Budget/Fiscal

During the course of Councilmember Lamar Heystek’s presentation of the alternative budget, one of his proposals for possible additional revenue was the idea of billing the party at fault when it requires fire or ambulance service.

Councilmember Heystek called it cost-recovery for at-fault party for public safety response.  He projected it could produce an additional 25,000 dollars in revenue for the city which would enable it to off-set some of the cuts to service for the public.  The city and the city council seemed to reject it almost on principle, but it established the idea of looking for alternative means by which to fund city services.

Reading the Final Environmental Impact Report (FEIR) for the proposed Wild Horse Ranch development gives one a little insight into how the city operates.  Specifically the designation of the “unavoidable cumulative impact” on the fire service.  EIR concludes: “consistent with the analysis of the Davis General Plan and General Plan EIR, the proposed project would have a significant impact to fire protection services.” 

Specifically the project is said to lie outside of the five minute response time area.  Moreover,

For those who have closely followed the debate on the blog, the chart you are about to see should come as little surprise.  Over the course of 2000 until 2009-10, the City’s PERS contribution has increased dramatically from just under one million dollars per year, up close to seven million by the end of the decade.

Obviously that rate of increase is unsustainable.  Thanks to the city of Davis and Finance Director Paul Navazio, we have the latest projections as well.  The key question is whether PERS contributions will continue to increase at the rate that they have and the second question is what the city can do about it.

For those who read Rich Rifkin’s column this Wednesday in the Davis Enterprise, it was a nice summary of where we are and where we stand.  He makes a few points that bear repeating and further discussion.  But let us back up a second for starters.

Last week, the Davis City Council passed a budget that calls for cutbacks in salary and benefits that equals around 3.8 percent of employee compensation.  The raw number is 1.25 million dollars, less than the number that Councilmember Lamar Heystek pushed which represented around 5 percent at 1.575 million dollars.  At the same time, it was greater than the 850,000 dollars that the city was proposing.

The council after months of agonizing over numbers finally passed a budget, along party lines, by a 3-2 margin with Councilmembers Lamar Heystek and Sue Greenwald strongly and vehemently dissenting.

Councilmember Heystek told the Vanguard that he was reiterating that given the budget adopted by the Council, it doesn’t appear he will support an extension of the sales tax and therefore is likely to actively campaign against it.

When Councilmember Lamar Heystek pulled the dramatic move in early June by going to the staff table and presenting his own budget numbers, he got everyone’s attention.  Had the council meeting not run so late the next week on June 16, Councilmember Stephen Souza would have done something similar for his own compromise numbers.  As it turns out, the move by Councilmember Heystek succeeded in getting council to move off the city manager’s budget, but not by nearly enough.

As it stands right now, the budget will likely pass by a 3-2 vote.  Much of how bad the budget will be is still to be determined by the results of employee negotiations–but we are not holding out hope that the city council and city staff will solve the city’s structural problems.

Nearly a month ago, the Vanguard ran a story asking why firefighters make substantially more than police officers in comparable positions.  This was after Councilmember Lamar Heystek posed questions to city staff.

In particular, the Vanguard learned that while the two positions appear to be similarly funded, the Firefighter II position is not the equivalent of the Police Sergeant position.  When Councilmember Heystek asked Bill Emlen what the comparable front line supervisory positions were for police and fire, City Manager Bill Emlen responded:

At last night’s Davis City Council meeting, the City Council went through the budget section by section.  While the efforts of Councilmember Lamar Heystek to introduce an alternative budget two weeks ago gained some concessions from the Council majority, Councilmember Heystek and Councilmember Sue Greenwald found themselves on the short of end of 3-2 votes on the key issues.

The bottom line was the failure of the Davis City Council to adequately address the looming structural issues of employee compensation at this meeting.  The short-term budget remains to be balanced through cutbacks to programs rather than changes to way the city funds employee compensation.

The Davis City Council a few weeks ago directed that three of the commissions look into the question of whether Measure J should have a business park exemption during their vote to place a renewal on the ballot that would sunset in 2020.

Last night, the first of those commissions, the Business and Economic Development Commission (BEDC) would take the matter into consideration.  From the onset, the commission was clearly not comfortable with the vague directive.  For the most part they seemed inclined not to grant an exemption, but they were not ready to definitively reach that verdict instead they voted by a 7 to 1 vote to recommend no exemption at this point in time.  The one dissenting vote actually wanted an qualifier removed.

Two weeks ago, Councilmember Lamar Heystek caught the city council and most of city staff off-guard when he moved from the dais to the staff table and began to present a full alternative budget.  The crux of his budget was to do what city staff had refused to do shift the burden of the budget deficit from short-term savings plans that would have to be made permanent due to the current projections for the city to longer term structural fixes to the city’s budget.

