Special Commentary: Council Set to Approve $1.1 Million in New Spending on MOUs

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City Manager Dirk Brazil delivered his first city budget report back in May
City Manager Dirk Brazil delivered his first city budget report back in May

Despite projections from last June showing the precarious nature of the city budget and despite sales tax figures coming in nearly three percent below the budgeted estimate for 2015-16, the city council is being asked to approve four MOUs from employee groups that will add half a million to the current fiscal year budget and $1.12 million to the 2016-17 fiscal year budget.

The MOU agreements between the city and four bargaining units – Davis Police Officers’ Association (DPOA), Program Administrative and Support Employees Association (PASEA), Individual Management Employees, and Individual Police Management Employees – each come with a 2 percent COLA (Cost-of-living Adjustment) on January 1 and an additional 1 percent on July 1.

The only “good” news in these budgets is that the city is not locked into them long term. Each expires at the end of June 2017. Even that silver lining represents a mixed bag, as it is possible that the city will be able to course-correct at that time, but it is also possible that a more labor-friendly council will open vaults to the bargaining units.

The writing has been on the wall for some time, as Dirk Brazil last spring told the Finance and Budget Commission that there would not be additional concessions sought in this bargaining process – this despite the very precarious nature of the current budget.

These announcements come just six months before the voters will likely be asked to approve some form of tax – likely the Utility User Tax – to support the city’s upgrade of infrastructure such as roads.

In June 2014, the voters approved a half cent sales tax. The sales tax was billed as a temporary tax measure to deal with the current structural deficits.

FBC-6-15-1

The chart above shows the impact of the tax as it pushed the city’s fund balance into the positive. However, last June’s projections show that, as soon as that tax expires, the city’s fund balance heads right back into the negative.

The city goes from being in the black in 2020-21 by nearly $2 million to being in the red in 2021-22 by about $3.4 million. And while revenues continue to increase modestly throughout the period, expenditures increase as well.

Most ominous is that this chart doesn’t show what happens with employee compensation increases.

FBC-6-15-3

The chart shows what happens with a one percent COLA and projects it out past when the tax increase will drop off the tax rolls.

The first thing we see is that a one percent COLA will basically track with expected revenue increases across the board. So the city’s projection of being in the black will no longer hold. The city will fluctuate between slight deficits and slight surpluses. By 2020-21, the city will be in the black by $300,000 under this scenario.

When 2021-22 hits, and the tax increase disappears, the city will immediately find itself right back in the $5 million deficit it was in previously. By 2024-25, the city would be back in a $7 million deficit.

While the second chart shows what happens with a one percent annual increase, the impact of even a one-time three percent increase is monumental. We assume that the rest of bargaining units such as Fire and DCEA will have similar pay increases should council approve this one, so we are likely looking at a $2 million plus hit on the city expenditures, which was not included in the first projection.

That being the case, we may not have any single-year budget surpluses if you look at the model. And that is only assuming that we implement the 3 percent as a one-time expenditure and go back to a flat line budget.

As we argued back in June, the zero-increase budget over a decade was unrealistic. However, there is a lot of bad news here.

First, the city’s model assumes no economic downturns in the next decade. Second, CalPERS (California Public Employees’ Retirement System) is already threatening to raise the rates for the city, which could take another million out of the budget, and Governor Brown is telling CalPERS that their planned cuts do not go far enough.

Perhaps the city is hoping to further cut non-employee costs, perhaps they are planning on the voters approving the renewal of the sales tax, and approving the Utility User Tax that they can use to bolster the General Fund – particularly on roads where the city is currently pulling $4.1 million.

However, that is a lot on which to risk the sustainability of the city’s budget. The voters have not approved the Utility User Tax – and we have yet to see the plan for how that would work.

The voters have also not approved Nishi or the Innovation Parks. Right now, even if they do, they are modest revenue sources and potentially only in the long term.

The only good news is that the city could move back toward a zero-growth budget after the current MOUs expire in mid-2017, but, as we warned back in June, the city’s budget is not nearly as strong as some have suggested and simply adding a few million to the budget is going to put tremendous strain on it.

Is the council willing to buck the city manager on this budget-related item? That seems unlikely without considerable push-back from the community. As it stands now, the city is in precarious shape and a lot of the hard work from the last five years is in jeopardy.

—David M. Greenwald reporting

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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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88 thoughts on “Special Commentary: Council Set to Approve $1.1 Million in New Spending on MOUs”

  1. sisterhood

    The city purchased the DACHA homes for under their market value when the residents were being sued and the properties were in foreclosure. The CA foreclosure laws state that any previous contracts must be honored when a foreclosed property is purchased. However, none of the residents received their carrying charges (down payments). In many cases, these funds were their life savings.

