retirement System) and OPEB (Other Post-Employment Benefits). “The good news is we’re in a place where we’re addressing those long-term liabilities. The time horizons are long – 30 years – but we’re addressing them,” he said. “But we’re putting away money in a way in which our actuary thinks is a reasonable approach.”
“But,” he said, “the point is that between 2020 and 2021… between OPEB and PERS we’re going to need to be coming up with an additional $4 to $5 million. Additional on top of today. But that’s a hefty piece of money. We are in a situation where we need this money.”
“We have the road backlogs, we have Bob Clarke who is ready to put out a bid on the study of other infrastructure – especially building replacement costs,” he added. “When we begin to finally internalize those things into our normal budgeting process then we can start breathing a little bit.”
As I mentioned in yesterday’s preview article, we are facing renewed employee negotiations and, after being able to gain critical concessions in 2012, we are now concerned that improved economic conditions will put pressure on city hall – already cognizant of low employee morale – to use these numbers as justification to increase employee compensation at a time when the city’s structural deficit does not adequately reflect the city’s fiscal condition.
Finally, as we have noted 2014 was a banner year on the economic development front. We have discussed innovation parks, but 2014 saw the emergence of a vibrant start up culture embodied by the efforts of the Davis Downtown and Jumpstart Davis. As Mayor Wolk and Mayor Pro Tem Davis write, “We continue to be excited about a variety of grassroots efforts — Davis Roots and Jumpstart Davis, for example — that encourage and foster an innovation and startup culture in our community.”
Chief Innovation Officer Rob White also trumpeted the efforts of the Davis Downtown and other community leaders who helped launch “the creation of the Jumpstart Davis monthly networking events and the soon-to-be-opened downtown co-working space are adding resources for entrepreneurs and startups.”
But 2015 is fraught with pitfalls. Staff projects two innovation parks plus Nishi could go on the ballot by Spring 2016. But the Vanguard believes that putting park against park is asking for trouble. Will there be a process to determine who goes first? How will the city deal with expected push-back on traffic and housing impacts? 2015 will be a key year in determining how this process unfolds, and by this time next year we could be three or four months away from a public vote.
Moreover, one of our concerns is that the perception that the city is no longer in fiscal crisis will lesson the public’s appetite for economic development and building on the periphery. We believe strongly that the city’s finances remain fragile and we are vulnerable to future downturns without stable revenue sources.
We are again at an interesting crossroads in time, as we have the chance to move forward or the chance to backslide into business as usual in 2015. Will 2015 be the year we took the decisive step forward or the year we wiped out four years of progress? Stay tuned to the Vanguard for further details.
In the meantime, Happy New Year!
—David M. Greenwald reporting