Council Will Approve the 2015-16 City Budget

budget-stockThere has been a lot of discussion on the longer range budget issues such as how the city will handle roads and other infrastructure needs, how the city will handle the upcoming MOUs, the sunsetting of the sales tax, and long-term budget projections.

Last week, Jeff Miller and Dan Carson submitted a summary of the discussions by the Finance and Budget Commission to the Davis City Council.

The council will now vote on the proposed budget with a series of changes that have been incorporated into that proposal.

Staff lays out some of the key additions:

  • There are a total of six additions to the current FY15/16 budget for a total of $2,316,037 all funds of which $265,000 are general fund. The largest component of this change is $1,999,762 of additional construction expenses for the Surface Water Pipeline project as bids came in higher than originally budgeted. This expense is funded with Water Fund Capital Replacement Reserve funds. Other non-general fund additions include the replacement of a 2002 pick-up truck for $26,298 and the inclusion of $24,977 of Community Development Block Grant money for assistance with ADA related work at the Walnut Park Restroom.
  • General Fund changes include the addition of $250,000 for improvements at the Davis Senior Center, made possible by a donation from Senior Citizens of Davis Inc., and an additional $15,000 in the Police Department budget to cover further enhanced recruitment options and to support costs related to bicycle safety and traffic enforcement efforts.

In addition the City Manager has a change to his approval authority: “Updates have been incorporated to the FY 15/16 Budget Ordinance changing the City Manager Authority for administrative budget adjustments from $10,000 to $50,000, consistent with other administrative signature authority. Any budget adjustments authorized under the new signing authority will be reported to City Council in quarterly reports. This change is consistent with the current Council approved City Manager’s authority to approve contract services.”

Discussion: Looking at the Five to Ten Year Outlook, Concerns Remain

However, as the Vanguard has noted, while the budget has been portrayed as “good news” and a “vast improvement” over previous budgets, we remain concerned.

We reiterate our previous five takeaways from the budget picture – it is not clear when these things need to be considered but they should be on the radar.

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, 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 sometime 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 is 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.

And to that we can add a sixth point. The city manager as we have reported effectively removed the possibility of employee concessions from considerations. That coupled with the council replacement of labor negotiator Tim Yeung represents a strong concern going forward.

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.

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.

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  1. Tia Will

    Our fear is that the public has sensed incorrectly from statements from the mayor and city manager that the economic crisis may be over.”

    At the acknowledged risk of “beating a dead horse”, I would like you to define precisely what you mean by the words “economic crisis” as they relate to the city of Davis. To help with what I mean, I will tell you how I would define “economic crisis”. I would consider it a “crisis” if the city were facing imminent bankruptcy if the city council were not to impose some drastic changes.  Anything less than this does not constitute a “crisis” in my mind.  The need for prompt action ? The need for more responsible policies ? The need for a clearer picture of our “desired ends” as specified by Robb Davis in a separate thread ? Certainly ! Yes to all three !  But a “crisis”…

    So how are you defining “crisis” ?

    1. David Greenwald

      In 2008 given the unfunded liabilities and the state of the economy there was a legitimate risk of insolvency. As we dug into the issue more, we found that the city was in far worse fiscal position than we had believed originally. As late as last year, we faced a $5 million ongoing deficit that grew to $8 million by 2018. Those numbers improve slightly with better revenues, but the main difference is the money we have received through the sales tax. As soon as that money goes away, we are back in the red.

    2. Anon

      Have you seen the state of the city’s roads, bike paths, and sidewalks?  If this issue is not addressed now, the costs of repair grows exponentially.  Many of the buildings in Davis are decrepit.  When you allow buildings to go unmaintained, it invites slow destruction, as happened in the case of the DHS MPR, which had to be torn down because of mold as a result of poor maintenance.  What I think you fail to understand is that this city has allowed so much of its infrastructure to go unrepaired/unmaintained for literally years, and that neglect is beginning to come home to roost.  And that doesn’t even address the unfunded employee benefits issue, which is another debacle.

    1. Robb Davis

      DP – Can you be a bit more specific?  I am willing to give my perspective but have limited time today.  Can you clarify which issues you are referring to (I read this article quickly).

