Vanguard Commentary: Potential Revenue Measures Are Now A Mess

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At the last city council meeting, city staff presented a report that showed the city is spending about $10 million less on infrastructure on an ongoing basis than it needs to do. These include everything from roads and sidewalks to parks and pools to city building maintenance.

While the city has downgraded the projected cost of the roads backlog, the unfunded deferred maintenance remains over $100 million over a 20-year period and the Vanguard continues to believe a revenue measure is needed to generate the necessary funding.

The problem is not only is there no consensus on what to do, but other priorities seem to be getting in the way of sound decision making.

On December 15, the council voted 3-2 to approve a motion to ask staff to return with information on a TOT (Transient Occupancy Tax), a parcel tax focusing on infrastructure needs that are critical to be addressed immediately, and more information on the sugar-sweetened beverage tax.

The substitute motion was to focus on TOT and parcel tax. That motion, supported by Dan Wolk and Rochelle Swanson, subsequently failed.

The motion effectively took the Utility User Tax (UUT) off the table. In one of her letters to the editor, Elaine Roberts Musser lamented the decision of the council in setting aside, by a 3-2 vote, “a utility user tax with almost no explanation.”

In our December 18 article, Councilmember Brett Lee explained his reasoning somewhat.

Councilmember Lee said that, had the city gone in the direction of the UUT, he would have been more in favor of taxing cable and other more discretionary costs. He noted that people can choose whether or not to get the premium $200 cable package, saying, “if you have that sort of money, then paying a percent on that, I’m not too troubled by it. If you’re getting basic cable paying $30 a month, 3 percent on that is essentially 50 cents, it’s a very small fee. Something like that wouldn’t make Davis less affordable.”

On the other hand, he noted that people “do not have the ability to not have electricity, they do not have the ability to not use water, they don’t have the ability to not pay sewer fees.” He said, “So those fees were problematic. I was hoping to have the ability to have a tax that ideally was more discretionary.”

Meanwhile, a soda tax proposal has come forward. On December 1, a group of former elected officials, including Senator Lois Wolk, came forward supporting a soda tax.

Two weeks later, after Mayor Dan Wolk had seemed to be supportive of the tax, he attempted to take it off the table. Mayor Wolk used his prerogative as mayor to jump ahead of his colleagues in an effort to frame the message. He said, “We’re here tonight because council is concerned about the state of our community assets.”

He said that any revenue measure needs to address infrastructure, needs to have been studied and have public input, and finally needs to be successful at the ballot.

Meanwhile, Mayor Wolk trumpeted his record on public health concerns, then stated, “In my mind, the soda tax does not meet those three requirements.” He noted, “I think we’ve had a taste of the opposition here tonight.”

While the move caught many off guard, the Vanguard has learned that the mayor backed off due to pushback by the beverage industry, including threats to fund his opponent(s) in the impending assembly race.

Mr. Wolk quickly shifted to pushing for a parks tax.

Mayor Dan Wolk, during his comments, noted that “we have an exacting amount of defined needs that we need in the area of parks and rec.” In expressing his concerns “over going the route of a soda tax to fund those items, it seems like it might behoove the council to look at something like an increase in our parks tax by a certain small amount or moderate amount to be able to begin to pay for some of these items as opposed to going the route of a soda tax.”

“That would be something that I’d be interested in sort of seeing,” he said. He suggested a $50 increase in the parks tax to $99, “which would be a special tax and require two-thirds vote but it [would] provide needed funds for our infrastructure.”

He added, “I don’t think we can shy away at this point from… I’m not willing to wait another year before putting something on the ballot.”

Mayor Wolk was joined by Billy Doughty, head swim coach, Davis Aquadarts, with support from Charlie Russell; Kellie O’Neill, president, Davis Tennis Club; and Elaine Roberts Musser.

They write, “On a potential revenue measure in June, we agree with Mayor Dan Wolk. We need a revenue measure that will be assured to go toward parks facilities, has proper oversight, has a proven track record of broad support without funded opposition, and can pass at the ballot box.”

But given the games being played, will a parks tax be able to pass at the ballot box?

Our view remains that the city needs revenue for streets and infrastructure. As such, a parks tax that is devoted to park infrastructure – while certainly needed – does not go nearly far enough in generating revenue for other infrastructure needs.

