Concerns Raised About the Budget Process

budget-stockElaine Roberts Musser on Tuesday addressed the Davis City Council during public comment of their budget discussion and raised a number of key points in advance of the council’s eventual adoption of the City Budget by the end of this month.

Here is the text of her remarks:

I was part of the committee that recommended the sales tax increase – however it was made clear by us that any sales tax increase should be part of a package deal that included supporting long-term fiscal sustainability through economic development. The sales tax increase represented a temporary bridge to sustain city revenues until well-planned peripheral innovation parks came on line to provide a permanent tax revenue stream in about ten years’ time.

When the Chief Innovation Officer Rob White was mysteriously replaced without explanation, the Davis Innovation Park suddenly put their plans and the communications from the city projected a rosier economic picture – citizens are left to wonder WHAT IS GOING ON.

Is the city council or city staff wavering on its support for innovation parks? Is a signal being sent to the neighboring region that Davis is really not open for business? Are sales tax increases, parcel taxes or utility taxes thought to be the sole answer for the city’s long-term fiscal sustainability?

Is the city council and city staff really willing to grapple with the city’s huge unmet needs of road repair and building maintenance that has been disregarded for years?

I was gratified to see that city council ask to see the city budget projections show what the picture will be if the sales tax increase is not renewed and for budget projections that show a one-percent COLA for city employees.

The picture isn’t pretty, in fact it’s quite grim and not even remotely complete. There has also been a request put in to have a consultant assess the cost of necessary repairs to buildings, pools and parks that has been neglected for years. Road repairs are a looming cost that grows exponentially every year it continues to go unaddressed.

A huge thanks to the finance and budget commission for trying to help the city tackle these tough issues. Citizens need to hear a consistent message from city council members and city staff that long term fiscal sustainability is the city’s number one concern.

I highly doubt the citizenry is willing to incur more tax extensions, tax increases, or new taxes is they get the feeling that the rot eating away at the city’s infrastructure is not responsibly addressed in the long term through responsible budgeting and a well-planned economic development strategy like innovation parks.

To see Ms. Musser’s full comments click on the video below:

 

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

26 Comments

  1. Gunrocik

    Kudos to Elaine!  I believe she speaks for all of us in the community who closely follow the city’s financial picture.

    And she was very polite in her remarks — she could have called out the Mayor for pitching soccer fields while our infrastructure continues to crumble around us.  Or how quickly we’ve attacked sugary beverages while it took a year to even hire a consultant to assess our facilities capital and maintenance deficit.

    I will repeat my plea to the Council majority from the other day:  There is a simple way for the Council Majority to express their displeasure with the Mayor and his operative in the CM’s chair.  Don’t approve the budget funding for the watered down CIO position.  Make it clear you want a professional and not someone whose skill set seems to be limited to showing up for meetings and reporting back to their boss.

  2. Tia Will

    I agree with the kudos to Elaine for providing citizen leadership in dealing with financial issues facing the city. I think that some of her questions and points need clarification.

    The sales tax increase represented a temporary bridge to sustain city revenues until well-planned peripheral innovation parks came on line to provide a permanent tax revenue stream in about ten years’ time.”

    Given the time line of “about ten years  for a permanent tax revenue stream” it would seem clear that the “bridge” provided by taxes would need to be considerably longer than the “temporary tax” that was passed. This is called renewal,  not new taxation, and was readily foreseeable, not some stealth move.

    “Is the city council or city staff wavering on its support for innovation parks? Is a signal being sent to the neighboring region that Davis is really not open for business? Are sales tax increases, parcel taxes or utility taxes thought to be the sole answer for the city’s long-term fiscal sustainability?”