    Now the city has 1.1 million dollars to spend, yet they still do not have funds to reimburse the DACHA residents, some of whom continue to live in the homes they thought they were purchasing as part of a housing “cooperative”, but are now forced to rent from the City.

      1. sisterhood

        At least one family had a lawyer representing them. I do not know the outcome. I am in proper and if I ever hear that the other resident settled, then I will pursue reimbursement of the remainder of my down payment.

        1. sisterhood

          Revenues for the City’s renting of the DACHA houses, now referred to as GAMAT, can be found in the following account:
          -160-1625-372-1500
          Along with the corresponding expenditure accounts in 160-1625-410

  2. Tia Will

    The voters have also not approved Nishi or the Innovation Parks. Right now even if they do, they are modest revenue sources and potentially only in the long term”

    Much has been said about Nishi and the Innovation Parks as revenue generators. However, the last part of your statement is the most cogent I have yet seen about their contribution to the city coffers. Nishi would be a very modest revenue generator if not a loss depending upon final configuration ( not that it does not have other merits), and the Innovation Parks ( now down to one) would never have brought in money except in the “long term”.

    I think that we still need to face what I see as simply objective fact, and what others see as somehow “unfair”. We need to be willing to pay for what we want. With appropriate relief for those who genuinely cannot pay or who would be forced out or forced into poverty, the rest of us need to pay for our desired lifestyle. We can pay with taxes, or we can pay with utilization fees, or we can donate our time and money for our pet projects, but the bottom line is we must pay for what we want. What we cannot do is to wait for some new bright shiny project to be approved and pretend that will take care of our current and near future costs.

     

    1. David Greenwald Post author

      Not everyone agrees with me on the Innovation Parks. There are certainly opportunities for more revenue – CFDs, cutting costs (although this move mitigates that possibility), etc. I prefer to be conservative with regards to projections.

      1. Miwok

        I really enjoy see the “projections” in the article for 8 or ten years of “revenue” when these agreements are expiring in two years or less, but the nice little charts display gloom and doom. An Economists dream, Obama accounting, if you will. Take figures for a year and extend them ten or more years to exaggerate them.

        Why doesn’t the charts include all this “new money” coming into the system? What a scam. Nothing like voting on bad information, and Mr Brazil giving this to a  City Council should be reprimanded for this.

    2. Anon

      Tia, setting aside the issue of the innovation parks, you seem to be advocating for increasing taxes enough to “pay for the services we want”.  The problem is if the city continually adds on projects, e.g. new sports park, new swimming pools, pay more to employee groups, it can far outpace the citizens ability to pay.  Are you advocating driving the “riffraff” out and having nothing but a wealthy enclave?  There are folks having to leave Davis because they can no longer afford to live here.

      1. Tia Will

        Anon

        Are you advocating driving the “riffraff” out and having nothing but a wealthy enclave?  There are folks having to leave Davis because they can no longer afford to live here.”

        I fully believe that by now you know full well that this is not what I am advocating. I have said many, many times including in my previous post on this tread that I would make exemption for those whom this would exclude from living in Davis. I also think that you must know by now that I believe that as a society, we have enough wealth to provide an above poverty level living standard for every man, woman and child in this country but that we refuse to do so.

        I find it disingenuous that you attribute driving out the “riffraff” to me when I am sure that you must know all of the above. Instead of attributing it to me, why not just state your own thoughts on the matter ?

         

    1. Matt Williams

      That is a very good question Tia, and one that the EPS economic/fiscal analysis doesn’t explicitly answer. The EPS report is very clear about the one-time construction expenditures by the developer of $273,078,870 (Table 3 on page 64 of the EPS analysis), and also very clear about the $185,603,212 one-time impact of Nishi on the City’s construction economy (Table 5 on page 69), but nowhere near as clear about how those one-time impacts contribute both revenues and service costs to the City Budget.

      The report is also very clear about the Estimated Annual Fiscal Impact Summary at Buildout on page 131 that lays out $1,273,000 in annual revenues and $1,351,000, (with drill down into those revenues and expenses in Table 1 on page 132), but that is only a single point in time (a future time that some say is irrelevant to our immediate city budgetary issues), and are asking questions like yours.

      A table showing the trended annual revenue and expense number estimates from year one through buildout would be very useful.

  3. Barack Palin

    David, question on a utility tax.  Being that the brunt of the tax will be gas and electricity will a utility tax be based on what a household is actually paying for gas and elec. or will it be based on what a household actually uses regardless if they have solar or not.

      1. Barack Palin

        That’s what I thought.  So basically a utility tax will be a regressive tax.  Rich people that can afford extensive solar systems and use all the electricity they want will pay much less tax than the average Joe that can’t.