      1. Davis Progressive

        sure and it doesn’t have to be today – but when is the council going to take up the issue of the next round of mou’s, infrastructure needs, look into staffing levels, look into modifying future spending projections – basically part of the discussion that has taken place here and by the fbc?

  2. Robb Davis

    Next round of MOUs:  All I will say about this is have a look at Tuesday night’s closed session agenda item, last meeting’s closed session agenda item and at least three others since the beginning of the year viz:

    Conference with Labor Negotiators:

    Agency Designated Representatives: City Manager Dirk Brazil; Assistant City Man-ager Kelly Stachowicz; Assistant City Manager Mike Webb; City Attorney Harriet Steiner; City Attorney Stacey Sheston; Human Resources Administrator Melissa Chaney; Patrick Clark, Patrick Clark Consulting

    Employee Groups/Organizations (under discussion): Davis City Employees Association; Davis Police Officers Association; Department Heads; Executive and General Management; Firefighters Local 3494; Fire Management; Police Management; Program, Administrative and Support Employees Association

    Infrastructure Needs: Item 4F of June 16 Meeting:


    The Building and Park Facilities Assessment is in keeping with the City Council’s interest to recognize the condition of the City’s Building and Park assets and to develop a plan to sustainably fund the maintenance and replacement of the major critical infrastructure elements.

    A 30 year Facilities Replacement Schedule for various building components was completed five (5) years ago. However, it did not address either the physical condition nor realistic replacement costs. A long term maintenance and replacement plan does not exist for park facility assets.

    A Request for Proposals was issued March 12, 2015 inviting interested consultants to produce a comprehensive assessment and plan to maintain the City’s assets. Seven firms responded to the request of which three were selected to be interviewed. The selection team consisted of Bob Clarke (PW Director), Stan Gryczko (Asst. PW Director), Christine Helweg (Community Services Superintendent), Kelly Fletcher (Budget Manager), and Glen Stone (Facilities Manager). Kitchell CEM was selected as the best qualified to develop the assessment documents. 

    Staff is also updating assumptions to PCI cost estimates.  Both will come back to us after the break.

    Staffing Levels: Stay tuned.  More to come.

    Spending Projections: Staff did alter projections to include the years post sales tax expiration.  Some members of the FBC would like to see alternative approaches to projections that include various scenarios based on broader macroeconomic changes (e.g. a recession), or adding unfunded liabilities to the budget projections (especially street, building and park backlogs).  At this point no decision has been made but I think these are reasonable requests and once we get a better picture of backlogs we should be able to include that. To me, the bottom line is that we are aware of the limits of projections as they are currently done and we are naming the liability issues even if we are not putting them into the current projections.  However, I want to be VERY clear that we ARE putting OPEB and PERS increases into these projections based on the work of our actuary.

    Hope this helps a little.

    1. Matt Williams

      Robb, with respect to “Staffing Levels: Stay tuned.  More to come.” I believe there is an easy, immediate, and useful step that could be taken by the City (by Staff in support of the Council) to promote both understanding and transparency with respect to Staffing Levels.  I made this suggestion at the most recent FBC meeting on June 2nd and repeat it here.

      Specifically, the 1996 through 2016 Staffing Trends graph presented on page seven of Staff’s presentation to the FBC (see,%202015/Item%205_%20Att%202%2015-16%20Proposed%20Budget%205.26.15.pdf ) should be supplemented by three additional graphs that subset the individual annual staffing numbers from the graph.  The first subset would be for Public Safety – Police staffing. The second subset would be for Public Safety – Fire staffing. The third subset would be for Non-Public Safety staffing (i.e all employees other than Police and Fire).

      You have made the point many times that the Staffing reductions have not been made strategically (i.e. through attrition).  The subset trending graphs would allow us all to see how the burden of staffing cuts has been shared amongst the three named employee groups.

      Since I made that original suggestion to the FBC I’ve amended it to add one more Staff Trending graphic … one that includes Temporary FTE counts.

  3. Anon

    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.

    WELL SAID!!!

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