Two years ago, as we first began to earnestly plan for the possibility of innovation parks and economic development as a way to help alleviate the city’s revenue shortfalls, I argued that in order for the public to support either the short term mechanisms for revenue – at that time, the sales tax and then a parcel tax for infrastructure – or, in the long term, we needed to lay a foundation for the public that the city was in need of revenue.
Polling, even in the spring of 2014 when the city was facing a $5 million structural deficit, showed that most people thought the city’s fiscal position was in fair to good shape. The public was clearly communicating to the council and city staff that there was a miscommunication between the city and public about our fiscal reality.
If anything, that communication gap has grown rather than shrunk.
One problem is that the city has simply not communicated to the public the extent of our fiscal reality.
In a late December column, Mayor Dan Wolk argued that Davis was having a “Davis Renaissance.”
The mayor wrote, “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.”
Not everyone bought into that view and Mayor Pro Tem Robb Davis responded in a Vanguard column a week later, “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.”
The most devastating part of the mayor pro tem’s response is the fact that, while staff numbers have been cut by over 100, from 453 to 352, since 2008, “The cost of compensating staff has increased from just over $100,000 to over $150,000 per employee in the same decade.”
He wrote, “In sum: total and per employee costs to the City have increased even while employees take home less AND we have 100 fewer employees.”
That was January 3, less than three months ago. A month later, the council would punt on an infrastructure tax for the June ballot. The council has a narrow window to put something on the ballot that could generate revenue for the city without requiring a two-thirds vote.
However, the council could not agree on what to spend the money on or the mechanism to deliver that spending.
Mayor Dan Wolk continued to push for a parks tax at the $50 level (over and above the current $49 parcel tax). He pushed for the Rainbow City Rehabilitation ($300,000), the Community Pool renovation ($2 million), Playfield Park turf replacement ($400,000), stating, “I think these are things that are clear needs in our community that we have difficulty funding outside of some additional revenue.”
“We could do a significant amount of good for parks and this is funding that… is one time,” he stated.
Councilmember Rochelle Swanson said that she could not support just the parks tax as outlined. She suggested the possibility of a $100 parks and infrastructure tax which also would replace Measure D, absorbing what’s in the current parks tax. She said this would recognize that “we should have asked for more before (than the current $49).”
She added, “Some of the things that were listed (in the parks list of needs), I don’t feel they’re the top top priority.”
Councilmember Swanson added that what she is hearing is that people want the core infrastructure, while other things are important. It was suggested that a parks tax could free up other money in the general fund for roads. But Ms. Swanson said, “I can’t support that, because I don’t think it will pass.” She noted, “As hard as we have worked, there’s still a trust factor there and I think we’ve worked hard to earn it, but even a set of advisory, I think we’d be better off on the flip then to do it that way.”
Mayor Wolk pushed back, “To focus on the roads piece… we’re doing quite a bit on roads now. Certainly we have to do more, but we’re putting $4 million into roads every year.” Never mind that the city needs at least twice that amount for roads.
Tax revenues should be looked at as short-term bridges for funding and revenue. In the long term, the city needs to expand its tax revenue through economic development. However, that strategy, as we have written this week, appears to be in danger.
Rochelle Swanson noted that Mace Ranch Innovation Center could net $2.2 million annually according to the EPS Consulting report, with the potential for as much as $6 million a year with a one-time $10 million fee.
She recognized the need for revenue, stating, “It’s not hyperbole, if this doesn’t pass in November, I’m going to be a big cheerleader to bring back a really big parcel tax, either that or we’re going to start closing things.”
“That’s not being a scare tactic, that’s being real,” she said. “We have a huge infrastructure problem. We need organic revenue. It’s why I agreed to run for council in the first place and why I agreed to run for a second term.”
If anything, the amount of money that the city needs has been understated.
Last week, Matt Williams, a candidate for the city council, put a number to the city’s infrastructure needs: $655 million.
As Matt Williams noted in his answer to his own question last week, he broke down how the $655 million was calculated. $200 million of that is for roads over 20 years. $352 million is buildings and parks. $114 million is for retiree pensions and health benefits.
He said that we are doing better on retiree health benefits and pensions, “but that’s only $114 million of the $655 million.” We have a parks tax, but the parks tax is “leaving us with $315 million worth of capital infrastructure maintenance that we’re going to have to do to the parks surfaces and buildings.”
He said, “These reports came from staff. They came in the last 120 days. We really do have to understand, what we have promised to ourselves.”
From our perspective, the mayor at least pumped up the city’s financial success and downplayed the coming money crunch, even as council was preparing but failing to act on a revenue measure. The community seems reluctant to support new development and it is touch and go at best if either Nishi with its modest 325,000 square feet of R&D space, or MRIC with its larger 300,000-plus square feet, can gain approval of the voters when they come before them in June and presumably November.
The city needs to make the case to the public about the enormity of the unfunded needs and liabilities of the city, and yet this has received scant attention.
As Matt Williams asks, “Given that we have a $50 million annual General Fund budget, what are the important steps/decisions that Council and Staff need to make in order to address this $30 million per year funding shortfall?”
Again, why has this received so little attention?
—David M. Greenwald reporting