Second Thoughts: Two ways to look at city budget
by Jon Mendelson
Apr 13, 2012 | 3683 views | 12 12 comments | 27 27 recommendations | email to a friend | print
On March 27, Mayor Brent Ives stood before Tracy’s movers and shakers and stated boldly, “The city of Tracy is fine.”

The mayor’s State of the City address looked toward a brighter economic future and applauded the moves taken to help the city weather a financial storm that is completely sinking some of Tracy’s neighbors.

The warm feelings didn’t last long. A week later, on April 3, he and the rest of the City Council were greeted with a report that suggested Tracy is, indeed, still in danger of foundering.

According to an estimate by Zane Johnston, head of the city’s finance department, Tracy will be out of reserves and will run a $10.2 million general fund deficit in five years if more steps are not taken to reduce expenditures.

A deficit like that would lead to cuts even larger than what the city has already absorbed, seriously imperiling police and fire protection.

A host of assumptions could make that $10.2 million gap smaller (spending less than 100 percent of each year’s budget, for example) or larger (slower-than-anticipated sales tax growth). But it certainly suggests the March 27 State of the City and April 4 economic outlook session were on the rosy side of the spectrum.

And it’s not just the speeches that have been so tinted. It’s been suggested that the city’s general fund could actually run a surplus by 2015, thanks in part to the increased sales tax revenue delivered by Measure E, the half-cent tax hike approved by voters in 2010.

One Measure E oversight meeting earlier in the year even featured a document asking the committee’s five members to consider possible uses for that surplus. Not exactly doom and gloom.

So, where’s the disconnect?

According to Johnston, there isn’t one. The optimistic outlook offered by the mayor and possible surpluses discussed by the Measure E folks will only materialize if the city moves forward with more aggressive expense cuts.

“If we don’t do anything, this could become a reality. We’re a ship, and we’re like this,” Johnston said, tilting his hand to the side, “and we need to right ourselves.”

One of those steps is to have city employees pay into CalPERS, the public employee pension fund.

Right now, the city pays the public safety employee contribution toward CalPERS, in addition to the employer’s share, an arrangement that union employees say was agreed to in lieu of pay increases years ago, when CalPERS payments were cheaper for the city.

But big hits to the stock market have forced the state, counties and cities to put more money into the pension fund — and a decision by the fund’s managers to decrease its estimated rate of return is only making things more expensive.

That millstone, which is likely to get heavier, is why officials say it’s imperative for the city’s long-term health that employees contribute more toward their retirement.

At the April 3 meeting, Ryan Gall, a member of Tracy Firefighters Association, said negotiations regarding a new contract are “all but finalized,” with firefighters agreeing to pay toward CalPERS.

It’s a concession consistent with my conversations with various members of the department, who have made it clear that they’re not just looking for a paycheck.

Firefighters have told me they’re willing to take a hit if there’s a genuine need, a willingness proven in the past.

Staffing at the Banta station was reduced long ago, and fire crews have agreed to furloughs, which lapsed along with the most recent contract in July.

But union members also want a fair shake for doing a job that puts them in danger every day they don a uniform. And there seems to be a feeling that Tracy hasn’t shared the whole story.

Gall publicly challenged the city’s assumptions regarding increasing fire department costs and those costs’ contribution to the large deficits predicted in the April 3 budget exercise.

He said an actuary hired by the fire union to check the city’s numbers suggests the city overestimated how much the fire budget would grow.

“That actuary was done with some fairly conservative numbers,” Gall told the council, saying the actuary found the increase was only .68 percent, compared to the city’s estimate of 4.2 percent, which was apparently calculated before the fire chief added on a list of wanted improvements.

That kind of discrepancy would make the city’s five-year assumptions look less dire. (And make the need for employee concessions less necessary.)

Johnston, who has worked for the finance department 26 years and says it’s his job to accurately provide sound budget information, stood by his work.

“There is something behind each one of these numbers,” Johnston said. “They’re not made up in my office.”

Another set of dueling perspectives.

But whether you take the fire numbers or the city numbers, the April 3 presentation makes it clear that the city must continue to cut expenses. It’s not less true just because it’s a political cudgel the city has wielded and will wield in negotiations with employee groups.

It’s hard to ask concessions from the people on the front line of Tracy’s public safety battles — the guys and gals we count on to protect houses from fire, saved loved ones in emergencies and guard neighborhoods against gangbangers.

