When the city of Davis faced a $5 million a year structural deficit in 2014, the council voted to put a half-cent sales tax on the ballot and the voters, in June of 2014, approved it by a healthy margin (58-41), but by less than two-thirds of the vote. While this measure required a simple majority, the margin of the vote impacted the thinking of the council.
The original plan was to put a second revenue measure on the ballot to deal with infrastructure needs. However, they faced a combination of the election result and polling that showed a parcel tax – which would need two-thirds of the vote to win – would fall short.
The polling done by the Godbe Research company found that less than half would support a $149 per year parcel tax for the November 2014 ballot. That number increased to 58 percent at the $99 level.
At the time, Councilmember Brett Lee pushed for a $50 per year parcel tax that he thought might prevail. He also warned that the council not conflate “need to have” with “nice to have.” Part of the problem was that some on council were pushing for new swimming pools at the same time that the council needed funding for critical infrastructure.
In hindsight, had the council pushed for a $50 parcel tax that would have generated $1.4 million in annual revenue – certainly far less than the city needed at the time – it would be better than the $0 they have been receiving.
Two years later, the city did not do more polling. However, council was unable to put a parcel tax or tax revenue measure on the ballot in 2016 either. There were three problems. First, no one could agree on the type of tax. Second, no one could agree on what the tax measure should fund – with debates over the need for park maintenance tax increase versus the need to increase revenue for roads and other infrastructure.
There was a third disagreement over whether the city should seek a general tax or a special tax.
State law permits a general tax only during the general municipal election – in other words, only in June of even years when councilmembers face election or reelection. The advantage of a general tax is that it only requires a simple majority. However, the disadvantage is that the funds cannot be specified for any particular purpose.
For budget hawks and reformers, that has always been a bone of contention.
This concern goes back to 2004 and the original sales tax measure, Measure P.
In the argument in favor of Measure P on the ballot, the signers who included Lois Wolk (Assemblymember), Helen Thomson (Supervisor) and then-Mayor Susie Boyd, argued: “The City faces increasing costs. We will face higher expenditures if we are to provide the additional police protection and meet park and recreation and open space commitments we have made to our citizens.
“Without Measure P revenue,” they argued, “given the uncertain state support to the General Fund, we would be faced with very deep service cuts in police, fire, and parks.”
In the city’s newsletter sent out in the winter of 2004, they claimed the money would go into the city’s General Fund and be considered “discretionary” revenue. They mentioned public safety and emergency services, street maintenance, parks and recreation, and neighborhood and community services.
The proponents argued, “The city faces increased costs to run city programs and services. Needs in the city have grown with the population. Programs, parks and other services have been added. As with other local businesses and organizations, basic program costs, including staff costs, have increased. The city has absorbed many of these increased costs into existing budgets, but this process cannot be sustained indefinitely.”
In 2004, city officials argued that if Measure P did not pass, “[i]t will be difficult to maintain the current level of services, programs and staffing.” They continued, “Building of parks and greenbelts, as outlined in the adopted General Plan (e.g., Mace Ranch), and anticipated by city of Davis residents, may have to be deferred.”
The result, of course, was that the voters would approve Measure P. The voters approved the measure 68.5 to 31.4 percent.
The city then turned around and put that money to employee compensation increases. In 2004, the firefighters agreed to a new MOU which gave them a 36 percent pay increase. All of the other bargaining units in the city would receive between a 15 and 20 percent pay increase.
One way to safeguard against such a blatant bait and switch would be going to a special tax – which would require two-thirds vote.
Then again, the council will argue it is a different time. We have a much better sense of the budget needs. And the council has an active commission – the Finance and Budget Commission – which would probably sound the alarm at any effort to roll a tax into an employee compensation increase. Not to mention the fact that the Vanguard would have a field day.
Still, the lessons of the last two cycles are stark. Even a low level tax would have generated millions of dollars in revenue that would go into the system.
Right now the city faces a roughly $7.8 million shortfall, not in its immediate budget but rather in terms of the needs for roads, infrastructure, parks, and unfunded liabilities.
Questions remain. Can the council agree on the type of tax? Will they agree on what it should go for? Will they agree on the amount?
And, assuming that the council does all of that – will the voters approve it? It is worth noting that the voters have been willing to, at the 68 to 72 percent level, approve renewals and new taxes for the school district – and yet the voters balked at a $150 a year parcel tax (at least in polling) for the city.
Does the city need to do more to educate the public on its needs and why it needs the tax revenue to continue to provide services like police, fire, and – oh yes, our roads, parks, greenbelts and bike paths?
—David M. Greenwald reporting