Commission Impossible: A Valley Ho-Down

February 20, 2008

A Valley Ho-Down


Image: Future Vallejo Blues Festivals may be a little too bluesy. I grew up in the same neck of the woods as Vallejo, CA (down near the Bay Area, not quite "in" it). When I was a kid I thought it was pronounced Valley-Joe. Then I thought it was Valley-Ho. But it turned out to be Vuh-lay-hoe. Anyway, Vallejo is in the unenviable position of possibly being the first California city to file for bankruptcy (see story here). This is a worst case scenario, but one that Chico could in theory face if things went south budget-wise, and things went south employee-wise. Vallejo was one of the cities that Chico's Finance department used as a case study, and it looks like it may capsize (financially speaking) around April of this year. There are some similarities between Chico and Vallejo. We both spend about 80% of our budget on public safety. We both have a structural problem with our budget. And of course both cities end with a phonetic "oh" sound. That pretty much makes us the same place. There are some pretty big differences as well. Vallejo has what used to be Marine World which has to be a huge sales tax magnet. It also has some spunky-chunky outlet shopping. I'm actually amazed they're in trouble. I ran across a 2006 Firefighter/Engineer ad for Vallejo offering an annual salary of $62K - $75K. In Chico the salary for a similar position looks to be around $65K. The Police Officer position looked to be $84K-$100K in Vallejo, and here in Chico looks to be in the $65K range. Those numbers are for regular pay and no benefits are included. One problem that Vallejo faces is a huge future liability from employee retirement benefits. I'm not sure if our retirements are structured differently than Vallejo's, but there was talk of changing the system for new City of Chico employees. If we're in the same boat as Vallejo but a few years on the positive side, we should look at doing this pretty soon. In 1991 our PERS benefit for public safety was 2%@50. In 2001 it changed to PERS 3%@50. I'm no public employee retirement expert but I believe the formulae described above are the age you can qualify for retirement (50) and the percentage times the years worked you receive as your benefit. So for 2%@50 if you worked for 30 years for the city and retired at 50 you would get 302% = 60% of your paycheck as a monthly benefit. The 2001 change to 3%@50 would give the same employee a 90% benefit. And of course from 1991 to 2001 the paychecks have gotten quite plump. Beyond the existing budget problem our city officials need to be looking at 20 years from now, and do everything within their power to reduce the taxpayers liability. More on Vallejo's situation... The City Council will meet in closed session Feb. 26 with the city's employees' organizations to try to find a solution to the budget crisis. In a report to the City Council dated Feb. 13, Vallejo Finance Director Rob Stout projected that without deep cuts, including assumed agreements negotiated with police and fire departments by June 30, the City will be $6 million in debt and will have spent every last penny of its $4 million in reserves. Gomes said the city has a plan to cut $20 million out of the budget in the next year. That emergency spending plan could devastate city services. The police and fire unions must agree on the spending cuts before it can be considered. The Feb. 26 city council meeting takes place the same day the City Council plans to vote on the plan. In a report to the City Council last week, City Manager Joseph Tanner said the city faces a $10.1 million general fund operating deficit for the current fiscal year and a negative available fund balance of $5.9 million on June 30, 2008. " Based upon the updated financial projections, the current estimate for insolvency is late April 2008," Tanner said. "It may become necessary for staff to recommend that the City Council consider filing and pursuing Chapter 9 bankruptcy in the event the city is unable to meet its existing obligations with its existing revenues," Tanner said in the report. Not good.*

CI Challenge: Can you guess what it is? Winner: Gregg Payne the all knowing master of artwork and artists that show ninners and swords in their work.