Analysis: Should City Really Preclude More Employee Concessions?

City Manager Dirk Brazil delivered his first city budget report.
City Manager Dirk Brazil delivered his first city budget report.

Monday night’s Finance and Budget Commission budget discussion got high marks from a number of people who have typically been critical of the city’s handling of budget matters. However, one remark jumps out and it came from City Manager Dirk Brazil, who seemed to preclude further concessions or “take-backs” from employees during this round of negotiations.

The question is whether the city manager jumped the gun here and prematurely foreclosed on the possibility of more employee concessions.

Our analysis of the budget shows three problems with the ten-year projections the city finally released. First, the sales tax measures were sold to the public as “temporary” and “emergency,” however it is clear that the city goes immediately back into the red as soon as the taxes expire after the 2020-21 fiscal year. The city undoubtedly will have to attempt to get the voters to renew them – but the city cannot operate under the assumption that the voters will do so.

Second, as Commission Chair Jeff Miller pointed out, the budget assumptions assume economic growth – modest growth, granted, but positive growth throughout the period. That assumes ten additional years of economic growth after this year – which does not seem reasonable or likely. It seems probable that we will see another recession some time in the next decade.

Third, right now we are at a historic low in terms of number of full-time equivalent (FTE) employees. At 352, we are down a full 100 from the peak. Those cuts were largely done by attrition and without much regard as to services provided and workload. The question is whether we can assume that, over the next decade, we can continue to operate at 352 FTE. Again, it seems likely that we will need to grow the number of employees to a more workable level.

Fourth, the city staff showed us the projection of what happens even at one percent annual COLA. The small margin that the city had in the black completely evaporates and, as soon as the taxes fall off the books, the city’s fund balance drops precariously.

Fifth, these numbers do not factor in the need for infrastructure repair. Right now, the city is pumping in more than $4 million for roads, and the city manager has acknowledged that that figure in insufficient to improve the city’s roadway conditions. That doesn’t include the needed money for parks, greenbelts, and city buildings. The city has a discussion for a parcel or other tax revenue scheduled for July, but any revenue will have to get past city voters – and a two-thirds margin was elusive in previous polling.

On the other hand, it seems unlikely that the city has the will to attempt another round of cuts – not the city manager, nor, likely, the majority on council.

What is interesting is that, for most employee groups, while they believe they have had severe cutbacks, most actually received a small COLA in the last round of negotiations. This was in exchange for cuts in other areas. For example, many took a huge hit on the cafeteria cash out, which was reduced in many cases from $1500 to 1800 per month, down to $500 per month.

They have picked up a greater contribution to employee pensions; in the case of non-safety employees, they went from paying none of their pensions to paying eight percent. And there were also changes to medical plans.

On the other hand, the firefighters went to impasse, and so some of these changes could not be imposed upon them. They make more than any other bargaining group and are likely the only group in town near the top of the region in compensation.

There has been some talk, therefore, about trying to equalize the discrepancy between fire and police in compensation, but it’s not completely clear that there is the political will to do so.

We need to ask tough questions still – are we staffed sufficiently to deliver the services that we want to deliver? Are there gaps in that service delivery due to attrition? And the larger question still is whether we can continue to provide all of the services that we currently provide.

The biggest question of all is how do we go forward from here? We have clear needs in terms of infrastructure and we have no margin for error on the budget for the foreseeable future.

We are going to need to look at a renewal of the sales tax and probably a parcel or utility tax to pay for the infrastructure, but we are going to lose a lot of support if we include “nice to haves” like pools or sports complexes in that request.

We need to assess staffing needs and the cost of services we provide and determine whether or not we want to continue to provide all of the services we have.

Within that context should be a discussion both of employee compensation and staffing levels.

Finally, we need to continue to look at ways to increase revenue. Our fear is that the public has sensed incorrectly from statements from the mayor and city manager that the economic crisis may be over. The budget numbers argued against that. We need to look at economic development as a long-term solution to help with our margins.

