Davis has a strong slow growth legacy embodied within the passage and renewal of Measure J/Measure R, which requires citizen votes for the conversion of agricultural land to urban uses. However, over the course of the last two years there has been a school of thought emerging, believing that the city needs to develop the capacity for new tax revenue through the development of innovation parks.
The belief, by some at least, has been that the sales tax revenue generated by innovation parks could help the city pay for existing needs without increased taxes. As Chief Innovation Officer Rob White wrote last fall, “One major reason that innovation parks are being discussed is the recognition that there is a significant need to increase the amount of revenues coming in to the city to pay for maintenance and upgrades of existing amenities — things like parks, bike paths, streets, swimming pools and public facilities.”
He noted, “A major reason Davis does not have the funds to completely pay for these amenities any more is that our sales tax collection is about half of that in a comparable community. Davis also has a lower comparable citywide property tax total because the community has not experienced significant resetting of values over the past few decades and has not built new housing stock.”
The Vanguard has identified the need for new monies to repair roadways and other crumbling infrastructure. However, following the passage of a half-cent sales tax last June, discussions of a follow-up parcel tax measure have stalled. Some of that was due to lack of support for an additional tax measure in polling conducted by the city. Some of that may be due to the perception that the economy is improving.
One of the key questions that might need to be asked is whether the voters would be willing to go against their slow growth tendencies, absent the perception of an economic crisis – a crisis that even last year most citizens, according to polling, did not believe existed.
Recently we have seen comments from readers pushing back against the notion that we need innovation parks to generate new revenue.
Last week, one reader wrote, “If the REAL problem is city revenue, then why didn’t the City council raise the sales tax to the level recommend by the citizens commission to put before the voters.”
Another reader would write, “I know that the issue of growth is controversial. Personally I come down on the side of keeping Davis a small city, even if that means living with some pain in terms of higher taxes and fees and less services than we might like. If I wanted to live with urban sprawl and congestion, there are plenty of other places in California that I could move to.”
The discussion of new taxes needs to be weighed against the increasing cost of living in Davis and the prospect of people being priced out of the community
The council may have to fight itself over this issue as well.
Last week at an outreach meeting, Councilmember Rochelle Swanson responded to a question as to why the city could not just cut its way into the black or raise taxes. She responded that things look bad for the budget.
She stated that the city has already made a ton of draconian cuts. There is not the money in the budget to do the things that residents believe Davis should do, and there is insufficient money to pay for what we are doing already.
That runs counter to the narrative that was developing late last fall from Mayor Dan Wolk, who was trumpeting the nearly $850,000 in additional revenue.
He 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.”
“In fact, I am more confident than ever regarding the current and future state of our city’s finances,” the mayor added.
He noted, among other things, “We are on our way to eliminating our structural deficit. 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.”
The mayor was quick to add, “We’re not out of the woods yet.” And he also pushed for the need to obtain “more revenue by continuing to process the two innovation park proposals, as well as the Downtown University Gateway District on the Nishi property.”
There was a belief at that time that the city would be using the improved fiscal situation to potentially justify increased compensation to city employees. Interestingly enough, we are in early April and still have not seen a proposed budget for the city and have not heard much about new collective bargaining agreements, despite the fact that the current agreements are about to expire.
It is ironic that the fate of the innovation parks may well hinge on the public’s perception of the city economy and budget situation.
There is little doubt that employees would like to see increased compensation – but, ironically, increased compensation now would signal to the public that the fiscal crisis is over. It would serve employees better to wait until the innovation parks are squarely approved before pushing their demands for increased compensation.
The city would be best off tackling its infrastructure needs and laying out the case that it needs a more diversified economy and tax base.
—David M. Greenwald reporting