Council Must Decide on Revenue Measure by February 6

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The council will be asked to engage in further discussion on a possible revenue measure for June 2018, while providing feedback to staff to prepare for their final action no later than February 6, 2018.  The council is not set to any action at this time and would appear to have at least two more meetings to make such a decision if need be.

This will be the fourth such discussion, and last time the council seemed to narrow in on a parcel tax that funded parks and roads.  However, Mayor Pro Tem Brett Lee held out for the idea of the Utility User Tax (UUT).  There is also the possibility of a separate $50 parcel tax for social services.

Staff notes: “The parks and transportation needs have been well-defined through studies and staff follow-up; the social services concept is evolving and focuses on homelessness and affordable housing.”

The report includes an updated long-term general fund financial forecast from consultant Bob Leland, who had developed the long-range financial forecast for the city.  He has updated the forecast assumptions in relation to sales tax.

Writes staff, “(This is) based on new information from MuniServices, which audits and tracks the City’s sales tax revenue and makes its own projections for future sales tax. MuniServices is predicting a decline from previous growth projections in the transportation sector from 3.7% to 2.1% growth, primarily due to anticipated slower sales in vehicles and changes in gas prices.”

Staff continues: “Because the City is heavily dependent on sales tax from the transportation sector (41% for the 1% uniform statewide tax and 26% of the local Measure O tax), the effects of slower projected growth and changes to the tax base are significant.”

The result is as follows: “In response to the lower sales tax revenue projections, the forecast now assumes no addition of one new staff position per year after 2019,
reduced annual infrastructure contributions from $4.65 million to $3.5 million, and includes $500,000 for estimated annual cannabis tax revenues. The forecast allows for a continuation of current levels of service for operations, but does not account for full payment of all identified unfunded needs, for example, transportation infrastructure.”

In terms of cost-cutting measures, staff notes that the city has “undertaken numerous cost cutting measures” since the recession.  The biggest has been the reduction of staffing numbers from 464 (FTE) to 356 over a ten-year period.  They note that “the City has maintained roughly this number since 2013/4 and the long range forecast does not assume significant increases in staff numbers.”

Staff looked at statewide results for various taxes and found that “simple majority sales tax measures and parcel tax measures are the most common types of taxes placed on the ballot. And, as would expected, a simple majority tax passes more frequently than a super-majority tax.”

On the social services tax, city staff notes that starting in the early 1990s, social services funding was realigned with money sent to counties for certain programs with decision-making authority on how money could be spent.  Staff writes, “This realignment, however, did not result in additional funding for non-mandated services.”

However, over the last four years, “Yolo County has been able to build the beginnings of a comprehensive homeless service system. It has designated some local funding for an administrative structure and has secured grants and outside funding from the federal and state governments and foundations to expand services and develop a more robust system to support homeless individuals.”

They add, “There is always more that could be done.”

Meanwhile, on affordable housing, the city has long “supported affordable housing efforts but has not had a permanent source of funding since the dissolution of redevelopment agencies [RDA]. Efforts to assist with general social services have been limited primarily to CDBG [Community Development Block Grant] grants to local non-profits, provision of transit for seniors and those with disabilities, and non-income-based services for seniors.”

This past year, “the city has funded the outreach homeless coordinator and for the past two years has partnered with the County to fund New Pathways, the program to house four individuals who are chronically homeless.”

Staff notes that Senate Bill 2 went into effect on January 1 and it imposes a fee on the recording of most real estate documents.  Staff writes, “Although SB2 is expected to generate approximately $250 million annually statewide, it is not yet clear how much would come to Davis.”

Meanwhile, SB 3 was signed into law and the state will put a $4 billion general obligation bond on the November 2018 ballot.  If it passes, “$3 billion in bond proceeds will be allocated among programs that assist affordable housing developments. It would also provide matching grants for local housing trust funds.”

There are also housing impact fees that can be used to provide a stream of funding to assist with development of affordable housing units. As the city embarks on its General Plan update and corresponding updates to its development impact fee structure, staff recommends “we many want to consider doing a nexus study to add a housing impact fee, similar to what communities like Berkeley, Fremont and San Luis Obispo have done.”

Staff acknowledges, “It is difficult to ascertain exactly how much is ‘enough’ in terms of funding for social services. Such services do not lend themselves to the fairly straightforward calculation of needs such as has been done for the City’s infrastructure. The social service needs are great and costs per recipient can be high in order to move people off the streets and into permanent housing.”

Staff notes that expanding shelter capability and continuing the current grant-funded programs is expected to cost $550,00 per year alone.  That is the amount of the parcel tax that would be allocated for homeless programs.