        1. David Greenwald Post author

          It’s certainly not a progressive tax. I would prefer the parcel tax personally, I see a good possibility that they use the UUT to increase personnel compensation with the general fund money and then backfill with the UUT. A parcel tax might not preclude that, but it would make it more difficult.

        2. Barack Palin

          No it will not be BP, the people who have put in solar would have paid taxes at the time of the installation of their solar system.

          Matt, they’ll still be paying much less on a monthly basis than most other UUT taxpayers in Davis.  It will be seen as unfair no matter what spin is put on it.

           

          1. Matt Williams

            I agree it will be “seen” that way. That is a political calculation. This is a case where the political calculation is not supported by the actual taxes paid when you consider both the up-front tax payments and the ongoing tax payments.

        3. Barack Palin

          Matt, trying to say that a sales tax being paid up front on something takes the place of an ongoing monthly tax that everyone should have to pay is a non-starter in my opinion.

          1. Matt Williams

            That is a different question BP. The challenge you face is finding a taxing mechanism that “everyone pays” … their fair share.

    1. Anon

      To Barack Palin: UUT tax can be on all utilities, e.g. water, sewer, sanitation, cable (not including internet), telephone, gas, electric.  Each utility can be taxed at differing rates.  I suspect the city will decide to recommend taxing all utilities rather than just gas & electric.  And yes a UUT is a regressive tax to some extent.  Wealthier folks tend to use more water and gas/electric than those less fortunate, which helps such a tax to be less regressive – but it is regressive.  The problem with advocating for a parcel tax, is that it requires a 2/3 vote to approve, a difficult barrier to get over.  Hence the move towards a UUT (utility user tax), because it requires only 51% approval.  Whether the tax to be asked for will be a parcel tax or UUT is still undecided.

      1. Barack Palin

        The problem Anon is that most of the UUT tax will be based on a household’s biggest bill, their  gas and electric, which as noted will be easier for people of means to sidestep than others.

        1. Anon

          To Barack Palin: Biggest bill is city services bill, not necessarily gas/electric.  Cable bill can be huge, but have to tease out internet, which cannot be taxed per federal law (at least as far as the city can determine at the moment).

          1. Matt Williams

            Have you personally ever run into a tax that you believed was fair?

            BTW, not parsing anything. Simply reciting the factual evidence.

      2. Matt Williams

        Anon said … “The problem with advocating for a parcel tax, is that it requires a 2/3 vote to approve, a difficult barrier to get over.”

        I don’t see the 2/3 barrier as a problem because there will be a very specific list of what the money is going to be spent on, and I believe that if the citizens/voters see that kind of transparent accountability, they will be much more comfortable with voting yes.

        I personally prefer accountability and transparency. Our City needs to practice fiscal responsibility in all its transactions, taxes included.

        1. Anon

          Poll was taken showing parcel tax would not likely succeed.  Citizens may be tax weary now – it appears from past votes the threshold for passage of a tax might be hovering around 58%, which is well under the 67% needed for a parcel tax.

          1. Matt Williams

            The poll presented the people being questioned with a no accountability, no transparency, no fiscal responsibility option. Is it any wonder higher numbers of people said “No” The poll as administered had a head-on collision with the fundamental lack of governmental trust that pervades Davis.

        2. Miwok

          It is interesting that the City Policy wants to subsidize a huge rental population with a Parcel Tax. At least with the Sales tax, EVERYONE in town paid, transient or not. Parcel taxes will only hit the Houses in town, but not UC  owned properties. A gift? Subterfuge? Obfuscation?

        3. Barack Palin

          Miwok, I agree.

          I’d rather our council cut down on costs but at least with a sales tax everyone pays a share and it doesn’t just fall on the homeowners.

    2. Matt Williams

      BP, the way it has been presented in the meetings I have attended, it would be based on the net amount of a person’s bill after deducting any credits for renewable energy produced. A person who has installed solar would have paid applicable sales taxes on the capital costs of that installation.

      1. Barack Palin

        A person who has installed solar would have paid applicable sales taxes on the capital costs of that installation.

        If I buy a new car and pay sales tax does that mean I shouldn’t have to pay yearly registration taxes?

        1. Matt Williams

          I hear your point BP, but I would say that everyone who owns a car has to pay sales taxes and registration taxes. On the other hand, everyone who uses electricity in their home does not have to pay sales taxes on a solar system. So, even if your point is a good one, your analogy is a poor one.

    1. Matt Williams

      The reason overall cost of living went down is because of the steep decline in the oil/gasoline component of cost of living. Personal transportation and the transportation of goods cost considerably less.

          1. Matt Williams

            Your point became muddied when you said “though I don’t believe it.” That was what I was responding to.

