Commentary: Moving in the Wrong Direction on Financial Issues

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City HallI increasingly find myself in a strange position with regard to city finances and the direction in which we should be moving. On the one hand, the Vanguard has been pushing for revenue for roads for a long time now. However, after last week’s discussion on revenue measures, the city council seems to be moving away from a way to fund infrastructure.

Put simply, increasing the TOT (Transient Occupancy Tax) is a no-brainer but isn’t likely to move the needle. The UUT (Utility User Tax) appears to be off the table. The soda tax is unlikely to fund infrastructure (and I would argue it should go toward children’s health and nutrition, not general fund needs). And the parcel tax is a big hairy monster that is unlikely to be placed on the ballot.

On the other hand, as the passage of the MOUs (Memorandums of Understanding) demonstrate, the current council as a whole, not singling out individuals here, does not seem to have the collective appetite to make further cuts. We remain perched on a precarious ledge. Whatever benefits come from innovation parks, if they come, will be down the line and there is a lot of work to even get them on the ballot.

While the MOU issue has gotten scant coverage in the local press and general finances appear to take a backseat to our coverage, we have noticed some percolation.

Last week there were two letters in the local paper that cited a story in the Sacramento Bee – that the Vanguard, but not the local paper, picked up.

Jean and Alan Jackman wrote, “I find it shocking to read in the Sacramento Bee that six Davis Fire Department employees in 2014 earned between $241,709 and $297,692 in one year and that the police chief earned $236,908, less than the six in the Fire Department.”

“And those figures do not include employer payments for health care or benefits. The city manager doesn’t even appear on the list of highly compensated employees,” they wrote. “Then I note the lack of transparency for five years in our open-space parcel tax funds. And last week the council vote of 4-1 without discussion regarding employee raises. There seems to be a disturbing pattern here. Who is minding the cash register?”

The same day John Rogers added, “I have always wondered which Davis union was the strongest. After reading in Sunday’s Sacramento Bee about the 50 highest-paid local government officials, I think I have figured it out. A Davis fire captain is No. 8 at $297,692. Three Firefighter IIs are No. 10 at $294,308, No. 15 at $275,920 and No. 16 at $275,814. A fire captain is No. 18 at $265,576, a fire division chief is No. 38 at $241,707 and the Davis police chief is No. 44 at $236,908.”

He added, “Davis firefighters have the strongest union by far. It seems to me that the firefighters union would want to help the city fix the potholes in our streets. It would make the fire trucks less bouncy.”

Finally, a good column by Rich Rifkin: “What will the people of Davis prioritize?”

Mr. Rifkin’s main thrust is that the residents of Davis have to make a choice between city services and cost. Residents, he says, “want a city government that delivers a vast array of services” and in order “to afford those services and more, citizens have voted in favor of all manner of new taxes,” but at the same time, “Davis residents apparently want to provide generous pay and benefits to city employees.”

However, he argues, “the citizens of Davis cannot have it all.”

He notes that, since 2008, “as the compensation given to city workers exploded in cost and the real estate bubble burst, almost all city services have declined. We now have much worse roads and sidewalks, fewer police officers on patrol, parks and greenbelts that are not properly maintained, city buildings in need of repair and so on. When non-critical infrastructure breaks, it will not be fixed.”

Mr. Rifkin notes, “In order to keep paying humongous salaries and benefits, the city reduced its workforce by roughly 100 full-time people between 2009 and 2012. Even though some of those jobs of late have been filled, the explosion in pension and medical costs portend a dire future, where services will have to be vastly cut back in the years ahead.”

On top of increased health care costs and pension costs, the council has made matters worse by voting to increase pay beginning on January 1 to four labor groups. He writes, “In 2016-17, the taxpayers will shell out $1.129 million more for these hikes, with more to come when the dust settles with the rest of the city employees.”

These, he argues “are only the beginning. They will drive up the cost of pensions, too, and more services will have to be cut as those costs rise.”

Rich Rifkin ultimately pins these decisions on city manager Dirk Brazil, about whom he says, “Dirk Brazil, has been the driving force behind jacking up the cost of labor for Davis lately.”

He argues, “It’s what he was hired to do after the labor unions prodded our cost-conscious city manager, Steve Pinkerton, to leave. (The firefighters held a big celebration at a downtown pizza place on Pinkerton’s last day, and their political candidates feasted with them.)”

