Sunday Commentary: Is the Cost of Labor Peace Too High for Davis?

This week, the city of Davis put to bed the longest contract dispute in the city, which had lasted over nine years.  In August of 2017, the city reached an agreement with the firefighters’ union to put an end to their dispute, but it would take another 15 months to end the dispute with DCEA (Davis City Employees Association) and finally reach an agreement.

The city sent out a press release with positive statements from four of the five sitting city councilmembers and the city manager.

We look at the comment by Dan Carson, who has built his career on the notion of fiscal sustainability.  He said: “The reform of retiree medical benefits will provide cost savings to the City in future years. The contract as a whole strikes the right balance between ensuring the level of service provision Davis residents expect and the level of fiscal responsibility and transparency the City needs.”

However, it is worth comparing that to the comments made last year by the Vanguard and Robb Davis with respect to the firefighters’ contract.

At that we pointed out that the contract was far from ideal from a fiscal perspective – but noted that the city set the stage for that agreement by granting a COLA to five other bargaining units in December 2015.

However, as with then, it is worth noting that we have a de facto deficit of between $8 and $10 million per year, perhaps higher, and that voters back in June “rejected” a parcel tax that would fund a key shortfall in roads.

Robb Davis in 2017 issued a statement: “This agreement rectifies some, frankly, poorly conceived benefits of past contracts, and adds brakes on future medical costs. It restores past salary cuts, requires increased PERS (Public Employees’ Retirement System) contributions. It provides a COLA (cost-of-living adjustment) but balances that with increased employee contributions to a medical trust fund. In the end, it is expected to cost the City more.”

But at the same time, he said “it sets the stage for important cost sharing going forward that we believe has the potential to keep costs in check. Because the City cannot impose these items we arrived at them through challenging negotiations that took time. I believe we have a stronger foundation for future negotiations than we had in the past with key issues corrected that need correcting.”

DCEA on the other hand receives a two percent COLA all four years of the contract.  In exchange, they agree to a 1 percent pension cost share, or up to 1 percent additional salary, depending on actual PERS pension rates in 19-20 and 20-21.

This all needs to be put into perspective.  This is the cost of labor peace, as it was last year with the firefighters.  Given where we are fiscally, it is somewhat difficult to stomach ongoing cost increases that are not somewhere else offset either by cost costs or higher revenue.

Then again, it is important to put things into a broader perspective.

For one thing, we have talked about the compensation gap for teachers.  But the compensation gap for DCEA-represented positions is fairly wide as well.  The employee group has gone nearly a decade without a cost of living increase, and this group is among, collectively, the lowest compensated workers in the city.

When the city conducted a total compensation study, “most benchmarked classifications were found to be below the market median for comparable positions in comparable agencies.”

Moreover, we are talking about a cumulative increase in salary of about two percent each year.  We are not talking about a 36 percent four-year salary increase that characterized the last decade for the firefighters, with the other employee bargaining units getting between 16 and 20 percent increases.

This is not a return to the bad old days of blowing out the budget and pension funding.  So, while the increase is less than ideal, it is important that we maintain perspective.

We can debate numbers all day, but at the end of it that day, this contract doesn’t change the fundamental bottom line.  Our current situation is not sustainable.

Our labor compensation, therefore, is a statement of values from the Davis City Council.  For the better part of the decade, the council held the line on new spending as a way to get their budget in order.  Now with the Leland model and the work of the Finance and Budget Commission, we have a much better idea of what things look like.

If the council is stating that a more equitable labor contract is part of their goal – that’s fine, but in order for the council to be responsibility, that statement must come with a trade off.

If labor peace is important, than it must also be important to find ways to fund these costs.  I’m disappointed that the city did not put more effort into passing its parcel tax.  Merely putting it on the ballot and allowing the citizens to vote on it was not enough.  The measure fell short with only 57 percent of the vote.

But the city and especially the council did not put on the full court press there either.  There was no robust complaint.  There was no door to door canvassing.  There was no making the case about the $8 to $10 million shortfall.

The fiscal sustainability of this community rests on three planks: cost containment, taxes, and economic development.

Last week, I pushed forward with the idea of a renewed innovation park, one that would have a component for workforce housing.  That could be a way to fund things like roads and employee compensation increases into the future.

We need to re-consider our approach to economic development coupled with taxes if we are going to support labor contract increases.  That is going to be the key.  The contracts that were signed are not going to break us by themselves, nor do they change the big picture of what we need to.

But they are a reminder that we cannot just sit back and allow the status quo to continue.

