We have watched over the years the ebb and flow about the concern of the budget. In fact, the budget discourse may be some of the most telling information about the direction coming out of City Hall.
In the 2008 election, with Don Saylor and Stephen Souza seeking re-election, they pumped home the point that the city had “a balanced budget with a 15 percent reserve.” A technically true comment, however, it ignored the large and growing unfunded liability and what was even then a growing list of unmet needs. Then the Great Recession hit a few months later.
From 2009-10, the council make incremental changes, but mostly it attempted to get through the revenue downturn of the recession by utilizing attrition as well as furloughs. While reformers were pushing for deep changes to pensions, the council likened the city budget to a large ship that has to be turned slowly.
In 2010-11, with a new council in place led by Mayor Joe Krovoza and Mayor Pro Tem Rochelle Swanson, there was a much more aggressive focus on pension reform, figuring out the exact needs for roads, and reforming things like the fire department. The most aggressive changes came in the form of the 2012-13 MOUs.
However, even as late as 2014, the city faced as much as a $5 to $6 million structural deficit. The city pushed through a half cent sales tax, but failed to put a follow up parcel tax on the ballot for that fall, which would have funded infrastructure needs – especially road repairs.
The year 2014, however, saw Joe Krovoza replaced as mayor by Dan Wolk – and a change in focus. In late December 2015, Mayor Wolk presented “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.”
A few months later, Robb Davis would take over as mayor in July 2016, and he disagreed with Dan Wolk. In a response column, he wrote: “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.”
Consultant Bob Leland was brought in and determined that the city was facing a long-term $7.8 million annual shortfall.
As Robb Davis put it: “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.”
What is interesting is that the last five mayors in Davis have gone on to leave the council: Ruth Asmundson 2009-10, Don Saylor 2010 (before resigning to become County Supervisor), Joe Krovoza (2011-14), Dan Wolk (2014-16), and Robb Davis (2016-18). That has led to a lot of change in terms of the message coming out of the city.
One question is about the focus of the city for the next few years – the need to renew the sales tax, the need to possibly pass a parcel tax for roads at some point (probably 2022), and the need for economic development – what would be emphasized.
The reality is that the picture painted by Robb Davis and Bob Leland remains. Last year (2018), voters voted down a parcel tax for road maintenance, despite needs that remain between $6 million to $16 million annually over the next 20 years.
The city continues to estimate that there is an ongoing deficit of $8 to $10 million for city needs, including infrastructure.
It is not just roads: bike paths, facilities, parks, parking lots, traffic and more. The estimated funding gap over the next 20 years is $224.4 million.
Comments from council on Tuesday:
Lucas Frerichs: “It’s not a particularly sexy budget, but it’s a solid budget.”
Mayor Brett Lee: “These budget investments enable the city to use our existing resources more efficiently and enhance the Davis community’s assets. Our overarching goal is to continue to provide excellent city services with transparency and innovation.”
“I think this is a prudent budget that I’m happy to vote for,” said Councilmember Dan Carson. “It does address council priorities — additional funding to fix our streets and roads and bike paths…”
He added that “we’re being very careful and responsible, not making commitments beyond what we can handle.”
The press release from the city focused on smaller items – funding for public safety staffing, police officer recruitment funding, cannabis revenue and grants.
It also notes, “Over $7.6 million in projects related to streets and roads, with approximately $6 million in state and local funding allocated for pavement maintenance alone.”
But reading between the lines, the $6 million for pavement rehabilitation and maintenance drops back to $3 million for 2020-21.
The city needs the voters to understand the precarious nature of its budget in order to support things like the sales tax renewal in 2020, a possible economic development project, and a potential 2022 parcel tax for roads.
My complaint is that the budget largely treads water here – which is understandable given that there are no real new revenue sources except for cannabis. But they fail to lay the groundwork for the coming asks.
Dan Carson noted in his comments on Tuesday that the two-year budget “assumes renewal of our Measure O sales tax.” He also acknowledged: “We need to start our communication process with our citizens to make sure they understand the stakes there.”
My problem is that the budget discussion was a good opportunity to do that, however, the message coming out of City Hall with their press release and the news coverage was one that was overwhelmingly positive.
That will serve the incumbent councilmembers seeking reelection fairly well, but it could make it harder to do the heavier lifting starting in 2020 and beyond.
—David M. Greenwald reporting