Analysis: Should Davis Count on Help for Roads?

road-failure

Last week, Dan Carson reported in the Vanguard, “For the first time in decades, there is a growing bipartisan consensus in the California Legislature to significantly bolster funding for state and local transportation needs.”

He noted that Davis could potentially receive as much as $3 million per year in additional funding to maintain city streets and bike paths. If this came to fruition, while it would not solve the city’s problems, it would help.

However, our recommendation is that the city proceed with current plans. While we have questions about whether a Utility User Tax that would generate $5 million is sufficient or the best vehicle to deliver roads, there is no doubt that Davis is in desperate need of an injection of capital.

Davis has not yet completed its full analysis of infrastructure needs, but suffice it to say the needs are staggering and overwhelming. Roads alone could well top $150 million. Currently, the city has cobbled together about $1 million in road impact fees along with $3 million in general fund monies, but the city manager acknowledges that, while this is a good start, it is insufficient to deal with the full extent of the problem.

Beyond roads, we have parks that were underfunded when the city last passed its $49 parcel tax back in 2012. We have city buildings for which we still have no firm figure. And to make matters worse, swimming pools and other less urgent needs could end up going onto the bill.

As Dan Carson put it, these monies are “unlikely to end current discussions about a June 2016 local utility users tax measure aimed at improving City of Davis infrastructure,” but they could be a help.

An additional worry is that “the amount of additional state aid coming to Davis could well turn out to be less than $3 million annually.” The school district learned this the hard way when the Local Control Funding turned out to deliver far less to Davis than other school districts.

On the other hand, Mr. Carson still believes that the city will need far less than projected for its 20-year pavement program. He writes, “Prior city projections were that $7 million annually would be needed for road and bike path maintenance, but those estimates could be reduced if more reasonable inflation assumptions are adopted to reflect future paving costs.”

He adds, “In any event, an injection of $3 million annually in state money within a few years would make a huge difference in the situation. The city currently has committed just under $4 million in General Fund and special funds on an ongoing basis to its pavement program. Adding other one-time grants into the mix, a ramp-up of additional state aid over a few years to $3 million could provide the city enough money to carry out a robust pavement repair program.”

He argues, “Such substantial additional help from Sacramento could lessen the burden on local taxpayers on dealing with these problems. If a local utility users tax measure still moves ahead next June, as is now contemplated, the state action could free up local resources from a new local tax measure to meet other infrastructure needs, including other transportation and park projects.”

Our view is somewhat different from that of Mr. Carson, who lays out a lot of promising developments in Sacramento, summing it up and saying that “the burst of legislative activity now occurring in Sacramento holds great promise of helping Davis address its transportation problems. That help is unlikely to be a cure-all for our city’s infrastructure needs, but could bring us much closer to having the money needed to pay for maintenance of roads and bike paths.”

Our first reaction is to believe that funding is coming when it actually starts arriving. Promises from Sacramento have a way of drying up long before they reach local municipalities.

Second, reliance on state and federal funding was in fact part of the problem. Money began drying up 20 years ago from federal and state programs. But the city had no local means to raise revenue. For a 12-year period, the city spent less than $10 million on roads – almost all of it from state and federal grants, and much of it from the stimulus plan passed in 2009.

When the money slowed and dried up, the city’s inadequate spending on roads magnified a growing problem. We funded roads at about a $650,000 to $800,000 level. That level of spending was not sufficient to keep up with demands and the city’s Pavement Condition Index (PCI) dropped from the 70s to the 60s, and by accounts from 2013, as low as 63.

Therefore, our recommendation is that the city develop a stream of local money to fund roadways. If the state is able to give $3 million, that money could go into the roads fund, freeing up local tax money for other priority projects. But that allows the city to move the local money back into place if and when the Sacramento economy declines again and state funding cuts are implemented.

Some seem to view this as a time to start looking to spend money again – our analysis suggests that we could go either way in terms of improvements of our fiscal condition and, therefore, fiscal restraint should remain in order until we have stable revenue streams in place to justify new spending and new projects.