—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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24 Comments

  1. Moderator

    Comments moved from another thread:

    Ron: The evidence shows that there isn’t much market demand for existing commercial space (which is being converted to housing or semi-residential, throughout the city). Same with the two innovation center sites that were converted to housing proposals (Nishi, and the Davis Innovation Center / WDAAC).

    The biggest danger, however, remains Dan Carson and his “optimistic” projections regarding commercial development – despite the lack of market demand. (Along with new competition from innovation centers planned outside of Davis – which will likely satisfy any demand that actually exists.)

    David: The evidence doesn’t show that at all.

    Ron: Uhm, yes it does.  That’s why existing commercial spaces are being converted to residential, along with the two innovation center sites. (Of course, UCD’s reported refusal to allow commercial traffic through their land was also a factor, regarding Nishi.)

    David: Should be having this discussion on the other article.  But I would suggest you are severely misreading what is happening on many different levels.

    Ron: You brought it up here, before I made the comment.  But yeah, let’s not go into this any further, as it becomes an endless, repetitive discussion. (And one without an actual or objective fiscal analysis, either.)

    I fully expect you to bring it up again and again, into the future.

    David: Probably do a piece separately rather than go back and forth here.  But you’re reading is very selective.  You ignore the $70 million purchase of URP by Fulcrum and their coming large investment in a mixed-use project followed by densities redevelopment of the site.  You ignore the investment by Sierra Energy.  You ignore the fact that the Davis Innovation Center simply moved up the road where they didn’t have to deal with a Measure R vote.  You ignore the fact that UC Davis is investing tens of millions in sacramento for an innovation center.  You’re ignoring the two hotels and nine cannabis dispensaries/ mobile delivery.  We’ve made a lot of mistakes on economic development in the last few years, but the bottom line is despite this, there is a lot of money being invested here despite the obstacles and missteps.

    Added point: people who are investing tens of millions into Davis at Fulcrum contradict your point. They argue that a key barrier to economic development is lack of housing in Davis for workers/ employees. So the first thing they are doing is building a mixed-use housing so that their employees have a place to live. That’s a huge statement which is backed by investment money.

    Don: Commercial development has continued within the city limits on the limited sites available. It’s the peripheral projects that have been abandoned. I’m sure you can think of a reason why.
    Now I suggest you continue this discussion on the other thread, as has already been suggested to you.



    Ron: I thought that you didn’t want to go into this any further, in this article.
    URP is being converted to semi-residential.
    A strong argument could be made that the Davis Innovation Center proposal was more “appealing” to many voters, than the housing proposal that ultimately succeeded (in the form of the WDAAC). And yet, the developers chose the housing proposal, over the innovation center proposal.
    UC Davis is building on its own land, in Sacramento. This means that the development is exempt from property taxes.
    Yes, the hotels are expected to be helpful.
    Three innovation center sites/proposals have now been withdrawn by their respective development teams. Two of these sites have been converted entirely to housing. (A third site – the Cannery – which was also considered for commercial development has also been converted to housing.)
    (In the case of the Davis Innovation Center, the footprint of the development was reduced to accommodate WDAAC.)
    Should I provide a list again, of all the other existing commercial/industrial sites in the city that have been, or are expected to be converted to residential or semi-residential uses? I can do so again, if needed.

  2. David Greenwald

    This is a critical point: Ron is focused on innovation parks on the periphery, he ignores the Measure R problem and assumes that lack of commercial demand explains it.  He also ignores the tens of millions in investment by Fulcrum and Sierra Energy.  The investments in Dixon, Woodland, West Sacramento and Sacramento for innovation space.  He conflates commercial which is a broad category for what we are talking about here.

    To that end:
    Ron’s reading is very selective.  He ignores the $70 million purchase of URP by Fulcrum and their coming large investment in a mixed-use project followed by densities redevelopment of the site.  ignores the investment by Sierra Energy.  You ignore the fact that the Davis Innovation Center simply moved up the road where they didn’t have to deal with a Measure R vote.  He ignores the fact that UC Davis is investing tens of millions in sacramento for an innovation center.  He’s ignoring the two hotels and nine cannabis dispensaries/ mobile delivery.  We’ve made a lot of mistakes on economic development in the last few years, but the bottom line is despite this, there is a lot of money being invested here despite the obstacles and missteps.
    Added point: people who are investing tens of millions into Davis at Fulcrum contradict your point. They argue that a key barrier to economic development is lack of housing in Davis for workers/ employees. So the first thing they are doing is building a mixed-use housing so that their employees have a place to live. That’s a huge statement which is backed by investment money.