In addition, council needs to reconsider in the face of possible opposition whether they want to continue to pursue a parcel tax, which is a two-thirds vote requirement.  The advantage of such a tax is that they can explicitly designate where the money goes.  The disadvantage is that there is a much higher statewide failure rate for two-thirds taxes than simple majority taxes.

A parcel tax only passes 52.7 percent of the time in the last 11 election cycles, whereas a majority vote UUT has passed two-thirds of the time and a majority vote sales tax has passed 82 percent of the time.

—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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22 thoughts on “Council Must Decide on Revenue Measure by February 6”

  1. Keith O

     The biggest has been the reduction of staffing numbers from 464 (FTE) to 356 over a ten year period.

    It’s my understanding that even though the staffing numbers have gone down our actual overall compensation costs have gone up over the same period of time.  Go figure.

    1. David Greenwald Post author

      The cost of compensation has gone up due to increases in the cost of retiree health and pensions not due to salary increases so most of that is outside of the control of the council.

      1. Keith O

        There have also been salary increases during that time span.  But think about that, we’ve reduced our personnel by 23% but our actual employee costs have gone up.  The system is unsustainable.

        1. Keith O

          So the answer is yes, there have been compensation increases. How many times will future councils have to come back and ask for more and more taxes? How much can Davisites afford to “pony up” as you put it the other day?

          And on top of everything the council is considering starting a new Social Services program, yet more costs.

        2. David Greenwald

          The key question to me is: do we need the revenue now or can we do it by cuts or down the line through commercial development.  My answer: we need the revenue now and should use cuts as containment and commercial development to mitigate future tax needs.

        3. Keith O

          I think we were saying the same thing years ago, that we need revenue now and future commercial development.  Well where are we years later, we still need revenue and still need future commercial development.  The taxpayers are getting hosed, anyone actually paying parcel taxes just needs to “pony up”.

          1. David Greenwald Post author

            And we didn’t get revenue and we didn’t get commercial development and so the problem is worse than it was in 2014.

        4. Mark West

          “we didn’t get revenue and we didn’t get commercial development and so the problem is worse than it was in 2014.”

          The need for commercial development was recognized in the 1961 Core Area Specific Plan, and every General Plan update since, yet still hasn’t happened. How many more years of tax increases do you think residents should accept while we wait for the development piece to be implemented?

           

      2. John D

        David,

        I note that City of Redlands, with 68,000 residents, is served by 480 City employees.  If we’re already down to 356, just how much lower do we expect to go?
         

        1. John D

          Howard,

          Thanks for the research.  I suspect there may be other important distinctions beyind these.  Still, it begs the question of just how much you can shave before hitting the bone.  On the subject, we’ve had no meaningful discussion concerning plans/options to boost the revenue side of the ledger.  That no one finds this strange – particularly as we pivot to considerations of significant new tax burdens – is disconcerting.

        2. Howard P

          Even on the cut side, to date, it was not a rational process…  basically attrition… no examination of “niche” positions created in the last 15 years, some of which were ’empire-building’ by some division heads… no looking at which positions needed to be ‘management’, and which didn’t (just a vehicle to compensate more highly) … the Meyer report needs to be dusted off… and seriously considered…

        3. Keith O

          In addition to the City services we have, Redlands runs a cemetery, an airport, library and solid waste services by city employees.
          At least two different flavors of apples…

          Good find Howard, all those services would demand mucho hombres.
          But does Redlands run a parcel tax expensed Social Services program?

        4. Howard P

          Check the website I gave… feel no need/desire to do your (or Ron’s) research (Ron seems to like for others to give him info, with little/no effort on his part) to make your points… looking up the Redlands website took all of 5 seconds, and I was curious to know where it was… heard the name, but didn’t know where… turns out it’s abbutting San Bernadino… as in St Bernard… feel free to ‘rescue’ the answers to your question… with or without the small keg of brandy.

        5. Keith O

          Oh Howard, I wasn’t asking you to do any research for me, my comment about the Social Services Program was tongue in cheek which obviously went over your head.

  2. John Hobbs

    ” My answer: we need the revenue now and should use cuts as containment and commercial development to mitigate future tax needs.”

    That makes mathematical sense. Goodawnya. Now good luck convincing your neighbors.

  3. Tia Will

    And on top of everything the council is considering starting a new Social Services program, yet more costs.”

    And yes, as citizens, we really do have to pay for the amenities we want for our community. Imagine actually having to pay for what you use !

     

    1. David Greenwald

      Keith is also not factoring in the costs of not addressing the homeless issue for example.  People are literally screaming for the city to do more about the homeless and that costs money.

      1. Keith O

        Almost every other city in the country isn’t charging their citizens a parcel tax to deal with the homeless.  What makes our situation so unique?  In fact we were told our problem isn’t near as bad as many surrounding communities.

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