            You and I are on the same page on your other question. The COLA under the Social Security Administration has been 0.0% in 2010, 2011 and 2016, and has averaged 1.2% over the last seven years (see https://www.ssa.gov/news/cola/automatic-cola.htm ). What makes Davis different from the rest of the US?

        1. Barack Palin

          Just curious, BP… what total increase/decrease of total comp have you experienced in the last 5 years?

          What does that have to do with anything?

          Do you not think our firefighters are already overpaid?

          We should only pay what we can afford as a city.

        2. hpierce

          Well, BP, “Do you not think our firefighters are already overpaid?”, “What does that have to do with anything?”  Back at ‘ya… since the FF’s aren’t a part of the topic du jour.

          Depending on who your employer is (if you have one), perhaps any pay/compensation increase/decrease you have had, has something to do with MY bottom line, as a consumer.

        3. Mark West

          hpierce:  “perhaps any pay/compensation increase/decrease you have had, has something to do with MY bottom line, as a consumer.”

          This is absolutely true, when a private business overpays its employees, the consumer is directly impacted.  With an overpriced product or service business, a consumer usually has the option of finding a competitor that offers better value. That is the direct benefit we all gain from competition in the marketplace.  When it comes to City services however, that really isn’t a reality for most.  The City has a monopoly on providing City services so when it overpays it’s employees, the consumer, otherwise known as the taxpayer, has no real choice but to foot the bill. Sure we could all move to another city that offers ‘better value’ but is that really a realistic or desirable option?

        4. hpierce

          You’ll note (hopefully) MW, that I took exception to a portion of BP’s comments.  I did not, and do not dispute the portion of his comment, “We should only pay what we can afford as a city.”

          Your comments about ‘municipal monopoly’ are noted, and valid. Consider the alternative. Same applies to other utilities, to a lesser extent.

          I’m all for fiscal responsibility.

        1. Barack Palin

          Good point Miwok.  I’d still like to know where they came up with the 3% COLA number when we’re being told no raise on Soc. Sec. because of no increase in COLA.

        2. Matt Williams

          Miwok said … “Matt, Energy and Food is excluded from the COLA.”

          That depends on what COLA you are talking about Miwok. As noted below (in the article you linked) the Social Security Administration uses the CPI for Urban Wage Earners and Clerical Workers (CPI-W) as the basis for its periodic COLA.

          CPI for Urban Wage Earners and Clerical Workers (CPI-W)

          The urban wage earner and clerical worker population consists of consumer units consisting of clerical workers, sales workers, craft workers, operative, service workers, or laborers. (Excluded from this population are professional, managerial, and technical workers; the self-employed; short-term workers; the unemployed; and retirees and others not in the labor force.[2]) More than one half of the consumer unit’s income has to be earned from the above occupations, and at least one of the members must be employed for 37 weeks or more in an eligible occupation. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is a continuation of the historical index that was introduced after World War I for use in wage negotiation.

          As your linked article also notes …

          As new uses were developed for the CPI, the need for a broader and more representative index than the CPI-W became apparent.

          Core CPI

          The core CPI index excludes goods with high price volatility, such as food and energy. This measure of core inflation systematically excludes food and energy prices because, historically, they have been highly volatile and non-systemic. More specifically, food and energy prices are widely thought to be subject to large changes that often fail to persist and do not represent relative price changes. In many instances, large movements in food and energy prices arise because of supply disruptions such as drought or OPEC-led cutbacks in production. This was introduced in the early 1970s when food and especially oil prices were quite volatile, and the Fed wanted an index that was less subject to short term shocks. However, on January 25, 2012, the Fed announced they would stop using the core CPI and rely instead on the Personal consumption expenditures price index.

  4. Sam

    David- CalPERS has already cut their estimated return rate to 6.5%.

    When it is fully phased in that will increase the city’s contribution by 40%. That is along with the 50% increase in contributions CalPERS has already approved.

    Right now Davis takes in about $40,000,000 in taxes and fees. Once the increase is in effect they will spend over $18,000,000 on pensions alone. That is 45% of their revenue.

    Approving an increase in salaries shows the city is not seriously addressing the problem, or even acknowledging it exists. I don’t see any other solution aside from going bankrupt and discharging the pension liability the city owes to its current and former employees.

     

     

  5. Mark West

    There is no good news here.  During the campaign for the sales tax increase, it was predicted that the money would not be used to help clean up our fiscal mess, but instead would be given to the employees as increased compensation.  From the start, roughly $3.5 M of the expected $5M tax increase went to cover the costs of previously negotiated compensation increases.  These MOUs propose giving the rest of that new tax money (plus a bit more) as further compensation increases, proving the prediction correct.