But if we end up closing off the possibilities of concessions from employee groups, we limit ourselves, and right now the budget doesn’t look strong enough to do that.

—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.

Related posts

24 Comments

  1. Frankly

    The elephant in the room related to employee demands for increased compensation is the increase in taxation.

    What a damn scam.

    Government is that giant sucking engine… it keeps taking more and more from the pockets of hard working people, and those people find themselves struggling more to keep up and demand a raise.  And then for every new dollar they get, they only see about 50% of it, so they have to demand twice as much.

    And when these workers are government employees, to pay them these new dollars we have to increase taxes.

    And because we keep increasing taxes more people lose their jobs and require public assistance.

    And then government has to raise taxes again because there are more people on public assistance.

    It is a spiral downward toward fiscal insustainability.

    Smaller government should be a goal of everyone that cares about our future.

    Now is the time to work on additional cuts of personnel, outsourcing and automation.

    1. Davis Progressive

      and this is where you lose the argument in davis.  if you want to rail against government and hone ross perot with the “giant sucking engine” then you end up losing because most of the electorate in davis supports the use of government.  where you have to draw the line at the cost of government and the need for the services we are currently providing rather than driving down one step further to the philosophical level.

      1. TrueBlueDevil

        They support government. They just don’t want to pay for all of it.

        With the approximatley 25% reduction in city staff, have we seen a 25% reduction in basic city services? I don’t think so. We trimmed 100 jobs and the city still functions.

        1. Davis Progressive

          i don’t agree with that either strong two-thirds majorities for parcel taxes, and solid majorities for parks and sales taxes for the city along with support for statewide tax measures.  i think the question a lot of us are asking is whether the money we have agreed to spend is being spent wisely.

        2. hpierce

          “the city still functions…”  from what you see… the ‘high profile’ functions (Planning, etc.) yes… they had no cutbacks… Parks, Public Works?  Hey, as long as your water comes on in the morning, and your wastes disappear down the sewer, you’re good, right?  The reductions will catch up, but the system was damn good, and the effects of the cuts are two-three years out.  But they will come.  

      2. Frankly

        Tyranny of the majority.

        If you are a leftie and not a government employee, I really wonder about the rational for defense of demands that increase the cost and size of government.

        You would think that all of us non-government employees would come together and beat back the beast.

        Hence my partisan heat.  The only political muscle that can get it done is the left-leaner that is also fiscally conservative.  But many of these folks defend and demand large government as if it is their religion.

    2. Don Shor

      Most of the voting electorate in Davis works for government or is retired from government employment. So probably this argument isn’t going to resonate with them.

      1. hpierce

        “most” implies 50% or greater.  Saying 50%+ Davis voters are active/retired employees of government is probably hyperbole or BS (or both). J’accuse.

        1. Mark West

          “I’d guess it isn’t.”

           

          The data Don posted is for jobs located in Davis, not the employer of citizens who live in Davis.  That said, I would agree with the guesstimate that the majority of households in town contain current or retired public employees.  We are a bedroom community primarily associated with the University and State Government services.

      2. Gunrocik

        If you check out this piece of census data:

        http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=CF

        Go down to “class of worker” and you will see that 42% of those who live in Davis and are employed, have  a job working for government.

        And that likely understates the influence of those “government” workers since there is no question we have a large cadre of government retirees as well.  It is also likely that many students who work part time at UC Davis are not included in that number either.

        In addition, many of those government workers live in a household with a non-government worker.  It is highly likely that over half the households in Davis include at least one government worker.

        While I have no data to back it up, I would also bet that the government workers and retirees vote at a much higher rate than the rest of the population as well.

        Frankly, I believe that many of the posters on the Vanguard are in that minority of households that don’t include a government worker.

        Long live the People’s Republic of Davis!

      3. Jim Frame

        Most of the voting electorate in Davis works for government or is retired from government employment. So probably this argument isn’t going to resonate with them.