Mr. Rifkin writes, “Brazil strangely tries to argue that these raises are needed because take-home pay has fallen in recent years for many employees who are funding a little more of their bloated pensions. But Brazil, ever-munificent with taxpayer money, ignores the fact that total employee compensation is what really counts — and it has kept rising to the point that the services we want are no longer affordable.”

While Mr. Rifkin nails most of this, I disagree that Mr. Brazil was hired to increase compensation to labor. Instead, I think he was hired to make sure the mayor got elected to the assembly and that increasing compensation to labor groups is just a means to that end.

Many will disagree with that sentiment, but I urge you again to watch the debate and discussion at last week’s meeting where the city manager pushed back on the council majority regarding the revenue measures, where the mayor was on the losing side of a 3-2 vote. (Don’t believe me? Watch the videos here.)

Where does this take us? It will be an interesting 2016, that’s for sure.

—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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29 thoughts on “Commentary: Moving in the Wrong Direction on Financial Issues”

  1. Tia Will

    I disagree that Mr. Brazil was hired to increase compensation to labor. Instead, I think he was hired to make sure the mayor got elected to the assembly and that increasing compensation to labor groups is just a means to that end.”

    So what we have here are two very bright, articulate and well informed individuals ( David and Rich) disagreeing over what the “real motives” of those who hired Mr. Brazil were. I think this is a wonderful and succinct demonstration of the limitations of believing that our understanding of what is happening in the minds of others is better than that the owner of that mind.

    I frequently call out this “mind reading” school of public commentary  when it is aimed at me by posters on the right. I feel in calling behaviors for what they are regardless of position on the political spectrum or whether or not I might agree with how an issue “appears”.

     

  2. Don Shor

    Our budget is balanced and resilient.Due to improved revenues and cost-cutting efforts, our budget is balanced with a healthy 15-percent reserve. Better yet, it is a fiscally resilient one in that we are paying what we need to be for our pension and retiree health obligations and are making substantial investments in our infrastructure (see below).

    Yes, there are still long-term challenges. But we are doing very well.

    http://www.davisenterprise.com/forum/opinion-columns/the-mayors-corner-the-davis-renaissance/

  3. Misanthrop

    “Finally: A good Column by Rich Rifkin”

    What a joke. Laugh out loud.

    Rifkin highlights the outrageous compensation received by several of our local firefighters but then after attacking this low hanging fruit never points out that these abuses are exceptional. Instead he dog piles city management compensation too. At least the SacBee had a follow up piece to the one about the highest paid public sector workers showing how half of Calpers retirees get $12,000 or less a year. Rifkin makes the obvious case that Davis wants to have good services, well paid employees and limited growth but spends most of his time, as usual, whining about over compensated employees and lack of revenue. He could have written a great column but failed to challenge the limited growth  dogma that is hamstringing our ability to raise adequate funds for our community needs and instead served another conservative plate of public sector austerity tripe.

    Its been interesting to read all the usual hang wringing over the 3% budget increase and the bashing of the Mayor and the City Manager for a small increase for the bargaining units who worked with the city during the Great Recession while the people who were on the council that gave the huge salary and unfunded pension increases that wrecked havoc on the budget in the first place are getting almost a free pass. Perhaps when you cover the assembly campaign you will tell the real story of how the councils that the candidates sat on dealt with the Firefighters, one voted to impose a contract to try to restore budgetary sanity after the other gave a 36% raise. Why is it that the fiscally prudent one is getting most of the Vanguard heat?

    1. Alan Miller

      Why don’t you write the column?  No one is stopping you except your own anonymity.  I mean it, you imply here, but don’t name . . . spend a little more time and write the column.

  4. Barack Palin

    the people who were on the council that gave the huge salary and unfunded pension increases that wrecked havoc on the budget in the first place are getting almost a free pass

    Not at all, that council has been called out many times for giving away the store.

    Why is it that the fiscally prudent one is getting most of the Vanguard heat?

    Because the current council all but promised that the recent sales tax increase wouldn’t go for employee raises but they turned around and did it anyway.  They lost all trust.

     

  5. Topcat

    This is a good article. Many Davis residents who don’t follow local politics have no idea why the City is in such bad financial condition.  Everyone I’ve talked with about the firefighter compensation is aghast at how things have gotten so out of whack.  Of course that’s just the tip of the iceberg as most City employees enjoy generous salaries, lavish benefits and a great retirement.  All this at the expense of the taxpayers.