It is, however, our reality.

Firefighters, cops and other public employees shouldn’t be left empty-handed in these transactions, though. In exchange for concessions, they should get a promise from city leaders.

That promise should be that the city will not incur unnecessary ongoing costs, that it will maintain staffing of public safety departments, and that it will reward employees for taking cuts if and when the economy bounces back.

It should also come with a corollary to temper optimistic speeches with more reserve and reality.

• Second Thoughts is a personal opinion column by Editor Jon Mendelson.
Comments-icon Post a Comment
May 15, 2012
"But union members also want a fair shake for doing a job that puts them in danger every day they don a uniform."

There was a time not long past when public safety employees earned a fair wages and compensation. In recognition of the importance of their job and the high standards to which they are held, public safety employees earned a little more than non-safety public employees with similar backgrounds and skills.

In the last 15-25 years the relationship between public safety and non-public safety employee compensation has changed dramatically. When many public agencies quietly agreed to pensions that promised public safety workers 90-110% of highest salary pensions reason-ability and fairness went out the window.

That action gave public safety employees a retroactive pay increase - in effect giving them a hefty raise for work they may have performed years earlier.

The measure of compensation sought by public safety unions is not what is "fair", it is as much as taxation can support. That's evidenced by their having hired their own actuary to, in effect, dig through City's pockets to make sure that no spare change was overlooked in calculating what the union could demand.
April 19, 2012
Well, I'm glad he won't be voting on it then. It's good to see a politician take the high ground if family is involved.
April 17, 2012
Putting aside the rudeness in some of the comments earlier. I bet there are a lot of people who would probably prefer their children became firefighters instead of working at the car wash or starbucks. Ok, now that is out in the open for whatever it was.

Most people do not know this but in 1736 Benjamin Franklin started one of the countries' first fire departments.

But he probably did not deserve a retirement either.
April 17, 2012
If the mayor don't vote for his daughter's husband pay raise, he going to be eating Sunday dinner somewheres else becuase it wont b with the rest of the folks.

Dont you think that makes sense?

Who cares about an election year, its about the money.

its not corruption its that you dont care for the mayor.
April 16, 2012
I see nothang wrong for voting on his son in laws salary. The fire department is separate from the council's pay anyways.

The mayor is just taking care of family.

Nothang wrong with that.
April 17, 2012
"The mayor is taking care of family"? Cocodream, are you saying that engaging in potential conflicts of interest when public funds are at stake is permissible? If the Mayor were to vote on a contract that directly benefits his son-in-law, all that would do is fuel the public's perception that politicians are corrupt and don't care about the people that put them in office, i.e. the voters. I hope that the Mayor avoids fueling that perception by recusing himself when it comes time to vote on the firefighters contract, especially during an election year.
April 17, 2012
Except that it is illegal, unethical and irresponsible. We have laws in this country to prevent patronage, which is what his voting on the fire fighters contract would be.
April 17, 2012
"The mayor is just taking care of family.

Nothang wrong with that"

Ummm, I think that's precisely what's wrong.

April 17, 2012
There is something wrong with that cocodream. If he wants to take care of his family then he should start by setting a good example for his children and grandchildren by abstaining from voting on the firefighters contract.

BobsYourUncle is right - cocodreams comment is precisely what's wrong!
April 16, 2012
You have raised an interesting point behonestguys. By participating in the closed session discussions regarding fire fighter contract negotiations he is most certainly creating a conflict of interest.

But the question that puzzles me is; "Shouldn't the City Attorney, who is also present during those discussions, be advising the Mayor to recuse himself from any discussions or votes related to the fire fighter's contract negotiations?"

In my research I found the Mayor has a habit of creating conflicts of interest. It appears he voted on an agendized item several years ago that directly benefited a firm he contracted with through his consulting business, BHI Inc. I believe he was fined for this practice by the Fair Political Practices Commission.

April 16, 2012
My question during an election year is this - will the Mayor be voting on the firefighters' contract? It is public knowledge that his son-in-law is a Tracy firefighter. Wouldn't the right and ethical thing for the Mayor to do to avoid the remotest appearance of impropriety is to abstain from voting on any such agreement, as Officers Abs does when it comes to all things DARE?
April 16, 2012
He can vote to give his family a raise? How is that possible? I want my daddy to be mayor!

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