    Even if the city council or city staff were wavering on the currently proposed “innovation parks” I do not see this as synonymous with sending a message that “Davis is really not open for business”. It may be that Davis is wide open for business, but that these parks are not felt to be the best way in which to proceed. I am one of David’s “threes”. Of the proposals on the table, I support Nishi strongly in some form, was trending mildly favorable on the project that is now on hold and was not a fan of the Mace location for a number of different reasons. But just because one is not strongly in favor of the current proposals does not mean one does not favor business in Davis. I am a strong proponent of the small start ups such as discussed by Chancellor Katehi, and such as those supported by Davis Roots, Jump Start and Pollinate Davis since I see these kinds of enterprises as very compatible with my values for a sustainable and thriving Davis and the best way for us to provide a strong and collaborative contribution to the region.

    Just because one does not support these very large “innovation parks” does not mean that one sees sales tax increases, parcel taxes or utility taxes as the “sole answer”.

  3. Gunrocik

    Tia: I am a strong proponent of the small start ups such as discussed by Chancellor Katehi, and such as those supported by Davis Roots, Jump Start and Pollinate Davis since I see these kinds of enterprises as very compatible with my values for a sustainable and thriving Davis and the best way for us to provide a strong and collaborative contribution to the region.

    I am a strong proponent of small start ups as well, but they don’t pay the bills.  We need to grow our revenue stream by millions each year.  Start ups by their very nature, don’t spin off much in the way of property tax, sales tax or other sources of revenue.  And as a local government, we don’t get a penny of the state income tax.

    Don’t confuse the Davis economy with the City of Davis budget.  There isn’t much correlation between the two.  For the City of Davis Municipal Corporation to get healthy, you need businesses that have buildings with plenty of secured and unsecured property tax flowing from them.  You’d also prefer that they generate lots of business to business activity within the local economy to generate some sales tax.  You’d also like them to create hundreds of good paying jobs that will help generate lots of sales in our local economy and create a demand for housing to increase our residential property tax.

    And ideally, it would be great if they developed on city-owned land, so that the city could reap the rental income from the successful projects as well.

    If we only have room for start ups — then it will be other communities that will reap the benefits of these companies as they expand and build new buildings, start new ventures and have the funding available to donate to charities in the community.

    In fact, the start ups, with their low tax generation will likely be loss leaders — generating demands for city services without a corresponding increase in tax revenue.

    Side note: Since all of the proposed parks are on County land, it will require a tax sharing agreement with the County prior to annexation.  I’m very concerned that with a County operative running the City and a County operative in charge of economic development — that Don Saylor will dictate the terms and we will end up with a horrible tax sharing agreement.  And, consequently,  we may end up with all the cost impacts of the new parks–without adequate tax revenues to offset their costs.  The parks will be a waste of time if we don’t ensure that adequate funds flow to the City.  That is why development on city-owned property is preferable — as the rent can help offset a crummy tax sharing arrangement with the County.

    That is why I think we need to make sure that the remaining 25 acres we held out of the ag easement for Mace 391 needs to be part of the Mace Innovation park. We need to leverage our land as much as possible. We can put Greg House’s Open Space Committee community farm on less valuable land.

     

  4. Anon

    I am a strong proponent of small start ups as well, but they don’t pay the bills.”

    Spot on!

    I’m very concerned that with a County operative running the City and a County operative in charge of economic development — that Don Saylor will dictate the terms and we will end up with a horrible tax sharing agreement.

    I cannot remember where I heard this, but my understanding is that in a tax sharing agreement for an innovation park on county land, the county can only ask the city for that amount in taxes that represent the county services that are provided (it was estimated it could not be more than about 25% for the county at most, and might be more like 10%).  Now does that mean county services provided to the innovation parks, or county services as a whole provided to the city?  And I am not certain if this supposed limitation on the county’s take in the tax sharing agreement is even correct.  It would be great if the Vanguard could do a follow-up investigative report on just how much the county can ask for in a tax-sharing agreement in regard to the innovation parks.

     

    1. Mark West

      What prevents the County from approving a business park on the outskirts of Davis and simply claiming the property tax for the County.  Measure R is only involved when the City wants to allow development on the land and incorporate that land into the City. It seems to me that if the County made the move, they could dictate the terms of any tax sharing agreement (including no sharing at all).