Following Councilmember Heystek’s lead has been Councilmember Stephen Souza who proposed his own alternative budget.  One of the key provisions for that budget however is his projection that the city due in part to Target will actually see an increase in revenue from sales and property taxes.  Our analysis on Sunday leads us to conclude that his projected 1% growth in revenues is highly unlikely given the current economy and the city of Davis’ reliance on state and university jobs that figure to impacted by the ongoing crisis at the state level.  Instead, it may be more likely that the city experiences another drop in revenue close to the 14% it has suffered during the past fiscal year.

Since looking at the entire budget proposals can be rather daunting, today I want to focus on two specific proposals, which in most respects are entirely unrelated.  The Vanguard has joined Councilmember Lamar Heystek in opposing many of the programmatic cuts for the city as embodied in the Tier 1 and Tier 2 reductions.  One of the big cuts in the Tier 1 and 2 reductions is the cutting of 27,000 dollars to Davis Media Access.

For the past year and a half, Vanguard Radio has operated on KDRT 95.7 run by the Davis Media Access.  In addition, Davis Media Access also operates DCTV.  While many do not take advantage of the community based television, we view it as another means by which to inform the community of Davis in a very intimate way via television.  Davis is in many ways a victim of being trapped in the Sacramento media market, there are no Davis-based television stations.  That pales to many other college towns and communities of this size that find themselves less a part of a larger city’s media market.  Growing up in San Luis Obispo, we not only had our own TV station and multiple radio stations, but there were nearby stations from Santa Maria and Santa Barbara that would also cover local news.  That does not occur in Davis very often unless there is a major burning issue.

The problem is a small city, city manager government is that staff runs City Hall.  Councilmembers are dependent on staff reports to be able to govern.  Staff is not assigned individually to elected city councilmembers, instead they collectively serve the council and by extension and default, the council majority.

That gives a tremendous advantage to council majorities who can gain from city staff the formulation and justification of their policies.  That makes what happened on Tuesday night all the more remarkable.  Councilmember Lamar Heystek took the highly unusual stance of sitting down at the staff table and presenting his own alternative budget.

Last night during the Davis City Council Meeting, Councilmember Lamar Heystek began to take matters into his own hands as frustration about the city’s budget proposal has grown.  Instead of merely opposing the current proposals laid out by finance director Paul Navazio, the councilmember boldly proposed his own alternative.

There are two key planks to the alternative budget as laid forth by Mr. Heystek.  First, the belief that the current 850,000 dollar reduction in salary compensation which represents perhaps a little over 3% of their total budget is insufficient.  Councilmember Heystek instead proposed a 5% reduction in total compensation for employees.

The city of Davis will ostensibly be passing a budget on June 23, 2009.  Included in that budget will be about 15.5 FTE positions cuts and another 1.5 million dollars in the tiered program reductions.   Total savings to the city will be 3.4 million dollars and the budget will on paper be balanced.

As we look more closely at the budget, one is likely to become skeptical about the plan.

Last week the Vanguard reported that the Davis City Council had quietly slipped approval of a nearly eleven million dollar water tank project past the residents of the city of Davis.

On July 15, 2008, on the consent calendar, the Davis City Council adopted a resolution authorizing the City Manager to executive a consultant agreement with West Yost Associates for East Davis Water Tank.  The fiscal impact for those consultant fees was expected not to exceed 600,000 dollars.

This week begins the long process of looking at the city budget where the City Council along with City Staff must deal with the short-term budget deficit and hopefully deal with the longer term structural issues dealing with employee compensation.

This article will simply look at the overview presented this week and wonder whether the numbers presented here are simply too optimistic.  Part of these figures are based on projected outcomes from negotiations with the bargaining units.  That process is ongoing and does not figure to be resolved prior to the budget’s passage on June 23, 2009.

Last night at the Davis City Council meeting, the city unveiled the budget.  Because the budget itself did not get to council until late in the afternoon, the city generally spoke in generalities rather than specifics.  In the coming days and weeks, we will look at the budget itself more closely.  For now, we want to focus on one particular issue that arose during the course of council discussion.

Finance Director Paul Navazio suggested that part of the more than three million dollar budget deficit will be closed through contract negotiations.  Mr. Navazio is proposing somewhere around 860,000 dollars or so of the budget will be closed through contract negotiations.  The question then comes to where should that come from and how should the city proceed with negotiations.

The Davis City Council recently approved a ten million dollar water project that was on the consent agenda with no discussion of the costs of the project, its design, size, impact or alternatives.  When Councilmember Sue Greenwald pulled the item from the consent agenda, the discussion was delayed until the end of the meeting, by that point the council was so tired they refused to discuss it and simply approved it.

The genesis of this approval began on July 15, 2008 with another consent item.  The council at that time approved a consultant agreement with West Yost Associates to prepare plans, specifications and estimates for the subject project.  The consultant agreement was not to exceed $600,724.

For the first time, the Davis City Council really acknowledges some of the problems that it faces in long-term, not just short-term fiscal stability and addresses key issues that are facing it as it attempts to go into good-faith labor negotiations.  The first step is always to define the problem.  However, the key will be to not just acknowledge the problem, but to actually hold employee groups and city staff posing as negotiators to the fire with regards to compensation packages.