—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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26 Comments

  1. Dan Carson

    David, here are a couple of relevant points for you and your readers to consider. First, we will know exactly how much state aid we will be getting by the time the session adjourns in September, long before the city council deliberations on an infrastructure package resume around November. State aid is highly likely to come in the form of subventions not subject to annual state budget decision making. It will provide a reasonable basis for the city to know what it will get each year. The package is highly likely to extend at least five years. The  constitutional measures likely to go to statewide voters next year would lock up the funding so it could not be tampered with in the next state downturn. To sum up, we will have enough information to fashion an infrastructure package of the magnitude the council chooses that puts the money where we most need it for years.

  2. Anon

    I don’t know where the state will be getting the money for more transportation funding to cities, but if the state thinks it will be forthcoming from the federal gov’t, guess again:

    From http://www.dailykos.com/story/2015/07/17/1403151/-McConnell-proposes-long-term-highway-bill-at-the-expense-of-retirees-and-the-nbsp-disabled#

    Democrats on both sides of Capitol Hill have been demanding a long-term funding bill for the highway trust fund and an end to the last-minute, short-term funding mechanisms that have been the norm for years now. Senate Majority Leader Mitch McConnell’s opening bid to give Democrats just that is typically diabolical: you can have your bill, but at the expense of retirees and the disabled.

    This is sure to set up a huge fight between highway funds and the elderly/disabled (a powerful bloc of voters – mostly seniors).

  3. Anon

    Some seem to view this as a time to start looking to spend money again – our analysis suggests that we could go either way in terms of improvements of our fiscal condition and therefore, fiscal restraint should remain in order until we have stable revenue streams in place to justify new spending and new projects.

    I would argue fiscal restraint should ALWAYS be the order of the day/week/month/year(s)!

  4. Frankly

    There are ongoing operational expenses and liabilities that should be funded by reliable and ongoing revenue streams.  Road maintenance is one of those ongoing operational expenses.  We should not be looking at potential windfalls as funding sources to cover ongoing maintenance expenses.  Doing so distorts the true financial picture.  It provides a false sense of funding adequacy that then leads politicians to over-spend on city employee raises or other discretionary projects, that then exacerbate budget problems with the windfalls no longer exist.

    Let’s connect the type of expenses with the type of revenues, and stop with the magical thinking of temporary dollars falling from the sky.

  5. Gunrocik

    Frankly and Anon are spot on.

    “Sunny Dan” needs to realize that our quality of life isn’t improved by wishing and hoping someone else will take care of us.  Money isn’t going to fall out of the sky and cure our massive funding deficit.

    “Sunny Dan” should look no further than his own experience at the Legislative Analysts Office.  If the LAO was so omniscient, why did we Californians suffer through some of the worst state budget deficits in the country year after year?  Anyone using his LAO credentials to support his analysis has zero credibility.

    1. Dan Carson

      It’s disappointing that you have chosen to respond to my piece about improving state transportation aid with a personal attack that is not in keeping with the standards for this forum.  The state would have been far better off if it had listened to my old office more often.  For example we strongly cautioned against using the one time windfall from capital gains during the Gray Davis era on permanent new spending and tax cuts.  That is a lot different than this case in which we will know in advance if substantial new ongoing state monies are available to help with our road and bike path maintenance needs.  I explained the potential sources of funding the state would have to allow this in the prior story.  But it would not be a free lunch. Davis motorists would surely end up paying higher gas taxes or vehicle license fees. This money won’t fall from trees.  It will come from your pocketbook.

      1. Doby Fleeman

        Dan,

        To your reply and that of hpierce, it would be my impression that the “issue” is more a complete lack of confidence (just as alluded in your frustrations trying to advise the legislature) with the state’s management of its fiscal affairs.  Why give them even more money that they can then pass along as tokens of reward to the lesser, local governments?  Don’t they have enough problems of their own in just managing to keep the rocks from flying in our major freeways?

        It’s hard to find a lot of support for the state’s current model of redistributing property taxes to help support our schools and former redevelopment funds, why would we want to increase their influence with our roads?

