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August 23, 2007
Pound Wise and Penny Foolish?
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| At yesterday's Finance Committee meeting
the councilors (Wahl, Gruendl, Flynn) discussed 15 items from the budget
deficit reduction matrix previously supplied by city staff. There are
59 items in total that will be discussed over 2-4 more committee meetings.
In attendance were just over 30 people, 22
of
which
receive
paychecks
from
the
city. I would not say it went well. Let me explain why I feel that way. Last June the City Council asked City Manager Greg Jones to come up with budget reduction recommendations. They were asking for HIS suggestions. What they received was a list of 59 items compiled by the staff. They've yet to receive any recommendation from the person managing the budget or the city. Many of these ideas for cutting costs or raising revenue still do not have financial impact associated with them. Some of them have absolutely no impact on the budget deficit. I'll briefly go through each item. If you have more in depth questions on a specific item I might have more information, so feel free to ask questions. 1. A consultant suggested that improving efficiency of the city vehicle fleet could save $250K. Fire Chief Brown said that he had never seen the report, and neither had the police (who run the larger more expensive vehicle fleets). Brown said a vehicle problem last year cost them an unexpected $250K which would have wiped out any savings. He felt this item may not create any realistic savings. 2. A consultant made small suggestions on where the city could save on energy usage as part of a free audit. They said for a $30K contract they could tell the city how much more money might be saved on energy reduction. The city has already taken a number of steps towards reducing energy use. This item came with no real cost saving estimate, and would actually cost money in the short term. 3. Implementing a tiered PERs plan for new employees could save money in 15-20 years. Police Chief Hagerty stated that tiered or reduced retirement benefits could impact retention and create divisions in safety personnel. This would require a renegotiation with unions. Councilors did not seem keen on this idea. 4. Canceling the Cohasset road widening project would save a lot of money ($10million) and was discussed. But this is an RDA project and has nothing to do with the $56-$112million deficit. It was removed from the list when that was pointed out by the audience. 5. Eliminating the cost of living adjustment for 1 year would save $1.6million and would reduce the accumulated debt over the next ten years. This was the only large dollar item related to city employee pay that seemed to breeze through the discussion. 6,7,8. Allowing more flexible work situations and even mandating a shorter work week were discussed with these items. But there were no dollar amounts associated with these deficit reduction items. 9. The city sometimes keeps job positions funded even though they haven't filled the positions. Those unfilled salaries can be used to hire hourly employees as long as they don't exceed union mandated maximum work hours. Eliminating these positions could save $110K, but in all likelihood the departments who had the positions eliminated would get some replacement money for hourly employees. 10. I'm not sure who would have to implement 3rd party indemnification from litigation clauses. I assume this was directed at developers but no dollar amount was given as to what this item would do to help reduce the budget. 11. Increasing parking fines from $15-$20 would raise $130K. 12. A fee used to cover the processing cost of a business license could be added. The fee would be $20 and would be on top of existing business license costs. $108K was estimated as the amount of money this would raise. 13. It was suggested that increasing fire inspectors / inspections would bring in $25K per inspector and force property owners to upgrade their properties. Chief Brown stated that each inspector actually costs $75K, so this would be a $50K loss. 14. City employees in management positions get merit pay for doing their job. I tried to find out if anyone doesn't earn merit pay that has the ability to do so. The answer seemed to be that everyone gets some merit pay. That sounds more like pay. Things like merit pay, which are intended to award good employees have a tendancy to become "expected". If all city managment are receiving merit pay, and it sounds like they are, then it has become an expected part of their compensation. That's my opinion anyway. Chief Hagerty pointed out that some employees can earn merit pay, but have reached a pay schedule maximum that prevents them from getting "merit" income on top of the pay they earned. Which would make some aspects of the system seem unfair. This was said to be valued at $300K. I can't see how this is an annual savings. So it must be a one-time savings, or a time-limited savings. In private companies you often see bonuses associated with cost reduction methods employees figure out while on the job. I think we should change our "merit pay" over the next 10 years so that managers earn additional pay when they cut costs and still get the job done. 15. Allowing people to buy multi-year licenses for doing business or operating alarms could save $140K in administration fees. This would probably reduce income from item 12. All of the items except number 4 were moved forward to the City Council. Councilor Wahl made repeated requests that each item moved forward actually have a dollar figure associated with it. Other requests were made for more information on various items. The first of 5 pages of items, if enacted, might reduce the deficit by $588K annually. It would also be possible to get close to $2million in one time savings from this list. With the $56million dollar deficit we needed close to $6million annually. When including the added cost of safety personnel over the next 10 years our shortfall doubles. What is astounding is that there has been no discussion of an across-the-board spending reduction. While there will be a discussion of increasing sales tax, there is no planned discussion of cutting the cost of government by a set percentage (like 2%). Looking in my crystal ball I think there is a strong possibility of a morale problem developing at the city. It will be very hard for staff members to deal with the extra workload these budget changes will require, and transition through the abrupt loss of our City Manager. The city staff work very hard, we should all recognize that. Correction: A little while back I mentioned in a blog entry that the Council giving up its pay would save the City $50,000. I made a rough calculation based on their monthly pay. The official estimate is $159,979 so they must get some more perks beyond the $600/month reported in the paper. |
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CI Challenge: Can you guess what it is? Winner: Rainman, see comments below for the answer. |
Posted by Lon at August 23, 2007 07:26 AM
Comments
FIre Dept logo?