    1. Ron

      The formatting of responses apparently became messed up, when Don transferred comments to this article.  I believe that this paragraph (a portion of which was pasted above, by Don) was intended to address David’s 8:28 a.m. comment:

      University Research Park is being converted to semi-residential. As usual, market demand for residential development is the driving force.

      A strong argument could be made that the Davis Innovation Center proposal was more “appealing” to many voters, than the housing proposal that ultimately succeeded (in the form of the WDAAC). And yet, the developers chose the housing proposal, over the innovation center proposal.

      UC Davis is building on its own land, in Sacramento. This means that the development is exempt from property taxes.

      Yes, the hotels are expected to be helpful.

      Three innovation center sites/proposals have now been withdrawn by their respective development teams. Two of these sites have been converted entirely to housing. (A third site – the Cannery – which was also considered for commercial development has also been converted to housing.) (In the case of the Davis Innovation Center, the footprint of the development was reduced to accommodate WDAAC.)

      Should I provide a list again, of all the other existing commercial/industrial sites in the city that have been, or are expected to be converted to residential or semi-residential uses? I can do so again, if needed.

      1. David Greenwald

        Two more responses and I’ll save the rest of my thoughts for a broader piece forthcoming.

        ”UC Davis is building on its own land, in Sacramento. This means that the development is exempt from property taxes.”

        And yet, Sacramento is a partner, which means that they see the effort as beneficial regardless of the tax situation.

        ”Should I provide a list again…”

        You can do whatever you want, but to me any effort misses the broader nuances of economic development and how it works.   Without that understanding, the list is simply a list.  It is not taking into account tradeoffs.  It is not taking into account the impact of Measure R.  it is not taking into account size and location.  It is not taking into account broader community efforts.

        1. Ron

          I believe that Sacramento is also contributing $, toward that development.  However, Sacramento is not exactly a model that I’d suggest using.  (For one thing, the type of unbridled development that Sacramento is willing to approve hasn’t been a fiscal savior for them, either.)  Perhaps Sacramento leader see a need for jobs there, to help lift up the blighted areas that exist around UC Davis Medical Center.  (Or in other words, to “gentrify” those areas.)

          If you’re going to continue to bemoan the “loss” of an opportunity for a development that is exempt from property taxes, I’d suggest that you aren’t exactly an expert in fiscal analysis. (Note that the Sacramento development is also focused on the medical field, which ties in to UCD’s adjacent medical center.)

          Perhaps I’ll save my further responses for your “forthcoming” articles.

           

          1. Don Shor

            Sacramento is not exactly a model that I’d suggest using.

            What city would you suggest using as a model for economic development and fiscal stability?

            If you’re going to continue to bemoan the “loss” of an opportunity for a development that is exempt from property taxes, I’d suggest that you aren’t exactly an expert in fiscal analysis.

            Generally cities look to these types of developments (UC etc) for their multiplier effect and for the other tax-generating businesses that like to locate near them.

          2. David Greenwald

            “f you’re going to continue to bemoan the “loss” of an opportunity for a development that is exempt from property taxes, I’d suggest that you aren’t exactly an expert in fiscal analysis. ”

            I have to laugh. I would suggest you read this full report, written by the key economic minds in this region, as it gives you a sense for what they are planning, the full scope of it, and what we are ultimately missing out on:
            https://innovatesac.org/pdf/aggie-square.pdf

        2. John Hobbs

          “Perhaps I’ll save my further responses for your “forthcoming” articles”

          Then perhaps we’ll find out who you really are. I am looking forward to your future posts under a true name.

          “Perhaps Sacramento leader see a need for jobs there, to help lift up the blighted areas that exist around UC Davis Medical Center.”

          You obviously don’t know Sacramento. Yes Oak Park is nearby to the Med Center and there are some “bad” spots in Oak Park, but they are largely far south and west of the Med Center. The much closer Elmhurst neighborhood and (“gentrified“)North Oak Park are now rather desirable residential neighborhoods.

          “Note that the Sacramento development is also focused on the medical field, which ties in to UCD’s adjacent medical center”

          There will be new businesses to serve the multitude of needs arising from the construction and existence of UCD’s new facilities. Sacramento’s mayor, council and business leaders see the need for good jobs and strong neighborhoods.

        3. Ron

          David:  The Vanguard is sounding more-and-more like a mouthpiece for the Chamber of Commerce.  At first glance, so does that report.

          I think you’ll find that the Vanguard’s advocacy is limited, regardless of the number of repetitive articles that you’ll continue to write.