        Perhaps a complete and transparent “accounting” of how the Federal, State and local roads and gas taxes have been expended over the past two decade would provide some much needed context for this conversation.

        Short of that, it would be difficult to argue with those we believe that our cities and counties should figure out their own models to keep their streets paved and sidewalks clean………without the need for state intervention.   After all, isn’t this the first and oldest obligation and responsibility of our government?

         

         

        1. Dan Carson

          Doby, it is better if the state steps in to help us locals because roads are deteriorating all over the state.  If you plan to drive only in Davis, well great. I drove down to San Luis obispo yesterday and one local highway we were on was an absolute wreck.

        2. Doby Fleeman

          Dan,

          Why are the roads deteriorating all over the state?

          Maybe it’s the model that’s broken – i.e. that government is somehow detached from its basic responsibility to execute on the most basic of its obligations – maintaining our roads.

          Ain’t sexy, and perhaps more importantly it doesn’t win you a lot of votes, but it’s a fundamental responsibility.

          Maybe we should have a initiative which creates a budgetary expenditure priority for maintaining the roads?

          Shifting the responsibility to the state in the form of a new tax isn’t going to fix the problem if our electeds can’t insure that the initiatives will be executed accordingly.   All I can see from such a move would be to “free up” corresponding general fund revenues (corresponding to the additional funding received from the state) to be spent on whatever pet projects the locals dream up.

        3. Dan Carson

          For the reason you cite I recently urged the council to adopt a “maintenance of effort” requirement   If the city decides to implement a new utility users tax, for example, I propose that the council promise in the tax measure to keep the $3 million general fund commitment to roads in place.

        4. Doby Fleeman

          Dan,

          Why not just pay for our own programs and let the state pay for theirs?

          Has this new concept really been thought through?   Will all of LA’s gas tax remain in LA?  Is all of the additional, new tax remitted to the zip code of purchaser of the gas?    What’s to prevent the state from siphoning off additional tax revenues from the heavy commuter crowd living in Tracey and working in the Bay area, and then sending it down to LA?  or Fresno?

          A whole new bureaucracy just to collect and redistribute gas taxes?   Really?   Is that the best way to address the problem of our government – at all levels – abdicating its basic responsibility to maintain our system of roads?

          Why not talk about the basic failings of the system and what we can do to fix the system of spending priorities?

        5. Dan Carson

          Doby, our transportation funding and governance systems are as needlessly convoluted and complicated as our education and water systems.  Reforming them to reduce the excess bureaucracy and restore accountability to taxpayers is a formidable long-term project but a worthy one.  We have federal, state, local and regional agencies involved in different facets of these systems with often disappointing results. But if we are going to act in the short-term to fix our potholes I think it makes sense to accept and use additional state aid for our roads that comes our way   If I am going to have to shell out hundreds of dollars in higher gas taxes and registration fees I want my money used locally to fix our local needs.

        6. Doby Fleeman

          Dan,

          Respectfully, but when you can bring yourself to stop using terms like “accept and use additional state aid for our roads” – then maybe we can have a reasoned conversation.

          In the meantime, a new state tax is a new state tax.  Revenues from a new state tax are not “aid” – they are a new state tax, to be administered by a new bureaucracy.

          It appears that you have already conceded that the new tax is inevitable.  Likewise, judging from your defense of the conduit, it appears you are an advocate for the state to manage this new tax collection and redistribution program.

          We simply have a difference of opinion regarding the cause of the problem and the best way to address the problem that got us here in the first place.

    2. Don Shor

      The state Legislative Analyst’s Office has always been respected for impartial and objective analysis. They have warned many times over the years about the overly optimistic budget policies of governors from both parties, and suggested fiscal remedies. Here is one example:
      http://www.californiaprogressreport.com/site/california-legislative-analyst-state-budget-woes-bad-governor-says—-there-are-better-way-solve-probl
      A couple minutes on Google will yield plenty more like that. I consider your comments to be without merit.

      1. Gunrocik

        My point is that the LAO is an organization that sits in an ivory tower and expounds about what should be.  If the LAO really wanted to be effective, they would have taken a more active role in making sure their views were actually implemented.  That would have meant acknowledging the existence of politics and providing solutions that were politically palatable.