  6. Ron

    So, these outrageous salaries for firefighters are one of the reasons that the city is reporting financial difficulties, and is advocating for development?  And, we’re expected to believe that the hoped-for revenues from a commercial development will be put to good use in the future?

     

    1. Frankly

      Ron, this is good question that has been repeated many times on this blog.  And with the recent CC decision to approve more employee raises even without new revenue, it is a reasonable assumption that any new revenue will just go to expanding employee costs.

      Welcome to Democrat-land!

    2. Matt Williams

      It is a reasonable assumption until, and unless, the voters choose Council members who understand the fiscal realities, and make fiscally responsible decisions.

        1. Matt Williams

          BP, the questions asked at the Council candidate forums in recent election cycles do not support your “We assume …” statement.  Discussion of fiscal issues skimmed the surface and didn’t drill down into the realities below that surface.

          Another problem with your “We assume …” statement is that Rifkin’s prophesy becomes an almost certain reality.  His references to Julie Partansky Pond and Howard Reese Bike Path are clear signs of the decline in the level of services being provided to the taxpayers for the dollars they provide in taxes and fees.

          A viable alternative to assuming doesn’t have to go as far as Howard Beale went in Network, but taking the time to be sure that the Council members you elect understand fiscal responsibility is a good place to start.

        2. Matt Williams

          If you are willing to complain, you need to be willing to contribute.

          Contribution comes in many forms.  For some it is as simple as casting an informed vote.  For others it is using the public comment pulpit to voice both concerns and support.  For others still, it means doing more.  After years of doing the first and the second, I have chosen to expand my public service.  If anyone finds that problematic, then they won’t vote for me to be their public servant.  That will be their informed vote.

          With that said, is there anything in what I said that you disagree with?  If there isn’t, then your comment is simply an ad hominem digression/distraction from the real issues.

  7. Robb Davis

    I appreciate this article and Rich’s.  I think the more we discuss the realities of our local fiscal situation the better.  There is a need for accuracy however.  Two points:

    1. The firefighter data presented in the Bee article was inflated.  From staff: First, the total Regular Pay column should have been based on regular pay only. Instead, when the information was pulled from the payroll system, it was the total amount of the employee’s wages on their W2.  The amount that was reported in that column was the total income (from all sources) the employee earned for 2014. Since this first column was reported in error as a total column, not just a base wages column, the total pay and benefit numbers are significantly inflated.  The overtime pay, lump sum pay,  and other pay are erroneously added to the total and not the base.

    While this may not take away from the overall message, it does indicate that there was a significant overstatement of total compensation in the article.  I am not sure if the Bee has retracted/corrected the article or not.

    2. I take exception to Jean Jackman’s letter.  While it is true that the expenditures related to Measure O (open space Measure O) were not clearly reported in the past, it was THIS City Council that requested and got a full accounting of all expenditures since the beginning.  It was our action that led to transparency being restored and better accounting going forward.  It was the detailed analysis by the new City property manager–Tracy Reynolds–that permitted a full accounting.  I am confused by the accusation that no one is minding the store when this CC is in the process of bringing to light such matters–as well as others related to building and park maintenance backlogs.

    I have disagreed with some decisions of the majority around compensation but that should not take away from the fact that this Council continues to seek a full accounting of the costs before us.  Hard decisions are ahead and we need the community’s continued vigilance to challenge us on these matters.  I just think that an accurate picture in all matters is necessary.

    1. Frankly

      The amount that was reported in that column was the total income (from all sources) the employee earned for 2014.

      Robb – I respectfully disagree that there was any over-stating of compensation.  Just using the base wage would have excluded these other payments and under-stated the total compensation.

      These are all monies paid these employees.

      I would also add the dollar value of their paid time off benefits.  They are significantly greater than are the averages in the private sector.

      I am a bit exasperated that you would even make this point that the money paid is overstated.  These amounts are simply asinine… WAY over what is reasonable this day and age.   Anyone that defends them is a nincompoop.  I know you don’t defend them, but I would prefer that we don’t sugar-coat them.

      1. Robb Davis

        Frankly – All I was saying is that it was counted wrongly.  They double counted.  I am not making an argument about the merits of counting total compensation.  We absolutely should.  They made a clerical error.  That was my entire point. Nothing more.

    2. Sam

      So the Fire Captain only made $255K not $342K. Even at $255K there is nothing showing the cost of the Captain’s unfunded portion of the pension and OPEB.