    This is not an issue of Davis citizens being unwilling to pay for the services we want as some like to claim, but instead an issue of a City management team (CC + CM) that is completely incapable of controlling spending on compensation.  We have grossly overspent our budget the past 10-15 years by neglecting necessary maintenance and  investments in infrastructure so that our City Council could use the money to overcompensate public employees.  That has proven to be a great way to further one’s political career, but a lousy way to run a City.  These proposed MOUs continue that practice and should be rejected.

    We need to control spending now and not hope (in vain) that someone will come along with the fortitude to do so in the future.

    1. Barack Palin

      Agreed, this sounds just like the prior sales tax increase that ended up going to firefighter raises.

      Looks like the same thing is happening to us again with the latest tax going to city employees.

    2. Topcat

      We need to control spending now and not hope (in vain) that someone will come along with the fortitude to do so in the future.

      The problem is how do “we” (presumably the citizens of Davis) get the council and the CM to control spending.  It doesn’t seem like they have any incentive to do so.

      1. Matt Williams

        Topcat said … “The problem is how do “we” (presumably the citizens of Davis) get the council and the CM to control spending. It doesn’t seem like they have any incentive to do so.”

        “We” have a City Council election coming up in June 2016. Elect Council members who are willing to be held accountable for how they control spending. It is as simple as that. Demand that any candidate you are going to vote for understands what YOU mean by fiscal responsibility.

  6. Frankly

    Mayor Dan is pursuing a Democrat political career modeled after his mother’s career, and it is the standard old pay-union-labor-to-play-politics plan.  Mayor Dan has Lucas and apparently Rochelle in his pocket and was able to chase away the friend-of-fiscal-prudence City Manager, Steve Pinkerton, and replace him with a loyal friend-of-union-labor, Dirk Brazil.

    The other power base helping Dan’s career are those moneyed interests that want to protect their inflated property values and satiate their NIMBY, change-averse, no-growth twitch.

    And our city staff are strong on land preservation and weak on planning and development.

    And this weak planning and development staff have been manipulated by the Dan, Lucas, Rochelle trifecta to produce a weak, incomplete and factually-incorrect assessment of revenue potential from the innovation parks.  It was amateur hour on clear display; but with so many business and development-ignorant “smart” voters, some owning the twitch and eager to accept anything that helps them calm it, these guys could get away with it.

    The problem we have is simple.  The city does not bring in enough revenue to support our city service needs and expectations.

    We also have a spending problem in that we pay our city employees way too much from a total compensation perspective.  But our by far our biggest problem is a lack of revenue.

    Palo Alto, another small college city with a smaller population takes in $150k compared to our measly $50k

    72,000 people in a 10 square mile city that is growing by about 800-1000 people per year from UCD growth and other modest numbers of new housing.  We are heading toward a great big fiscal crash and all we can do is ban plastic bags and increase spending.

    We have less than 50% of the productive and tax-generating commercial real estate we should have.  We have sky-high commercial rents because of our inadequate supply.  Downtown retailers are being priced out and with nowhere else to go, they are retiring early.  With high cost of space, only pizza restaurants that can convert to night clubs can make a profit.

    Our local economy lacks adequate size and scale for our population.

    The problem is not inadequate tax assessments, since we already pay some of the highest municipal tax rates in California.

    This city should be working on a 50-year plan to build a minimum of another 1000 acres of commercial property with a mix of research, light industrial and retail.  We should expect an average of $2.5MM additional revenue for each new 100 acres that is fully populated.  This includes direct revenue from tax assessments, and the secondary revenue from business transactions derived from the businesses and the employees of the businesses.

    Let’s not be shy about new tax assessment districts.  Business wants to locate here because of UCD.  Developers will benefit from the reliable attraction and so we can leverage that for a greater share of the rewards.

    1000 acres of new commercial space will take us from $50MM to $75MM in general fund revenue.

    1000 acres is 1.5 square miles.   That would make Davis 11.5 square miles instead of 10 square miles, and we would still be the most population-dense comparable city.

    But then this would upset some reliable money contributors to the political campaigns of our politically ambitious council members and their pay-for-play friends.

    So we likely just keep stalling and blocking and whining and spending.  Those old politicians that set us up for the crash will be long gone… on to their next step in their political career.

    And then we can look in the mirror as being responsible for voting them in.

      1. Matt Williams

        Here’s a question for you Anon, “Which do you think will have a greater (positive or negative) fiscal effect on the Davis community, the Innovation Park(s) or the fact that Davis lost 1,500 people in the 25-54 year-old age group and 900 people in the 0-19 year-old age group?”

        1. Frankly

          That is the other part of the fiscal benefit missing from the “analysis”.  Those middle-age groups tend to spend money.  And we need to also juxtapose the anticipated fiscal benefits of the innovation parks on the reduction in revenue that will continue as the gray-haired demographic continues to grow and dominate.