      1. Anon

        I don’t see this scenario as likely.  First of all, two representatives on the Board of Supervisors are from Davis.  Secondly, the political backlash from Davis would be enormous if the county chose to do that.  JMO

        1. hpierce

          Beg to differ, a bit… the scenario, I agree, is unlikely… the “threat” of the scenario, I believe has at least a 50-50 chance of being played out… JMO

      2. #me

        MW:  We pay the county more than $3M per year so that they won’t approve urban development within our sphere-of-influence (the so-called pass-through agreement that very few people understand or have actually read). My recollection is that they will get at least $70-80M before the agreement sunsets. The money was originally tied to the RDA but city and county leadership created some sort of workaround (that even fewer people understand) when the RDA went away to insure that the cash continues to flow.

        The county could decide to breach the agreement and forego the annual payment from the Davis taxpayers but that only makes sense if they can convince themselves that the payoff will exceed $70-80M.

        In my opinion, that equation doesn’t pencil.

        1. Matt Williams

          The money was originally tied to the RDA but city and county leadership created some sort of workaround (that even fewer people understand) when the RDA went away to insure that the cash continues to flow.

          #me, your statement above prompts a couple of questions . . .

          (1) The Council is preparing to approve in the next 30 days the City’s 2015-2016 Budget. Can you find any evidence of budgeted payment by the City to the County of the Pass Through Agreement amount anywhere in that 2015-2016 Budget docment.

          (2) We are fast approaching the end of the 2014-2015 Fiscal Year. Can you find any evidence of budgeted (or actual) payment by the City to the County of the Pass Through Agreement amount anywhere in that 2014-2015 Budget docment.

          (3) If there is a functioning workaround in place, is it of a limited time duration? Will it continue after the RDA “wind down period” comes to an end?

        2. #me

          MW:  The only document I have is from mid-2012 when the payment was $3,156,000. Here’s the link.

          I was told that the payments were continuing and the pass-through agreement was still in effect. That being said, I acknowledge that I could have out-dated information.

          Aren’t the RDA obligations clearly laid out in the budget? If not, isn’t that a problem? If the pass-through agreement was terminated, that would certainly be news-worthy.

          I suppose we just need a clear statement from city leadership. Is the city still paying the county $3M+ per year to prevent urban development by the county within our sphere of influence? If so, where is this payment listed in the city budget? It would also be nice if staff was directed to post the original agreement and all subsequent amendments to the web in a location where they can be found by the public.

          1. Matt Williams

            Good information #me. It will be interesting to work forward in the timeline from that 2012 benchmark toward the present, and see how it was handled (and reported) in 2013 and 2014.

          1. Matt Williams

            #me, I’m less concerned about the agreement document itself than I am about a transparent accounting of the inflow and outflow (sources and uses) of dollars associated with the Pass Through Agreement. As you pointed out, transparent accounting did exist up through 2012. Since then it has been elusive.

            I’m reasonably comfortable that the payments called for in the agreement document have been made to date, so a transparent accounting should be both straightforward and easy. However, what the future may bring is much less clear.

        3. Frankly

          Sure it pencils out.  A 200 acre business park with retail would likely bring in more than $3MM per year in tax revenue to the county.  More like $8-$10MM per year.

        4. Gunrocik

          The pass through agreement and any related document is all public information.  I would think that a high ranking member of the FBC could make one phone call and get this information without having to do a public records request.  🙂

          1. Matt Williams

            Gunrocik, the FBC very specifically asked Yvonne Quiring for that information, and to date no such information has been forthcoming.

  5. Anon

    Tia Will: “Of the proposals on the table, I support Nishi strongly in some form, was trending mildly favorable on the project that is now on hold and was not a fan of the Mace location for a number of different reasons.”

    Nishi will garner the city the least amount of tax revenue, so why is this the one you most strongly support?

    I favored the project put on hold as well – it would have added a lot of wonderful community amenities everyone could have shared, had a campus feel.  Fortunately it has only been put on hold, so there is a chance it could be brought back with the proper incentives (and I am not talking about tax breaks or anything of the sort).

