Monday Morning Thoughts: Two Years of Ignoring Fiscal Challenges Were Costly

City Hall

As we prepare once again to search for a new city manager, once again it seems we have forgotten where we stood a few years ago and where we stand today.

While we have a city manager form of government, policy direction really flows more from the council than from the city manager.  That makes it more difficult to put policy direction on the legacy of the city manager.

I found a comment sent out in an email message from a long-time Davisite to be curious:

“It cannot be stated enough what a mess Dirk found when he became Davis City Manager.  Joe Krovoza and Steve Pinkerton did everything they could imagine to destroy city staff morale.  One example was that Pinkerton spent a bunch of money to re-design city hall so that nobody could find the city manager.  City council members apparently used a special door, and the public and city employees were not allowed to try to communicate with the city manager.  Trust was non-existent.”

The messenger clearly had a bone to pick with the previous city manager. 
But they seem to forget the situation the city found itself in when Steve Pinkerton was hired in late 2011.  They also seem to ignore the fact that in many ways we are in just as bad a shape as we were in 2011 – if not worse.

The council had in 2009 and 2010 agreed to bargaining contracts that were insufficient in cutting retirement and other liabilities. The city was overcompensating its fire department at the expense of other city services and had no reliable way to increase revenue.

This was no small problem. PERB (Public Employment Relations Board) undid the previously imposed contract on DCEA (Davis City Employees Association) in 2011 and thus forced the city to lay off some employees. But for the most part the previous council balanced the budget through attrition, furloughs, and deferring maintenance – which has caused huge problems now in the present.

Under Steve Pinkerton, the city was able to fix some of the contracts, but because fire and DCEA balked at accepting the same contract as the five other bargaining units, there were imposed contracts there.

When Mr. Pinkerton was leaving, the voters approved a sales tax increase to generate $5 million annually to close the structural deficit.

Tough decisions were made under the leadership of then-Mayor Joe Krovoza and City Manager Steve Pinkerton – decisions that were meant to set the city on the correct course.

It is easy to pin the blame on reformist-minded regimes for lacking the necessary bedside manner.  But most of the morale problems likely stemmed from the need to engage in tough negotiations in order to reduce the city’s ongoing unfunded liability and set the city on a more sustainable course.

The problem that I see is that previous councils, especially from 2008 to 2010, failed to do the heavy lifting.  The other problem – and the one we are experiencing today – is that the same can be said for the 2014-16 council.

As late of December 2015, Dan Wolk wrote his column, “The Davis Renaissance.”  In it he declared that “our budget is balanced and resilient.”  He explained, “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.”

His conclusion was “there are still long-term challenges.  But we are doing very well.”

But, even then, Robb Davis, who would take over as mayor in July 2016, saw that all was not well, and wrote his own response piece.  It was under Robb Davis’ leadership that Dirk Brazil brought in Bob Leland, who determined that the city is actually facing a long-term $7.8 million annual short-fall – a number that a lot of people think is extremely low.

Robb Davis pointed out that “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.”

He also wrote, “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.”

In August 2016, he noted, “Our inability, given current revenue, to pay for the maintenance and replacement of critical city infrastructure is a weakness. Over the past 15 years, total general fund revenue has grown by 95 percent while general fund expenditures have grown by 92 percent. Revenue appears to have kept pace with expenditures. However, when we dig into the expenditures — or rather what is not in the expenditures — we see that the picture is not positive.

“I concluded that current revenues are millions of dollars per year behind needed expenditures on things like roads, parks, and city-owned buildings.”

It is easy to put the blame on leaders who make tough decision during hard times.  Both City Manager Steve Pinkerton and Mayor Joe Krovoza put policies in place that helped the city save millions.  It is easy to focus on things like re-designing city hall and poor employee morale.

The problem is that painting a rosy picture of our fiscal future doesn’t help either.  In the year of 2017, we have finally created the fiscal analysis we need to understand the challenges we face both in employee retirement and infrastructure – but we have not yet implemented policies to move us forward.

In 2014, the city seemed on the verge of realizing its need for expanded economic development, but in the last several years that too has slipped.

It will likely fall to the next city manager and likely the next city council to fix much of these challenges.

—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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1 Comment

  1. John D

    Beg to differ, but the job simply isn’t set up for the type of top down, all inclusive one would normally associate with a CEO in the private sector.  Not the scope of authority, scope of responsibility, strategy driven top line revenue expectations, not the strategic threats assessment approach and not a net, bottom line requirement associated with a CEO’s position.

    Change those requirements and maybe you’ve got something to talk about.

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