          1. Matt Williams

            Frankly said … “And we need to also juxtapose the anticipated fiscal benefits of the innovation parks on the reduction in revenue that will continue as the gray-haired demographic continues to grow and dominate.

            It isn’t just the growth of the gray-haired demographic Frankly. Davis is actually getting a double whammy demographically. In the period from 2000 to 2010, the gray-haired 55 years and older cohort increased from 12% of the Davis population to 17.5% and the UCD student aged population increased from 22.7% of the Davis population to 26.2%. That double whammy meant the 25 to 54 years-old population decreased from 38.4% to 33.0% and the 0 to 19 years-old population (feeding DJUSD) decreased from 26.8% to 23.4%.

            If anything the velocity of that trend has increased in the five years from 2010 to 2015. The gray-haired percentage is probably over 20% now. The 2020 Initiative has added 600 students to UCD each year, so the UCD student aged population is probably over 30% now. That means that percentage of the 25-54 and 0-19 year-old cohorts has dropped from a combined 56.4% to under 50%.

            So I will re-ask the question I asked Anon, “Which do you think will have a greater (positive or negative) fiscal effect on the Davis community, the Innovation Park(s) or the fact that Davis lost 1,500 people in the 25-54 year-old age group and 900 people in the 0-19 year-old age group?”

    1. Miwok

      We also have a spending problem in that we pay our city employees way too much from a total compensation perspective

      You can never pay people too much, depending on the quality of the people you want. You want fast food workers running the City, go ahead and lay off all the ones you have and ask for “interns”.

      We are heading toward a great big fiscal crash and all we can do is ban plastic bags and increase spending.

      Because Style over Substance works every election cycle. Dan is running on his promises, including that “Sports Park” he would have built if he had stayed as Mayor… Wonder how much his Mother left unfinished as well?

      All this talk about “sustainability” and they don’t know the meaning of the word.

      1. Frankly

        You can never pay people too much, depending on the quality of the people you want.

        When you pay more than market rates for specific labor skills/talents, you pay too much.  We are paying too much for most city labor in consideration of their total compensation compared to market rates for similar jobs in the private sector.

        You want fast food workers running the City, go ahead and lay off all the ones you have and ask for “interns”.

        A bit of hyperbole there.

        You could pay the firefighters 2/3 what they are paid, and 50% of the benefits and there would be a line four blocks long of qualified candidates for job openings.

        1. hpierce

          Two areas of technical comments:

          “When you pay more than market rates for specific labor skills/talents, you pay too much.”

          what is “market”?  Adjusted for area/locale?
          “market” is also usually defined as ‘average’ or ‘median’… should compensation for a position occupied by a “highly proficient” employee be compensated the same as for a “meets minimum standard” employee?  Remember, public employment has constraints, system-wide (not just Davis) that is different from the flexibility in the private sector.  Right or wrong, IT IS.
          specific labor skills/talents” … I always looked to hire competent generalists, UNLESS specific skills were needed… called ‘flexibility’.  You pay more for specialists.

          “We are paying too much for most city labor in consideration of their total compensation compared to market rates for similar jobs in the private sector.”

          I assume by your word ‘most’, you mean 50-75%… “some”, I could definitely agree with.
          are there “similar jobs” in the private sector where the job is looking out for the long term benefit of the community, rather than the short-term benefit to the employer?  Who is the ‘master’?
          In the private sector, the main goal (appears) to be maximizing return to the employer without pissing off the client/customer.  Not sure there is an apples to apples comparison.  In public service, a good employee recognizes that the employer IS the client/customer.

          This is not to say that adjustments may be warranted, but frankly, Frankly (because you are) your logic, isn’t.

        2. Frankly

          what is “market”?  Adjusted for area/locale?

          Market is the labor market.  It is adjusted for the labor market.  For example, the Bay Area is not the same labor market as is the Sacramento Area labor market.  But the Davis labor market is within the Sacramento labor market.

          The problem with public sector labor compensation rates is that they are determined void of labor market assessment.  For example, the total compensation for an Accounting Manager for the City is 60% higher than for the general labor market (which, by the way, incorporates the higher-paid public sector accounting managers).

          Every five years my board of directors pays an outside expert to do an executive compensation study and recommendation so that my compensation is defendable from a market perspective.

          Every three years I do the same for all my employees.

          Typically there are three categories:

          – Base pay

          – Benefits

          – Incentive pay

          Typically the base pay is divided into four quartiles.   The first quartile would be for new hires (the junior employee).  The third-fourth quartile would be for fully-trained employees with years of experience (the senior employee).