        I know of one former city department head who told me he thought his retirement benefits were “crazy,” followed by something along the lines of “I don’t see how they can keep doing that.”

         

  2. Davis Progressive

    this seems to be the key issue now facing the community – will the council make the difficult decisions or will they punt.  this is what happened in 2009 and it force difficult choices for the 2010-2014 council to have to grapple with.

  3. TrueBlueDevil

    [Edit: David, you wrote there were three problems, then listed five. FYI.]

    Step 1 is to get some idea of what we are looking at as far as outlays for infrastructure and maintenance. Have I missed something – have we seen a summarized list, even an estimate? We don’t need it carved in stone, but even a range would be helpful. Here is a wild guess, something like this. Please feel free to update, modify, criticize.

    I’m using a 10-year back-of-the-envelop estimate, and for simplicity haven’t added inflation. This is today’s dollars.

    —————————-Low          High

    1. Road Repair     $100M          $200M

    2. Parks                  $  5M           $  10M

    3. Pools                  $  2M           $  15M

    _____________________________

    Total:                    $107M           $225M

    Cost per/Yr:     $  10.7M        $  22.5M

     

    These 20-year projections (see below) boggle my mind because even a minor change in the first few years can have a large effect 20 years down the road. Then imagine if several small changes, combined with one large change. It could blow a hole the size of Highway 80 in any estimates.

    For example, given the exponential cost of repairing roads as they age, I’d have looked to fast track additional road work this summer with the short-term rosy budget uptick. If we can get 30% or 50% more work completed now, that’s a big costs savings; secondly, the more work we get done sooner, we reduce the chances of roads slipping into the danger zone. We reduce our risk.

    So if we even take the $10.7M per year estimate, and subtract the $3M we now spend yearly on roads, that shows that we are adding $7.7M per year in unfunded work.

     

    http://www.davisvanguard.org/2014/12/further-analysis-20-year-road-projections-will-always-be-imprecise-city-needs-to-secure-funding-regardless/

  4. Topcat

    …the firefighters went to impasse, and so some of these changes could not be imposed upon them. They make more than any other bargaining group and are likely the only group in town near the top of the region in compensation.

    Does anyone else think that the firefighters might be just a little bit greedy?

      1. hpierce

        Some have been forced… by State law, new FF’s will be under a lower tier system… I see no reason for “cafeteria cash-out”, for any City employee, particularly FF’s.  FF’s, as David and others have pointed out, are “high” in ‘market’.  History, etc. point to a freeze in total comp for FF’s. For the foreseeable future. And/or ‘concessions’.

        Other employee groups, not so much so, in my opinion.  I’d support increases in medical/dental benefits costs, IF the cafeteria cash-out is eliminated.

        As to salary, PERS contributions by the employee (on behalf of the employer), I’d like to see a “stasis”, at least for the next year, IF the med/dental contribution increases are not placed on their backs.

  5. zaqzaq

    Wolk will give away the house to employees in order to get labor support for his upcoming run on the assembly.  Lois supports Dodd’s senate run and Dodd supports Dan’s assembly run.

    1. hpierce

      Not likely… only the FF’s have a true union, and as a result, true unions don’t give much of a damn about Davis city employees.  PASEA and DCEA have long histories of opposing true union affiliations… by wide margins…

      1. Gunrocik

        The Fire Union will get their disproportionate share of any new contract, and the rest of the groups will get a share as well.  It is the Fire Union, along with Police that Dan needs for his next campaign.

        1. hpierce

          You may be correct… time will tell… equally as likely, given your thesis, non-FF’s will have concessions demanded, while FF’s see increases in compensation.

          That will concern the FF’s not one iota.

Leave a Reply

X Close

Newsletter Sign-Up

X Close

Monthly Subscriber Sign-Up

Enter the maximum amount you want to pay each month
$ USD
Sign up for