          Perhaps those who want Davis to become Sacramento should consider locating to the “real thing”. Sounds like a better fit.

          If you’re claiming to be representative of the “new way” of thinking, I’d suggest that it’s actually quite an old, traditional way of thinking.

        4. Ron

          There is no message.  That’s not a fiscal analysis, as in the type performed by EPS (or any other external consultant). Although I haven’t had time to review it in detail, it appears to cover a wide variety of topics including housing, and public funding for the development.

          1. David Greenwald

            Apparently you didn’t even take the take to see that the Chamber of Commerce was not involved in the writing of the report. It was Greater Sacramento, the Urban League, SACOG, the City of Sac’s CIO and UC Davis. Had you read any of it, you would see that it goes well beyond turning university land into an innovation center, which you seem to have consigned the project to.

        5. Ron

          Had you read what I wrote more carefully, you’d see that I didn’t state that the report was written by the Chamber of Commerce. Regardless, it is not a fiscal analysis, in which costs and revenues are compared.

          Regardless, the Vanguard is increasingly spreading the same type of message, as a Chamber of Commerce.  And, is attempting to do so while simultaneously claiming a progressive agenda.

          I see that you have two other articles today, which (based upon the titles) appear to be the same-old, same-old. At some point, I guess I’ll have to ask myself if it is even worthwhile to continue to comment on them. Folks should be able to see what you’re doing, by now.

           

  3. PhilColeman

    “But the city and especially the council did not put on the full court press there either.  There was no robust complaint.  There was no door to door canvassing.  There was no making the case about the $8 to $10 million shortfall.”

    A united and mobilized Council would have certainly helped sell the need for a supplemental funding measure prior to a public vote. Several talking points could have been raised in support. The Finance Department could have prepared cost/revenue projections if directed to do so. The economy was improving, tax increases had been held in abeyance during the darker economic times, and the city revenue stream showed promise for the future.

    We can’t, however, cite just the Council for leadership failure. Other leadership components should have mobilized themselves and others to march in-step with our governing body. Where were the city employee unions, the community advocates demanding increased city services for particular needs, the department heads? All would directly benefit and yet their voice and presence during the campaign were notably lacking.

    Add to the three “no’s” in the above quote, there was no city leadership and initiative. They received in return exactly what they invested, nothing.

    1. Matt Williams

      Phil Coleman said . . .  “A united and mobilized Council would have certainly helped sell the need for a supplemental funding measure prior to a public vote. Several talking points could have been raised in support. We can’t, however, cite just the Council for leadership failure. Other leadership components should have mobilized themselves and others to march in-step with our governing body.

      Add to the three “no’s” in the above quote, there was no city leadership and initiative. They received in return exactly what they invested, nothing.”

      Phil has hit the nail squarely on the head.  His 4 “No’s” bear repeating

      — No robust complaint,

      — No door-to-door canvassing

      — No making the case about the $8 to $10 million shortfall

      — No city leadership and initiative.

      I personally believe those four “No’s” also apply to the City’s past and present efforts when it comes to economic development.

      As I said in my comment yesterday,  I personally don’t believe that there is a clear vision of either what Davis is, or what it will be.

  4. Jeff M

    Shameful that in this period of over-heated Trump economy that this city is still needing to loot from residents to pay for its necessary government services.  What will happen in the next downturn?

      1. Jeff M

        I cannot fix the malady of irrational political hypersensitivity.  And if you really think below the surface of reaction on this, there is a larger point I am making.

        Left-leaning ideology is against the private economy and against economic growth.

        1. Ron

          Jeff:  David would apparently prefer that you not “remind” everyone of that.

          No doubt, he and some others on here are waiting for you to disappear (as a result of the upcoming change in policy on the Vanguard), so that they can claim that the ideology that you espouse actually belongs to the “left”. (They think that will give them “credibility”, in Davis.)

        2. Tia Will

          Left-leaning ideology is against the private economy and against economic growth.”

          I strongly disagree with this overgeneralization. Putting more money in the pockets of the middle class, working poor and poor would do more to stimulate the growth of the private economy than merely enhancing the wealth of those at the top. It would also allow more people the opportunity to raise their own spending levels through the higher earnings associated with higher education.

          I am about as left-leaning as you will find, but I am not opposed to wealth disparity or conspicuous consumption, once the basic needs of all are provided for. In a wealthy society, this should be the minimal expectation.

  5. Tia Will

    Ron

    Can we now count on you to fill the role Jeff has played in telling others what they think and why they do what they do once Jeff is gone?  Because your 12:10 pm post yesterday was a great start on assuming that position.

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