          Public sector employees don’t get incentive pay (a problem as I see it), but their base pay tends to exceed the averages and means for the private sector for like roles and like experience and skills.  Then when you add the value of the benefits and compare, the public sector employee tends to be significantly over-paid as per the labor market norms.

          There is no way to spin this as the public sector compensation levels being fair.  Most are significantly over-compensated when adding in the value of all their benefits.

          By the way… going back 20-30 years ago this was not the case. The private sector corrected from economic adjustments while the government employees kept getting raises from the politicians.

    2. Topcat

      We also have a spending problem in that we pay our city employees way too much from a total compensation perspective.

      I just wish that I’d gone to work for the City years ago so that I could be enjoying that nice retirement now instead of slaving away in the private sector 🙁

  7. hpierce

    What is noticeably missing from all of this is DCEA & FF’s.  They had “imposed agreements”, which, as I understood it, are only good for a year… and it has been much more than a year since the imposition of those “agreements”.

    Forgetting, for a moment, the merits/demerits of the MOU’s coming forward, what is going on re: DCEA & FF’s?

    Also not mentioned (nor findable on the City website) are Dept Heads and CM.

    1. David Greenwald Post author

      I’ve been told there have been no talks with DCEA and Fire. The city has no incentive at this point to come to the table as they will continue to operate under the imposed contracts in-perpetuity.

      1. hpierce

        Really… thought the state law specifically said imposed contracts were only good for one year, the under the codes the City had to meet and confer… guess I was mistaken.

        1. David Greenwald Post author

          Perhaps on paper, but what happens if the two sides don’t reach agreement, does it revert to the previous contract? I was always told (but never looked at the law), the status quo prevails and that’s the big advantage for a city going to impasse.

        2. hpierce

          From the Codes:  3505.7. Impasse; implementation of last, best, and final offer
          After any applicable mediation and factfinding procedures have been exhausted, but no earlier than 10 days after the factfinders’ written findings of fact and recommended terms of settlement have been submitted to the parties pursuant to Section 3505.5, a public agency that is not required to proceed to interest arbitration may, after holding a public hearing regarding the impasse, implement its last, best, and final offer, but shall not implement a memorandum of understanding. The unilateral implementation of a public agency’s last, best, and final offer shall not deprive a recognized employee organization of the right each year to meet and confer on matters within the scope of representation, whether or not those matters are included in the unilateral implementation, prior to the adoption by the public agency of its annual budget, or as otherwise required by law.
          Guess I just can’t read well…

          http://www.perb.ca.gov/laws/statutes.aspx#ST3505
           

  8. SODA

    Sorry reading on iPhone and article tables doesn’t enlarge for me so ? is how these increases in these MOUs compare to previous years? And is this the best that could be negotiated after months of negotiation? When did contracts expire?

    CM was prophetic when he said shortly after his appointment that decreasing compensation would not happen.

    Do we have any indication of individual CC views on this issue?

  9. TrueBlueDevil

    Count me as ignorant here, but I have some questions. If the city budget is precarious (it is), there is litle in the way of new sources of revenue coming down the pike, and we have $100+ million in much-needed road repairs that are unfunded – which will explode in cost if we don’t move quickly – along with other unfunded needs, why in the heck are we passing along more money to these various employee groups?

    They already have employment agreements in place, right? These union contracts haven’t ended, have they?

    These pay raises for over-compensated government employees seem counter productive, or worse.

    1. hpierce

      The ones under discussion expire 12/31/15.  There are two other groups who under imposed terms that, from what I have read, have technically (and likely, factually) expired at least a year ago.  Facts, no judgement.

      BTW, there is only one ‘union’ representing Davis city employees… that would be the FF’s.

  10. davisite4

    Does anyone think this is a good idea?  I read through the comments quickly, but I didn’t notice anyone support it.  If people that usually disagree are in agreement on this, the CC should take notice.  Or perhaps we should make sure that they do.

    1. hpierce

      If.

      Remember, the CC has been briefed several times, in closed session, and to think that there wasn’t at least 3 who agreed to the proposals, is ludicrous.

      The CM “needs to count to three” @ every CC meeting.

      1. Barack Palin

        Davisite4 is saying that by looking at the comments on this thread it looks like there’s not much support for this, not what the council might think.  If people get up in arms over this the council will listen.

        1. Mark West

          BP:  “If people get up in arms over this the council will listen.”

          I doubt it.  The reason for giving more money to the employees at this point is the belief that doing so will boost the odds of winning the next election. especially for those seeking higher office.  That has been the successful course in the past, and there is no reason at this point to believe things have changed.  What might make the Council take note for the future however, is if the electorate changes the ‘rules’ and rejects all the candidates who vote to support the giveaways. Getting up in arms and beating on plowshares isn’t likely to make a difference, but electing someone else certainly will.

