by Dan Wolk
Our community budget for fiscal year 2015-16 was introduced on Tuesday. Among other things, the proposed budget shows a markedly improving financial picture, with healthy sales and property tax revenue. In fact, this is the first time in many years that the budget forecast has projected general fund revenues in excess of expenditures.
In short, it shows that our local economy is improving.
But it’s one thing to read about that in an admittedly dry budget document in City Hall; it’s another to actually hear from individual business owners about how things are going. So for this column I decided to talk with a number of local business owners — the bread and butter of our economy — to get their take on things. And they reinforce that things are going well locally.
Here is some of what I heard.
Kellie Palmer, owner of Sanctuary Salon in downtown Davis, says: “In my business ‘neighborhood’ we are enjoying increased foot traffic and a renewed energy in the air with more residents shopping and consuming local products and services which benefit all of us and our local economy.” (Full disclosure: One of Kellie’s happy customers is your mayor’s own wife, Jamima.)
Jennifer Anderson, president of Davis Ace Hardware and the grandniece of Davis’ first mayor, J.B. Anderson, says: “Business was very good in the first quarter.”
Erin Dunning, owner of bikram yoga davis on L Street and a member of the Davis High School Jazz Choir with your very own mayor, says: “Business is doing better than last year. We have had bigger classes in May; I hope this resurgence continues into June.” Erin also is looking forward to teaching her popular kids yoga class in the summer.
J.D. Denton, owner of Fleet Feet Davis, says: “Yep, business is good. … After 36 years of doing business in downtown Davis, Fleet Feet continues to thrive. … We’re optimistic about the road ahead.”
Todd Haverlock, a Realtor in town with Coldwell Banker-Doug Arnold Real Estate, says: “The Davis real estate market has been highly active this year. Davis continues to be a magnet for home buyers from around the country and world. My clients are mostly after a slice of what’s special about Davis, including the bike culture, high-performing schools and strong sense of community.”
(In reporting the above, I tried my best to channel Wendy Weitzel, who writes the fantastic, must-read column “Comings & Goings” in this newspaper about local business.)
Although things are improving, that’s not to say that things are where they were at the height of the last economic boom. Challenges remain, according to the folks I spoke with. But the trajectory is positive.
For the next couple of weeks, the City Council and city staff will be discussing the budget leading to a late-June adoption. I encourage the community to get involved in this important discussion. After all, a budget is a good representation of a community’s values.
And, of course, please support our local businesses.
With all this happy talk about how great business is, I wonder if we’ll see City employees agitating for a pay increase?
Yes Topcat, it sure looks like the table is being set.
Topcat, any consideration of a pay increase needs to look at the whole picture … the real impact of a 1% salary increase (“raise”) for an example employee like the City’s Human Resource Director, who currently is paid $151,888 according to the state website.
— A 1% raise for the example employee would cost the citizens of Davis $1,518.88 per year. Using the example employee’s age of 50 and that employee’s projected retirement at 55, the total 5-year incremental salary outlay by the Davis citizens is $7,594.40 ($1,588.88 times 5).
— That $1,518.88 per year salary increase also translates into a $94.93 per month increase in the employee’s monthly defined benefit pension. For the 35-year pension period from 55 thru 90 (420 months) the total additional pension payments by the Davis citizens is $39,870.60.
— Add the $7,594.40 together with the $39,870.60, and you get a total outlay by the Davis citizens for the 1% raise of $47,465.00, which makes the functional annual percentage of the raise for an employee who will work for the City for 5 more years equal to 6.25%.
— The incremental take-home pay of the example public employee is $1,518.88 per year.
— If an equivalent private sector employee, being paid the same salary wants a 35-year monthly pension of $94.93 per month, he/she will have to go out and purchase a 35-year annuity, which assuming a 4% rate of return would cost the employee a lump sum of $21,416.33. Spreading that over 5 years the annual take home would be $1,518.88 minus $4,283.27 in order to have the same benefit as the public sector employee. The 1% raise for the private sector employee would result in a decrease in that employee’s true take-home pay after buying the increase to his/her pension.
Bottom-line, the City can’t afford pay increases at this time. It can afford to catch up on street repairs, and catch up on maintenance to buildings and facilities.
Asking for a clarification Matt… is your view, no salary increase (clearly stated), plus no additional cost (today $’s) in medical/dental premium coverage by city (employee pays 100% of any increase in medical/dental premiums), plus no additional cost to City for any increased rates for pension coverage (employees pick up any additional employer costs)?