        It is easy to stake out the high ground and hope someone will join you there.  If they had cared more about actually protecting the state from itself, they would have spent more time proposing solutions that had a hope of making through the legislature.

        That is why I get frustrated when LAO types tell our staff that they aren’t being positive enough in their revenue projections. Staff, unlike the LAO’s office, understand that you have to be conservative in your projections in order to not get a Council over spending!

         

        1. Don Shor

          If the LAO really wanted to be effective, they would have taken a more active role in making sure their views were actually implemented.

          That is not their role.

          If they had cared more about actually protecting the state from itself, they would have spent more time proposing solutions that had a hope of making through the legislature.

          I don’t really want an independent analyst’s office making recommendations based on political strategy or “providing solutions that were politically palatable.”

          But I think they actually do what you want them to do overall:
          http://www.lao.ca.gov/Recommendations

  6. hpierce

    “The state would have been far better off if it had listened to my old office more often.  For example we strongly cautioned against using the one time windfall from capital gains during the Gray Davis era on permanent new spending and tax cuts.”   Truer story never said.  Just like Suze Orman and others advise, if you get a raise/bonus, increase your savings and/or emergency fund.  Depending on the source and nature of increased revenue, that set-aside should be somewhere between 10-100% (of the increase/windfall), in my opinion.

  7. Davis Progressive

    my problem here is that dan carson once again seems to be painting the bright side of the story – we might have money.  and maybe we will know whether we have money relatively early in this process, but i would prefer to act as though they don’t have that money and prepare to deal with extra funds rather than the reverse.

    i also fear that given his [moderator] edited involvement in soccer – per a previous article – that he is supporting these plans as a means to finance a new sports complex?

    1. Dan Carson

      Another cheap personal attack by DP.  For the record we are in SLO to visit colleges with my youngest. I haven’t advocated a new sports park and if one is ever built none of my kids will ever use it.  Have any other moronic personal attacks?  Please get it out of your system.

      1. Davis Progressive

        wait a second don – he has an article in the vanguard – http://www.davisvanguard.org/2014/12/vanguard-commentary-labeling-soccer-team-as-elitists-violated-its-own-policies/ – that has to be fair game?  it’s in the public realm.

      2. Davis Progressive

        you doth protest too much.  i believe you are trying to lay the groundwork with these rosy picture projections that we will have money for a sports complex.

        1. Dan Carson

          That is simply not true. repeating your misstatements doesn’t make them true  How about a public apology for claiming I want a sports park for my almost college age son?  I don’t protest too much. You make up crap too much.

  8. Don Shor

    [moderator] Please avoid the direct criticisms of Dan Carson. If you wish to engage him or others on the issues, please keep your comments to the topic at hand. I will be editing or pulling comments that stray from the topic, or involve personal comments. Thank you all for your cooperation in making the Vanguard a place for reasoned discussions of the issues. 

  9. Tia Will

    I am really not understanding what the big disagreement is here nor how it led to any personal derogatory comments. It seems that Dan Carson has made the observation that some additional funding may be available and that we will know prior to having to make a final decision on how to approach an expenditure issue.

    I see this as yet another false dichotomy. The answer to the article question in my mind is “Of course we should not count on help…” But is it not reasonable to consider what may be available when looking at all the options ? I prefer to have all of the contingencies layed out before me when starting to consider a complex issue.

    I am wondering if this is not exactly the type of information that any of us would want prior to making a personal financial decision of major magnitude. I know that I like to have all relevant information in advance, even if the relevant information is not guaranteed. For example, if I was told that I was likely to receive a big bonus this year but there were a few more contingencies that had to fall in to place for that to be the case, I would share that information ( including that it was contingent ) with my partner. We would then place that into the category of one possible scenario to be considered when deciding on how to allocate our assets. Note, that I said considered as one scenario, not go out and buy a Mazerati ( ok, tongue in cheek) based on a “maybe” which I don’t see anyone advocating for.

     

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