Posted by: Gregg Payne at August 23, 2007 08:35 AM
Gregg,
You're warm, maybe even hot, in fact some might say you're on fire. But not quite correct.
Lon
Posted by: Lon at August 23, 2007 08:57 AM
reposted from previous post Hostage Crisis
ya kicked ass yesterday Lon! I thought Dave Burkland was going to throw you out of the meeting for a minute there. Yeah, "merit" pay, I love that. Go get 'em big boy!
Bob Best also kicked ass.
I think that was the first public meeting I have been to that resembled a real work-shop, not just a charette with power point presentations that tell us how things are going to be. We showed them that we can work with them, that we aren't going to trot along behind the pick-up truck like faithful hound dogs. That is the kind of give-and-take I would like to see with the RDA. All the RDA meetings should be open for such a work shop. They shouldn't be able to spend any RDA money or generate any new bonds without holding a series of meetings like the one we attended yesterday.
And I think it's catching on. I talked to a city employee on the way out who said she really enjoyed the meeting, appreciated our input, and that in the 10+ years she has worked for the city, this was the first public meeting she had attended. I hope to meet more people like her at the next meeting. Yeeehaw!
Posted by: Juanita at August 23, 2007 09:22 AM
Juanita,
It was an interesting meeting. I'm concerned that we're so far into the discussion and many of the items on the list don't have dollar amounts associated with them. I'm not sure there is a better way to do the budget thing, but this is a math problem so numbers are needed to go with all of the discussions.
BTW: After previously calling me a jerk and suggesting I eat, or do something else, with feces, I still have you on double secret probation. I won't be posting negative comments from you.
Lon
Posted by: Lon at August 23, 2007 09:27 AM
Maltese Cross?
Posted by: rainman at August 23, 2007 09:44 AM
IAFF logo
Posted by: rainman at August 23, 2007 09:47 AM
Rainman,
There is a maltese cross incorporated into this challenge, but I'm looking for a more specific answer.
Lon
Posted by: Lon at August 23, 2007 09:49 AM
Rainman,
There you have it. It is one form of the IAFF logo. That's the International Association of Fire Fighters. Good job.
Lon
Posted by: Lon at August 23, 2007 09:51 AM
"I'm concerned that we're so far into the discussion and many of the items on the list don't have dollar amounts associated with them."
Gosh! I was going to say that, but I had something on the stove.
As usual, it's okay for you and your co-horts to make ugly, snipey, catty (haha) comments about everybody else, but when I tell you what I think of that, oh god, stop the presses - Juanita is negative! I DID NOT tell you to eat feces. Prove it.
Posted by: juanita at August 23, 2007 10:53 AM
it looks like you edited my post, whether by accident or intention. it significantly changes what I said - I was explaining how you contradicted yourself, and you just cut me off and denied contradicting yourself. It's only obvious, you left off the right parenthese where you cut me off.
My husband thinks you did it on purpose and he used a word that blends food with excrement. I am willing to give you the benefit of the doubt. Oh, and I realize, you are the boss of this game and you can do what you want. That's what I get for horning in, etc. But this is exactly the kind of crap that brings blogs down to the level of graffiti on the Duffy's bathroom wall.