Please clarify, as I don’t want to make baseless asumptions.
hpierce, as I laid it out in a prior comment (see http://www.davisvanguard.org/2015/06/commentary-council-needs-reminder-that-taxes-were-supposed-to-be-temporary/#comment-278350) combined with Gunrocik’s predecessor comment.
PERS Employer rates will continue to rise, have the employees pay any increases in the employer rate over the life of the contract — that is a pre-tax pay cut, so less painful for take home pay.
Medical costs continue to be a wild card-continue to require employees to pay at least half the cost of any rate increases.
For non-Public Safety employees balance those out with a 5% percent COLA over three years — which is somewhat consistent with inflation –yes, I know the other cuts likely cancel that out. As I pointed out in an earlier comment in this thread (see http://www.davisvanguard.org/2015/06/mayors-corner-things-are-looking-up/#comment-278262), there is deferred gratification from the COLAs as the employees get to have higher final salaries when they retire.
Public Safety employees would be handled slightly differently. For those in Fire, I would eliminate the COLA until such time as the average Firefighter salary is equal to the average Police Officer salary. For the Police Officers I would not use the 5% over three years, but rather an absolute amount that is equal to what the 5% in three years is for the median non-Public Safety employee. That way (A) the current disparity between non-Public Safety and the Police Officers will not be enlarged, and (B) the disparity between Fire and Police will be reduced.
Thank you, Matt, but appears that your tune has changed.
Your cites say that “employees pay ANY increases in PERS employer contributions”, and “at least half of the cost of of any rate increases” for Med/Dental, yet unlike Gunroick’s proposal to offset that with a total of a 5% COLA over 3 years (first cite), you’d have the COLA be zero (second cite).
Am I parsing your cites correctly?
I want to be fair before I get out my calculator, crunch the numbers (not just for your high paid example, but for one close to the median/average), and really respond. Percentage-wise, as I understand your view, a typical employee, making significantly less than the senior manager class you used in the second cite, stands to take a pretty significant hit. And, as it relates to medical, given the way the medical “caps” are set, a single employee would see no “hit”, but a married person with dependents, would. Which I guess is a reasonable point of view, as having/covering a spouse or children is a personal decision that the public should not be expected to subsidize.
If you want to really get serious, the position should be that the City cover employee only, AND that the employee absorb AT LEAST (why not ALL?) of the increases in med/dental premiums.
I do not think my tune has changed at all. At the end of my second cited comment I said “Bottom-line, the City can’t afford pay increases at this time. It can afford to catch up on street repairs, and catch up on maintenance to buildings and facilities.” That comment preceded Gunrocik’s suggested plan.
I stand by my original statement. The City can’t afford pay increases.
In the model Gunrocik laid out, for non-Public Safety employees the 5% COLA over three years would result in an average salary increase that for the employees would be offset by the additional costs they would shoulder for benefit cost increases.
In my adjustments to Gunrocik’s model, for Police personnel the same offset would exist.
In my adjustments to Gunrocik’s model, Fire personnel would absorb the salary benefit cost increases with no COLA.
In aggregate the changes to the three groups would not result in a pay increase for the City because of the offsets. The aggregate pay for non-Public Safety employees would neither go up nor down. The aggregate pay for Police employees would neither go up nor down. The aggregate pay for Fire employees would go down.
Yes, I would like to see Mayor Sunshine talk about the plans for street repairs and other infrastructure maintenance.
You won’t hear about crumbling streets and public facilities from Mayor Sunshine. You will have to wait until Mayor Davis takes over for that — and by that time, hopefully Mayor Sunshine will be busy touting his rejection of sugary beverages and support for soccer fields in a race for another office — and our Council can get back to the business of governing instead of campaigning.
I notice our mayor didn’t interview the owner of Tucos.
interesting point
I do believe Mr. Sunshine selectively channeled the “Comings” part only; and so it goes with “positive thinking”.
our monthly dose of puff from the mayor. matt williams – did you ever try to restart the previous conversation. perhaps people are more engaged now.
The short answer is yes. At the very least my status as a former Editorial Board member rather than an active Editorial Board member, allows me to attach my own non-anonymous name to some of the questions.
However, your suggestion does prod me to submit a follow-up article to David.
Thanks, Dan.
The tone of the column, along with the smiling photo created a nostalgic moment for me.
It reminded me of my college semester abroad when I got to visit the Soviet Union and was exposed to a stream of information supplied by that wonderfully objective provider of the news: TASS.
For those of you not familiar with TASS:
http://en.wikipedia.org/wiki/Telegraph_Agency_of_the_Soviet_Union
Dobryy den’!
Maybe we should have some Socialist Realism style murals painted around town 🙂
LOL Topcat, don’t give our local socialists any ideas.
Long live the People’s Republic of Davis!