      Has a new revenue/expense projection been run showing the recently approved COLA and increase in CALPERS rates due to the drop in assumed investment return? It would be interesting to see if we go into the red before the sales tax even runs out.

    3. Matt Williams

      Robb Davis said . . . “2. I take exception to Jean Jackman’s letter.  While it is true that the expenditures related to Measure O (open space Measure O) were not clearly reported in the past, it was THIS City Council that requested and got a full accounting of all expenditures since the beginning.  It was our action that led to transparency being restored and better accounting going forward.  It was the detailed analysis by the new City property manager–Tracie Reynolds–that permitted a full accounting.  I am confused by the accusation that no one is minding the store when this CC is in the process of bringing to light such matters–as well as others related to building and park maintenance backlogs.”

      Robb, both the concerns in your response and the concerns Jean raises in her comment have merit.  You are absolutely right that the Council handled this issue well once it was brought to your attention.  Further, I wholeheartedly agree with your praise of Tracie Reynolds.  She has done a superb job since taking the reins of the Open Space program from Mitch Sears.  However, the issue wouldn’t have even been on the Council’s radar if Jean and other citizens hadn’t beaten their drums (not so) softly.  At the November Open Space and Habitat Commission meeting, commissioner Helena Chung praised Tracie for the quality and thoroughness of her report, noting that, “We have been asking for this information for the past five years.”  So, “accuracy” falls somewhere in the middle between your comments and Jean’s.

      Jean’s “no one is minding the store” comment is symptomatic of the fact that once distrust becomes the predominant sentiment regarding government, it is understandable that the switch doesn’t simply flip from distrust to trust.  Both you and Tracie have earned a considerable amount of trust, and that trust needs to be seen as the rule.  I say “seen as” because many, many people working for the City earn trust every day.  Unfortunately, the moments that have engendered distrust still exist, and human nature often follows the old saying that goes as follows, “You do ten things right and one thing wrong and you are farther behind than when you started”  

      I look forward to contributing to the efforts to reach a time when that saying will no longer apply.  Until then, Jean’s pessimistic statement tells us that we still have a way to go before trust is restored.

      1. Robb Davis

        Matt – I (and other CC members) requested this information in September or October of 2014. I don’t recall hearing the sound of drums. I DO recall requesting it as part of my learning about the state of various fund balances. Learning that still continues.

        1. Matt Williams

          Robb, I believe the Council made its request on October 21, 2014, as part of the discussion of Regular Agenda Item 06 — Overview of Yolo Habitat and Natural Community Conservation Plans.  That request is contemporaneous with the beginning of the “drum beating” by members of the public (as documented in the 10/6/14 OSHC meeting minutes).

          You more than likely would not have heard about the 10/6 public comment at OSHC because those members of the public followed protocol and brought forward their concerns in what they believed was the appropriate venue for open space issues, the OSHC.  Other than the Council Liaison to the OSHC, none of the Council members would have heard those drums. but Staff would have heard those concerns.

          Tracie Reynolds’ arrival in April 2015 signaled a sea change in responsiveness to both the Council’s October 21st request and the ongoing concerns being raised by citizens.

          With the above said, I agree with you that Jean’s “no one is minding the store” comment is not an accurate or fair assessment of what is currently happening.  If she had chosen to use the past tense, it would not have suffered from either of those deficiencies.

          The good news is that thanks to Tracie, and Council, and the OSHC, and Jean, we are currently moving in the right direction going forward.  That is an accomplishment worth celebrating.

      1. Robb Davis

        Go for it. Please move beyond anonymous griping here and start “taking it back.”  There is an election in six months. Put your best candidates forward. For those of us who are not up for election you know the options open to you. Time for you all to move beyond words to action.

        1. Frankly

          I think we need more controls and disclosures for how politicians can spend taxpayer money.  For one, I would cap all employee compensation increases to not exceed the rate of inflation.  All government entities should be forced to spend only within budget… no deficit spending.  Debt is allowed to meet budget shortfalls, but only with debt service covered by cuts.  And everything… I mean EVERYTHING that comes in and goes out must be fully disclosed so any voter with a 12th grade education can understand it. All employee compensation… total compensation… including the monetary value of their paid sick leave, holiday leave and vacation leave… needs to be fully disclosed. Every penny spent on politicians needs to be fully disclosed.  What we need is initiatives and measures to get this done.  They are coming.  Eventually the public sector union – Democrat machine will be unraveled by the voters finally noting the financial chaos that corrupt relationship has caused.

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