        2. hpierce

          MW… if what you say is true, it will be because some folk have a knee-jerk reaction towards “labor”… I recall that only the FF union has a “political fund” (think PD folk made some minor contributions to CC, years ago).  The city employees are but a “spit in the ocean” for any office, monetarily or voting numbers.

        3. Mark West

          hpierce:  “The city employees are but a “spit in the ocean” for any office, monetarily or voting numbers.”

          True, but public employees in general are not, and being willing to hand out compensation increases that the City cannot afford in this situation suggests a willingness to do the same down the road…say with State employees. Besides, I expect that the majority of households in Davis have at least one public employee (State, City, County or University) and that is not a ‘spit in the ocean.’

           

  11. hpierce

    You can’t (I think, because I tried) know how this all will affect CC compensation… is there a “me too clause”?  CC compensation, particularly post-retirement benefits, has not been diclosed on the City web-site, nor on the VG.  Heard rumors that a former CC member was insisting on their full retirement coverage, while railing against that coverage for employees.

  12. Don Shor

    Perhaps the city is hoping to further cut non-employee costs, perhaps they are planning on the voters approving the renewal of the sales tax, and approving the Utility User Tax that they can use to bolster the General Fund – particularly on roads where the city is currently pulling $4.1 million.

    If the city council passes this increased compensation, using up a significant percentage of the sales tax increase the voters just approved, I would find it very difficult to support any revenue increases going forward, and I suspect I’m not alone in that. It would jeopardize future parcel taxes, possible utility taxes, and any other ideas that have been floating around, because it would make it obvious that sustainable budgeting is not going to happen.

     

  13. Tia Will

    BP

    I’d rather our council cut down on costs but at least with a sales tax everyone pays a share and it doesn’t just fall on the homeowners.”

    This is a great illustration of why the “it’s not fair” argument is not persuasive to me. The question regarding fairness always must be, fair to whom and under what circumstances ? While it is true that a parcel tax places the burden on those who have enough material resources to have inherited or purchased a home, a sales tax puts a higher burden on those who do not have enough material resources own such a property. On the other hand, you have been stating that it is not “fair” having enough resources to have installed solar to lessen one’s utility rates while those who do not have enough resources to install solar have to pay more.  So where does “fairness” lie ?  I think too often what is deemed “fair” is what is advantageous to the person who is claiming “it’s not fair”. Hardly a persuasive argument.

    1. Barack Palin

      Tia will, do you think it’s right for your neighbor to pay much less in a UUT tax because they had the money to install solar and you didn’t?  I mean you’re already at a disadvantage with higher bills because you couldn’t afford solar then you get hit with an added tax that they don’t have to pay?

      Do you think it’s right that only homeowners pay a parcel tax that’s not levied on renters?

      At least with a sales tax everyone has skin in the game.  Most of the time people with higher means will spend more so they pay more in sales tax and it’s just the opposite for people of less means.

      You tell me a system that you deem more equitable for all involved.

    2. Barack Palin

      Tia Will

      I think too often what is deemed “fair” is what is advantageous to the person who is claiming “it’s not fair”. Hardly a persuasive argument.

      What’s funny about your statement is you say this then you state this :

      ” a sales tax puts a higher burden on those who do not have enough material resources own such a property.”  

      So you’re saying it’s not “fair” to them?   Hardly a persuasive argument.

       

  14. Tia Will

    BP

    So you’re saying it’s not “fair” to them?   Hardly a persuasive argument”

    No, I am pointing out the futility of ever using the “its not fair” argument. Which I basically believe is whining about one’s own life choices. “Fair” is always a subjective call, and almost always based on protecting what the speaker already has and perceives as being at risk.

    TopCat has stepped up and acknowledged the source of most people’s complaint.

    I just wish that I’d gone to work for the City years ago so that I could be enjoying that nice retirement now instead of slaving away in the private sector :-(

    I am in full agreement with one premise of the far right. I believe in personal responsibility, in not whining about “fairness” when the true source of dissatisfaction is our own suboptimal choices. And I also believe in acknowledging that our current system is designed to promote inequality and that the economic deck is strongly stacked against some such that not everyone does have the same opportunity to advance in our society. This is where the philosophic right and I part company. I believe that instead of spinning our emotional wheels over “fairness”, we simply provide an above the poverty line baseline income to all contributing members of our society. With this as the baseline, I believe that we would truly see people rise to the occasion by contributing according to their own interests and talents rather than regretting more economically, but perhaps less personally satisfying outcomes.

    1. Barack Palin

      No, I am pointing out the futility of ever using the “its not fair” argument. 

      That’s exactly what you’re doing even though you might not say the word “fair”.

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