On Tuesday, Mayor Dan Wolk will deliver his version of the State of the City at the Chamber Luncheon, but, based on his column on December 27, we already know his perspective. He is calling it a “Davis Renaissance.” He wrote, “I’ve never felt more optimistic about the direction of our town.”
However, Mayor Pro Tem Robb Davis, in a column published in both the Enterprise and the Vanguard on Sunday, challenges that perspective.
One of our readers questioned this, writing, “Seems like a glass half full or half empty argument. Dan says we are currently balanced but need to raise revenue for infrastructure. Robb says we have unfunded liabilities so we shouldn’t say we are out of the woods and need to increase revenue. How different are these views? Not much really.”
The Vanguard disagrees with the view that this is really just a half full/half empty argument. Here is “the tale of the tape”:
Dan Wolk: “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… Yes, there are still long-term challenges. But we are doing very well.”
Robb Davis: “Dan is correct: we are paying what we need to on retiree medical and pensions, but the costs of these continue to grow more quickly than revenue growth. He is also right that there ARE long-term challenges. But they are not just long-term. They are here now.”
Vanguard: The budget may be balanced on paper, but, as Robb Davis quickly points out, we owe $10 million on infrastructure out of a $50 million general fund. We may be paying what we need to on pensions and OPEB (Other Post-Employment Benefits), but those costs continue to escalate. We can debate what “balanced” means, but the budget is not resilient at all.
Dan Wolk: “Reinvesting in our infrastructure. If there’s one thing that has marked ‘Renew Davis,’ it’s been the sight of so much construction. This includes our $230 million regional water project, a $90 million wastewater treatment plant, and a $12 million, two-year effort to improve our roads. And the city is exploring ways in which to fund more, particularly parks and recreation facilities.”
Robb Davis: “In a December 15 report to Council, City staff demonstrated that we are under spending on critical infrastructure and programs by over $10 million on an annual (ongoing) basis. That is $10 million every year. This is for things we already have (not new things), including bike paths, streets, sidewalks, park structures, pools, tennis courts, traffic signals, our urban forest, playgrounds, irrigation systems and city building maintenance.”
Robb Davis: “In addition to paying for the necessary maintenance of things we already have, staff also presented a list of ‘one time’ expenses to do ‘new’ things such as upgrade city buildings, update financial systems, build new pools, renovate City Hall and fire stations, improve street conditions around the Richards interchange and Anderson Road, and pay for a much needed update to our General Plan. In addition to the $10 million per year, the one-time price tag on all these ‘new’ items is just under $95 million.”
Vanguard: The good news is that the city finally was able to plug $12 million into a two-year effort to improve our roads. The bad news is that is $12 million out of at least a $100 million hole. And, as Robb Davis shows, we have a huge and growing deficit with $10 million a year of underfunding on critical infrastructure. This isn’t something that can necessarily wait as the costs of deferring maintenance continue to drive that cost up. This isn’t a half full/half empty approach – Dan Wolk is ignoring the elephant in the room while focusing on the roses the elephant is about to trample beneath its enormous feet. The worst part is that Mayor Wolk lays no ground work for a fiscal measure to produce revenue here – and the prospects for a revenue measure have dropped precipitously since December 15.
Dan Wolk: “Our budget is balanced and resilient.”
Robb Davis: “Employee compensation is a large part of these operating expenses. In relation to staffing and compensation we must deal with a situation in which all the following are true: Staff numbers have been cut by over 100 in the past decade (453 to 352); The cost of compensating staff has increased from just over $100,000 to over $150,000 per employee in the same decade; But…The vast majority of staff in the city has seen the amount of their take-home check decrease over the past five years, principally due to increased employee contributions for healthcare insurance and pensions.
“In sum: total and per employee costs to the City have increased even while employees take home less AND we have 100 fewer employees. And because we have cut staff in a non-strategic way (via attrition), it is not even clear whether we are staffed appropriately to provide city services.”
Vanguard: This reminds of me of the 2008 City Council elections. In May 2008, Don Saylor and Stephen Souza during a candidate’s forum ran on the notion that the budget was balanced with a 15-percent reserve. Dan Wolk wrote last week that “our budget is balanced with a healthy 15-percent reserve.” In 2008, opponents of the council majority pointed out the pension crisis, the $60 million in unfunded liabilities for OPEB, and the large and growing unmet needs, including road repairs. They argued that the city finances were unsustainable. Don Saylor and Stephen Souza finished first and second in the election, but in September, we found out just how unsustainable the finances were. Robb Davis is pointing out that part of how the city was able to stay afloat was through attrition, and, while individual employees have had their take-home pay and benefits cut (one justification for the MOU increase), the cost to the city is increasing even as city services have been diminished.
Tale of the tape: This is not a half full/half empty argument. Robb Davis is pointing out that our budget is only balanced on paper – we are actually at least $10 million in the hole on what we need to spend just to keep going. He is pointing out that we are now paying more for employees even as employees take home less pay and we receive less in city services. This isn’t a renaissance, this is a looming crisis and the mayor is too busy running for election to deal with this.
Coming out of the revenue discussion, we have no proposal on the table that would deal with the $10 million shortfall in infrastructure. The mayor has only put forward a half-measure that would fund parks at $50 to $75 in a parcel tax which does not deal with the bulk of the city’s infrastructure needs.
Robb Davis concludes his piece by asking, “Is this an over gloomy picture of our local fiscal situation? I don’t think so. Very few if any California cities—Davis included—can claim to be fiscally ‘sustainable’ at this point in time.”
He adds, “Is our budget balanced? Not if our budget accounts for all our costs (which it should). Are we fiscally resilient? Not without greater diversification of revenues. Is our local fiscal situation doing very well? I am simply not ready to say that.”
We are left to conclude, is there any justification for the declarations by Dan Wolk about a “Davis Renaissance”? Not by a large margin.
—David M. Greenwald reporting