ARTICLE
Last week, we opined about the significant concerns raised with the release of the League of Cities Pension Report. As outlined in the current report released Thursday, the League of Cities called the rising CalPERS costs “unsustainable” for many cities, which it said were particularly vulnerable due to the large portion of local government coffers already spent on employees. Again the city of Santa Cruz pays about $16 million into CalPERS, the state agency that manages benefits for most public employees. According to data compiled by the California Public Policy Center, that payment is projected to double to $32 million by 2025. In response to projected budget deficits the City of Santa Cruz embarked on a proactive fiscal sustainability strategy. The strategy involves expenditure reductions as well as increasing revenues to sustain critical city services. Accordingly, on August 22, 2017, the City Council authorized the Mayor to appoint an Ad-Hoc Revenue Committee charged with exploring the potential for a revenue tax ballot measure. The Committee (Council members Chase, Krohn, and Mathews) met over the past several months to review a variety of revenue options as well as worked with pollster Gene Bregman to develop a public opinion poll which was conducted in late January. The three council members may have completed an internal and comprehensive review and analysis of revenue tax options and based on the results of the public opinion polls, the committee recommended that two general purpose tax revenue measures be placed on the June 5, 2018 ballot: a one-quarter of one percent sales tax ballot measure and two cents per ounce sugar sweetened beverage tax ballot measure. The public was not involved in any discussions on this issue to my knowledge. I have not seen any analysis of the various options, only what was presented at the February 13 Council meeting. The late January public opinion poll of 503 mentioned in the City staff report was publicly revealed to the council at this Tuesday afternoon council meeting. So the general public did not have any knowledge of the poll results and could only conclude from the slide presentation the validity of a potential ballot measure. According to Gene Bregman, this late January 2018 poll has similar results as the City commissioned poll back in July 2017. The poll said the public supported a general obligation tax for several purposes and both sales and sugar tax would pass. What was missing here is the formal public conversation with the residents, business owners and the concerned citizens who will be impacted by the outcome of the Council’s decision. There was no analysis weighing the benefits of the sales tax and sugar tax verses the impact to the general businesses community. The staff report and the polling information noted that without the additional revenue sources public services and potential layoffs would be required. The business community understands there are serious issues that need to be addressed by our city officials. The business sector further understands the City’s financial challenges. Yet, this policy recommendation offers no discussion on where specifically the funds would be allocated, what percentage will be for health or human services programs, public safety or infrastructure improvements. One council member suggested that the sugar tax be solely dedicated to health and children which would require a 2/3 voter approval of that sugar tax measure. The Council concluded that they will bring this back to the council at their February 27 meeting. The question is not whether the two tax measures are the correct solution to meet our financial needs of the City, rather it is a process that a political expedient one vs. a thoughtful well designed public policy discussion is the way we conduct our governing process. The City Council can say it was the efficient way to get in front of the financial storm by putting this before the voters utilizing an emergency legislation clause to beat the election clock. However, solely relying on the results of 2 polls of 901 interviews and the recommendations by a three member ad-hoc committee is not a good productive ‘robust’ policy debate. If voters approve of the proposed revenue tax ballot measures they would generate approximately $4 to $5 million in additional annual revenue to the City’s General Fund. Placing the measure on the ballot is expected to cost from $75,000 to $150,000. The annual pension deficit is approximately what would be collected by the measures if they are approved. Tuesday’s City Council meeting was a half-baked attempt to resolve one financial crisis without fully understanding potential unintended consequences that will follow. This vote is counter-productive and an opposite approach to the very detailed year-long public and community conversation that took place over the past year addressing the City’s (and the county’s) housing crisis. The housing discussion process was engagement with a full court press to listen, learn and then produce a report on the 99 ideas that came forward. The housing discussion will return to the Council next month with priorities of what housing issues should be addressed first. That is the best way to make quality policy decisions. The Chamber and the greater Santa Cruz County business community is ready and willing to partner with our public sector leaders to create public financing solutions that do not pit one sector of the our city against another.