You wrote the comment above on July 28th. I assumed you were telling me to eat shit in some round-about way. I should point out that I did not edit your comments. I did post both the comment above and the one where you called me a jerk, the latter having no information as to why I gained that particular moniker.
I should also point out that after 300+ posts and 1100+ comments you are the only person whose comments I've had to restrict on a regular basis.
I hope you understand that being overly negative, in a personal way, detracts from you getting your point of view across. Lots of other people have disagreed with me in the last year and many have corrected me. I think that's all valuable.
My hope is that you'll continue to make your voice heard in Chico, because you often make good points. But I've also found that when you comment on this blog the discussion becomes about you, or how you feel about me, and not about the topic of the post. That seems to prevent others from joining the discussion.
And so double secret probation will have to continue, at least for a little while longer. Sorry.
Lon
Posted by: Lon at August 23, 2007 12:02 PM
Lon,
about $20 fines. Thats a big parking lot without meters next to the city building. How is it the best paid workers downtown get the free parking. #60 meters and fines at city building =
$$$$$
Sorry Im not able to fully endorse your campaign. Im waiting to hear your plans for a better Chapmantown. We have lots of cupcakes in the hood and bidwell ranch shrimp sounds like the neighbors are coming for dinner
help us Lon
Mike
Posted by: mike trolinder at August 23, 2007 12:47 PM
Mike,
Item 4 on the list included a discussion of the city reducing instead of cancelling the Cohasset road widening. Reducing the spending from $10million to $1million would allow the city to maintain federal grant money for a bridge associated with that project. If the city can lower the priority of that project it can raise the priority of your neighborhood. I think some of the $9million that would be unspent could go to road, sidewalk, and sewer improvements in Chapmantown.
There was some talk at the meeting of the RDA being overspent. I was on the short lived RDA Citizen's Committee that warned the council not to overspend the agency's money. We also suggested that all RDA spending be applied to projects whose life exceeds the length of the loan. My preference would be roads, sidewalks, and sewers.
The city has spent RDA money on open-space purchases which I question, and I believe all are currently fenced from the public. They have also allotted a large chunk, I think $20million, for the first phase of a police station. While I support the idea of a new police station, or better facilities, I'm not convinced a lower priced option can be ruled out. Some of that money could go to Chapman.
I think there could also be a discussion of Chico annexing the entire neighborhood in exchange for recalculating some of the sales tax agreements we have with Butte County.
Spending on neighborhoods should not be based on how many neighbors donated to one political campaign or another. We should have a policy that the "worst should come first", whether it's a neighborhood, road, or park.
I can't claim to be an expert on the details of city spending...yet, but I do think you guys have gotten the shaft for way too long.
Lon
Posted by: Lon at August 23, 2007 01:03 PM
Mike,
I sort of glossed over the city parking comments. I completely agree with you. Some of that (most) should be metered parking. Great idea.
Lon
Posted by: Lon at August 23, 2007 01:13 PM
Lon,
Regarding item number 2: If you've ever walked into the City Council Chambers you know that no matter what is or is not going on the temperature is almost like a deep freeze. I'm thinking it could serve double duty as a habitat for those poor polar bears in the arctic who are losing their habitat to global warming. That might save a few bucks, though I'm not sure how. I guess we could require them to pay rent.
Item 3: I am so weary of hearing how safety employees will walk away from their jobs if they are not constantly getting raises and benefit increases. I have heard that Chico PD officers are the highest paid in No. California. So, where are they going to go? Somewhere that pays less? A couple of years ago I was told by a PD employee that half the force would walk out if salaries or benefits were reduced. I am certainly in favor of people being paid a fair wage and benefits, but, come on, where does it end? And, I believe that City salaries and benefits are not being seriously discussed as a way to help with the projected deficit. Why is that? And, why should the citizens suffer reduced services so that overpaid employees can have their cadillac salaries and benefits? For some reason, I seem to be the only person who feels this way. I am far from being as knowledgable as I should be about these kinds of things, so I ask: Am I missing something?
Item 5: When you say "This was the only large dollar item related to city employee pay that seemed to breeze through the discussion." what did you mean by that? Did you mean that the Finance Comm. members thought it was a good idea and that there was no argument about it?