Moreover, the Vanguard is concerned that the move for a parks tax is essentially bait and switch, pivoting the mayor away from the beverage industry while at the same time appearing to support children’s needs.

The soda tax, which would directly target obesity and diabetes, would generate revenue not for the general fund but more specific programs and therefore should not be viewed as a city revenue measure.

Finally, in the discussion over revenues, a Transient Occupancy Tax has been floated as another revenue generator. After City Manager Dirk Brazil pushed back on the council at the last meeting, Councilmember Rochelle Swanson suggested “TOT” as the push for the city.

But TOT revenue is limited at best. A 2 percent TOT increase would only generate $250,000. While it seems like low-hanging fruit from the standpoint that it doesn’t tax existing residents, it also fails to generate enough income to justify putting it on the ballot.

Given all of this – it is not clear that we have consensus to move forward with any revenue measure in 2016.

Some of the soundest advice comes out of two motions from the Finance and Budget Commission that the Vanguard published on Thursday. As Matt Williams succinctly put it, many are focusing on revenue, “in effect saying ‘The City of Davis needs more money to spend.’ The Finance and Budget Commission (FBC) unanimously passed a motion at our December meeting that strongly argues for a different approach.”

He added, “Rather than focusing on increasing revenues, the FBC believes the most pressing issue for the City of Davis is being honest about our costs … and taking definitive, proactive steps to control (and where possible reduce) those costs. Until we know “what we owe” it is premature to be talking about spending more.”

The Finance and Budget Commission instead recommends that “the Davis City Council not approve any new tax measures or utility rate increases for placement on a ballot measure until such time,” among other things, that the staff provides a detailed “scope of proposed and/or deferred capital infrastructure projects, as well as proposed new services.”

The previous motion recommended that “the city update its multi-year projections of underlying city revenues and expenditures.” Moreover, the city should review things like staffing and other personnel issues “to help free up city funding resources to address gaps in funding for infrastructure.”

The Vanguard believes this is a wise course of action. While the Vanguard believes that the city needs additional revenue, particularly for infrastructure, it is concerned that the city has not adequately projected costs and revenues into the future, making it difficult to convey budget information to the public in an accurate and credible way.

—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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23 thoughts on “Vanguard Commentary: Potential Revenue Measures Are Now A Mess”

  1. Topcat

    Moreover, the city should review things like staffing and other personnel issues “to help free up city funding resources to address gaps in funding for infrastructure.”

    Yes, there should be a lot more focus on getting personnel costs under control.  I think that we should be talking about cost cutting before considering raising taxes.

  2. Tia Will

    TopCat

     I think that we should be talking about cost cutting before considering raising taxes.”

    And I think that this is a very limited point of view representing the “address my concerns first approach” rather than taking a comprehensive approach. This restriction to a limited approach addressing only one political and financial point of view artificially limits our options by ruling out one set of alternatives until one’s owned favored options are adopted.

     

    1. Topcat

      And I think that this is a very limited point of view representing the “address my concerns first approach” rather than taking a comprehensive approach.

      Fair enough.  Perhaps I should rephrase it to say that I’d like to see cost cutting addressed in conjunction with any proposed tax increases.

      1. hpierce

        Which, is a reasonable proposition.  In my opinion, you look at structure/function first [simplifying structure, making sure critical functions are covered, rank the rest as to priority].

        When that is done, I suspect some functions are over-staffed, others understaffed (depending on desired service levels).  St Pinkerton and his minions let attrition reduce costs, with little/no regard to structure/function.

        Then, specific measures for cost-effectiveness can be pursued.  But, in my opinion, function/structure needs to be first ‘screen’.

        1. Tia Will

          hpierce

          But, in my opinion, function/structure needs to be first ‘screen’.”

          And I would agree if that could be done within a very short time frame. I think that realistically, having participated in administration for ten years, that the two really have to be done simultaneously both at the beginning and on an ongoing basis.

      2. Tia Will

        TopCat

        Perhaps I should rephrase it to say that I’d like to see cost cutting addressed in conjunction with any proposed tax increases.”

        And with that sentiment, I wholeheartedly agree.

  3. Tia Will

    The previous motion recommended that “the city update its multi-year projections of underlying city revenues and expenditures.” Moreover, the city should review things like staffing and other personnel issues “to help free up city funding resources to address gaps in funding for infrastructure.”