    Why are you not a fan of the Mace Ranch proposal, if it was well planned, brought in substantial tax revenue, and would save Shilling Robotics from having to move elsewhere out of Davis?

  6. Davis Progressive

    i have to say that was one of the more impressive presentations i have seen – very short talk, hard-hitting without resorting to attacks or disrespectful comments.

    1. Gunrocik

      Agreed DP.  Wish she would consider running for Council.  She would be a very good replacement for either of the professional politicians on the Council. Not only is she well-informed and focused on the greater good, I think she would elevate the level of discussion at meetings.

    2. Matt Williams

      I agree DP.  I turned around in my seat in Council Chambers Tuesday night and congratulated Elaine on the quality of her comment and asked her to please submit her comment to the Enterprise for publication as an OpEd.   Elaine’s message is one that is valuable input to the thought processes of everyone in Davis … especially the citizens whose lives are so busy that they find it hard to keep up with (or in some cases even pay attention to) the dialogue about the City’s fiscal/economic situation.

      Gunrocik’s “well-informed and focused” is not only a good description of Elaine, but also of her comment.

      I have had the pleasure of working closely with Elaine on Senior Citizens of Davis Board issues, as well as on the Water Advisory Committee.  She indeed would elevate the level of discussion at Council meetings.

  7. Tia Will

    Anon

    I favor Nishi for the following reasons. There may be more that I am missing at the moment.

    1) The location – if traffic issues could be successfully mitigated, I believe that the proximity to the University, the downtown and access to the train, and the freeway make it a site that would provide both housing, potential for small businesses in a space which has the potential for minimizing the use of cars while maximizing walking and the use of bicycles and public transportation.

    2) Since one of the main drivers for need for more housing and economic growth is the University, I see Nishi as a great link between the driver of need and the city.

    3) I like the scope of the project and feel that it is much more appropriate for Davis. I understand the need for economic sustainability. I also understand the value of living in a smallish, integrated community where scale and appropriateness  for the existing community are valued as much as the “grow as much as we can philosophy”.

    4) Nishi is the site that does not seem to me to be a matter of the city predetermining the winners and losers of these economically driven projects. I have nothing against Schilling Robotics. I think this is a great company. However, when a major reason for planning a development is to enable one particular, very successful company to stay in town, I have a hard time seeing this as anything other than the city backing one company over others. This is not in my eyes an appropriate position unless the city is going to get into the business of helping the very small struggling businesses as well as those who are already quite prosperous. I see no evidence that this more even handed approach is being contemplated. We frequently read in posts here the importance of the small businessmen to our community and yet is these small businessmen that we are willing to repeatedly through under the economic bus called “progress”.

    5) As for Mace. I attended their community outreach, had a chance to speak to the developer and and one of the lead planners and was frankly not particularly impressed with the plans. I did however appreciate the honesty with which they discussed what they anticipated as the need for housing for “thousands of new workers” and presumably their families. That was their estimate not mine. Given that I do not favor this kind of massive population growth, that was a strong negative for me. I realize that many do not share that view, but slow, deliberate growth is a core value for me.

  8. Gunrocik

    Tia: “I did however appreciate the honesty with which they discussed what they anticipated as the need for housing for “thousands of new workers” and presumably their families. That was their estimate not mine. Given that I do not favor this kind of massive population growth, that was a strong negative for me. I realize that many do not share that view, but slow, deliberate growth is a core value for me.”

    You have Measure R — there is moat around our City.  There is no chance of any housing being built within the community without a Public Vote.  Thanks to Measure R — most workers couldn’t afford to live here anyway.

    Opposing Mace based on a fear of residential development is as rational as opposing sunlight because it might give you skin cancer.

  9. hpierce

    Factual error, or…

    Housing within current Davis City limits, or maybe the odd Ag parcel within the City limits, is not subject to a Measure R/J vote.  Suspect you know that, but…

    1. Gunrocik

      hpierce – poor choice of words on my part.  Should have said:  “There is no chance of any housing being built outside the current city  boundaries without a Public Vote.”  As that further reinforces my point of the previous sentence that we have a moat around the city.

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