Last week, we opined about the significant concerns raised with the release of the League of Cities Pension Report. As outlined in the current report released Thursday, the League of Cities called the rising CalPERS costs “unsustainable” for many cities, which it said were particularly vulnerable due to the large portion of local government coffers already spent on employees. Again the city of Santa Cruz pays about $16 million into CalPERS, the state agency that manages benefits for most public employees. According to data compiled by the California Public Policy Center, that payment is projected to double to $32 million by 2025.
In response to projected budget deficits the City of Santa Cruz embarked on a proactive fiscal sustainability strategy. The strategy involves expenditure reductions as well as increasing revenues to sustain critical city services. Accordingly, on August 22, 2017, the City Council authorized the Mayor to appoint an Ad-Hoc Revenue Committee charged with exploring the potential for a revenue tax ballot measure. The Committee (Council members Chase, Krohn, and Mathews) met over the past several months to review a variety of revenue options as well as worked with pollster Gene Bregman to develop a public opinion poll which was conducted in late January.
The three council members may have completed an internal and comprehensive review and analysis of revenue tax options and based on the results of the public opinion polls, the committee recommended that two general purpose tax revenue measures be placed on the June 5, 2018 ballot: a one-quarter of one percent sales tax ballot measure and two cents per ounce sugar sweetened beverage tax ballot measure. The public was not involved in any discussions on this issue to my knowledge. I have not seen any analysis of the various options, only what was presented at the February 13 Council meeting. The late January public opinion poll of 503 mentioned in the City staff report was publicly revealed to the council at this Tuesday afternoon council meeting. So the general public did not have any knowledge of the poll results and could only conclude from the slide presentation the validity of a potential ballot measure.
According to Gene Bregman, this late January 2018 poll has similar results as the City commissioned poll back in July 2017. The poll said the public supported a general obligation tax for several purposes and both sales and sugar tax would pass.
What was missing here is the formal public conversation with the residents, business owners and the concerned citizens who will be impacted by the outcome of the Council’s decision. There was no analysis weighing the benefits of the sales tax and sugar tax verses the impact to the general businesses community. The staff report and the polling information noted that without the additional revenue sources public services and potential layoffs would be required.
The business community understands there are serious issues that need to be addressed by our city officials. The business sector further understands the City’s financial challenges. Yet, this policy recommendation offers no discussion on where specifically the funds would be allocated, what percentage will be for health or human services programs, public safety or infrastructure improvements. One council member suggested that the sugar tax be solely dedicated to health and children which would require a 2/3 voter approval of that sugar tax measure. The Council concluded that they will bring this back to the council at their February 27 meeting.
The question is not whether the two tax measures are the correct solution to meet our financial needs of the City, rather it is a process that a political expedient one vs. a thoughtful well designed public policy discussion is the way we conduct our governing process.
The City Council can say it was the efficient way to get in front of the financial storm by putting this before the voters utilizing an emergency legislation clause to beat the election clock. However, solely relying on the results of 2 polls of 901 interviews and the recommendations by a three member ad-hoc committee is not a good productive ‘robust’ policy debate.
If voters approve of the proposed revenue tax ballot measures they would generate approximately $4 to $5 million in additional annual revenue to the City’s General Fund. Placing the measure on the ballot is expected to cost from $75,000 to $150,000. The annual pension deficit is approximately what would be collected by the measures if they are approved.
Tuesday’s City Council meeting was a half-baked attempt to resolve one financial crisis without fully understanding potential unintended consequences that will follow. This vote is counter-productive and an opposite approach to the very detailed year-long public and community conversation that took place over the past year addressing the City’s (and the county’s) housing crisis.
The housing discussion process was engagement with a full court press to listen, learn and then produce a report on the 99 ideas that came forward. The housing discussion will return to the Council next month with priorities of what housing issues should be addressed first. That is the best way to make quality policy decisions.
The Chamber and the greater Santa Cruz County business community is ready and willing to partner with our public sector leaders to create public financing solutions that do not pit one sector of the our city against another.