    Someone please correct me if I am wrong, but I seem to remember Robb Davis calling for a complete accounting  of the city’s financial situation from his earliest days on the City Council. I am wondering how we got this far down the road without a full accounting which would seem to be an obvious place to start.

    1. Frankly

      It is really quite simple.  Government and politicians have an easier job when there is fiscal complexity and budget obscurity.  With transparency comes greater accountability.  Who naturally welcomes greater accountability?

      1. Tia Will

        Frankly

        Who naturally welcomes greater accountability?”

        I do. It has worked really well for doctors, at least within my group. As transparency and true accountability as opposed to designating a scapegoat has increased, so has collaboration between individuals, between departments, between groups of differing job descriptions in forming more efficient teams and in reducing law suits. Accountability, collaboration and transparency are really the best approach, but require a major cultural and attitude shift which does not occur overnight.

  4. Napoleon Pig IV

    The problem is that our esteemed local government has no credibility on issues of taxes, revenue, or spending priorities, not to mention stewardship and cost management. So, what is a mere voter to do?

    I’d say in the absence of clear improvements in local government quality, affirmative votes for any new taxes from my family face the steep odds of a spherical aggregation of ice particles surviving a stay in that hypothetical place where evildoers go for divine retribution. Oink!

    Happy New Year to the entire barnyard, species notwithstanding!

    1. Topcat

      The problem is that our esteemed local government has no credibility on issues of taxes, revenue, or spending priorities, not to mention stewardship and cost management. So, what is a mere voter to do?

      I would expect that a mere voter would simply vote “No” on any new tax proposals.

  5. Ron

    So, the city isn’t benefiting from the Cannery development?  (What a surprise!)  I assume that those developers are making a lot of money.  But, of course this is hidden from view.  And, the additional population will further increase costs and use of our public infrastructure.

    1. Matt Williams

      Ron, if you don’t object, I would like to expand your “the City isn’t benefiting” evaluation of Cannery’ fiscal impact.

      First, the dollars and cents impact of your “additional population will further increase costs and use of our public infrastructure” was/is included in the fiscal analysis that staff provided to the Council prior to the signing of the November 2013 Development Agreement. As a result, your final sentence is “double counting” those increased costs and use.

      Second, the terms of the November 2013 Cannery Development Agreement signed by the City actually did benefit the city, although not as much as some members of the community wanted it to.

      Third, when the Council decided by a 3-2 vote in May 2015 to approve the Cannery CFD, any fiscal benefit to the city was thrown out the window.  Under the terms of the CFD the city gave up $1 million a year of “value” and got virtually no value in return.

      Cannery is an object lesson of how inadequate analysis of the evidence produced a fiscally irresponsible decision.  The two Councilmembers who voted against the CFD asked for additional analysis of the evidence, but they were in the minority, and the analysis they asked for was never done.

       

       

  6. Tia Will

    Alan

    I believe Frank Lee was talking about the difficulty of transparency in government budgeting, not its advantages in a private sector.”

    He may have been. But would not more transparency in operations be beneficial in both the public and the private sectors ?  How beneficial was the lack of transparency in both public and private institutions prior to the collapse of the markets preceding the last recession ?

     

    1. Biddlin

      No. Between transparency and secrecy is a vast land of discretion and propriety.  It’s rather like some who read that an ebola patient has come into the country and immediately call for expulsion and quarantine.  We would all be better off if only the necessary public health were so informed, but  the “right to know” trumps actually public safety or utility in the 21st century blogosphere.

  7. Tia Will

    Biddlin

    Between transparency and secrecy is a vast land of discretion and propriety.”

    Agreed. And I think that the trick is establishing an agreed upon balance. It is entirely possible for a major problem to exist without the public being aware of it. This is an undesirable situation. It is also possible for the public to be aware of a potentially serious issue, but to have made an erroneous assessment of the actual degree of danger and thus create a situation of panic. Also undesirable.

    hpierce

    Can’t remember what regular poster warns against dichotomous thinking… Biddlin has this one right…”

    I was asking Bidden for clarification of a point, not contradicting or staking out a position. I am having difficulty understanding why you seem to be making your “logical deductions” on so little information. In this case, only a question.

     

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