Roads and sewers, sewers and roads. This city needs a new animal shelter. Desperately. The current shelter is fit for neither humans nor beasts. As much as I am having nightmares about Cupcake being let loose in Bidwell Ranch with only Faerie Shrimp and butterflies for sustenance, I would feel worse if she had to go to our pitifully overcrowded animal shelter.
Shatzi
Posted by: Shatzi at August 23, 2007 10:34 PM
P.S. Larry Wahl wanted each item to have a dollar amount attached? Sounds like him. I "heart" Larry Wahl!
Shatzi
Posted by: Shatzi at August 23, 2007 10:53 PM
Shatzi,
I like Larry as well. Larry often catches flak for what seem to be perfectly legitimate concerns. I recall the orchestrated uproar over his complaints about spending and our budget problems at the "State of the City" speech (I think in January). Looking back it seems as though Larry was focused on the right problem. Everyone else was focused on making nice.
#2 - It is very cold, that's why I go to all the meeting, to be comfy.
#3 - City employees are well paid by local standards. Reducing their pay would be difficult (meaning they would be upset). And remember that 66% of the people that went to this meeting were being paid to be there, and sometimes they are armed. I did not see a lot of happy faces when I questioned merit pay. If the public does not demand less pay for city employees I doubt we'll see it.
#5 - No employees raised concern over this 1 time pay freeze. As opposed to other benefit/pay issues this one seemed to be uncontested.
The animal shelter and my desire for focusing RDA spending on roads, sewers, sidewalks should be discussed. I agree that we need lots of things in Chico. But let me explain why I think RDA funding should be focused on hard infrastructure (RDA = redevelopment agency, I'll also use RDA for redevelopment area).
This will go long…
The RDA is separate from the City. Its board is the City Council and it is managed by city staff. An RDA can assume massive debt for the purpose of curing blight in the redevelopment area (which covers most of the city), in fact it must assume debt before it can draw income. Ours has assumed a massive debt of $140,000,000, which is a long term loan that accumulates interest cost. In fact it is kind of like a really big home mortgage.
The RDA draws revenue from something called the tax-increment income. When a piece of property is re-valued within the RDA, like when a home sells, the change in property tax is diverted to the RDA as income. It is diverted from other agencies including the City of Chico.
RDAs were originally formed to cure inner city blight, in particular massive failed public housing structures. Many RDAs, although not Chico’s, can make use of eminent domain. In fact when you read about government taking land from people to develop it into a new higher tax-income area it is often an RDA that is doing that. RDA money cannot be used to pay for maintenance or ongoing operations. I think most of us could agree on what “blight” looks like. There are neighborhoods around town that appear blighted. But the City of Chico has adopted a wide definition of blight, and they feel they are legally correct.
RDA money has been spent on buying property that has not been opened to the public. It was used to build the downtown plaza, is being used to rebuild Children’s Playground, to make the curbs downtown pretty, and there was even a suggestion that it could pay for disc golf (I don’t support that BTW). But using RDA to pay for things like picnic tables is like taking out a home mortgage to buy a TV.
I believe that the RDA funds should be used for things that last at least 20-30 years (the life of the debt), and for things that address real blighted neighborhoods. However, that being said, I would have put the animal shelter above the downtown plaza on my list of priorities. I would have put the animal shelter above buying Comanche creek on my list of priorities.
Unfortunately, the City has used the RDA to pay for everything, which has allowed them to be very generous with employees. And so our General Fund is going broke and our RDA is apparently overspent.
Lon
Posted by: Lon at August 24, 2007 07:48 AM
That's funny - we talked about all this at the time, and I thought it was all straightened out, how you didn't really mean to censor me but screwed up my post, etc. You certainly didn't mention the remark then, didn't act offended, thought we had it straightened out.
You know Lon, you are always facetious and say some pretty mean things about people in your blog. But when I get to kidding around, suddenly it's not alright. Maybe you should follow your own ground rules, help me figure out what's going on here.
Posted by: juanita at August 26, 2007 07:56 AM
Juanita,
I will try to do a better job and I'm sure you will as well.
Lon
Posted by: Lon at August 26, 2007 08:10 AM
