Pacifica City Council heard a report April 12 that recommends raising taxes and fees on Pacifica residents to deal with an out-of-control city payroll problem threatening Pacifica's long-term fiscal future.
The "Financing City Services Task Force" report proposes three revenue-raising measures:
•Increasing Transient Occupancy Tax (TOT or hotel tax) from 10 percent to 12 percent. A vote on this increase would be on the November 2010 ballot and projected money raised over five years is $72,000.
•"Public Safety Assessment" would require a two-thirds majority vote of property owners, projected to be in "Spring 2011," raising $4 million over four years.
•"Revised Utility User’s Tax" would hit the ballot in November 2012, raising an estimated $2 million within three years.
The report concludes that if all these measures pass: "The total savings + revenue would equal approximately $14 million in five years, solving our budget deficit, giving us a reserve of over $600,000, and putting us on a surplus-building path."
The 800-Pound Gorilla in the Room
That the city has at least $17 million in unfunded pension liability to city employees and that eight of ten labor bargaining units could not reach agreement with management in last year’s budget negotiations goes unmentioned. In Pacifica’s most recent (2009) Comprehensive Annual Financial Report (CAFR), the management analysis says: "Due to a combination of enhanced (higher) retirement benefits and significant investment losses by (Cal)PERS ... the City will be absorbing a significant ongoing annual unfunded liability contribution for the foreseeable future."
We Pay More and More
The proposed fee and tax increases couldn’t come at a worse time, as water rates recently jumped between 13 and 24 percent, and the city sewer charge is rising more than 5 percent. On top of that, the recently signed garbage contract locks in the highest rates in San Mateo County and proposes rate increases in August 2010 and March 2011.
The task force report’s rationale for huge increases in taxes and fees on the public is a projected shortfall of $14 million in the city budget over the next five years. In stating the problem, the report reads: "Since the largest and fastest-growing component of the City’s budget is salary and benefit costs, we recommend that the city ask all employee labor groups, ... to make adjustments which will lower these anticipated costs over the next five years. These adjustments ... may include a freeze on wages and a freeze in the city’s contribution to retirement benefits."
Although Pacifica Chief of Police Jim Saunders stated in the 2009 budget negotiations that Pacifica ranks near or at the bottom of the pay scale for police personnel in San Mateo County, the total yearly value of wages, benefits, and pensions for some positions in Pacifica city government tells the story:
Police Records Sup(ervisor) $115,000
Police Evidence Supervisor $130,000
Police Captain $260,000
Planning Management Analyst $130,780
Recreation Supervisor $140,235
These employee positions are among those identified by the city manager that may be cut if new tax hikes are not approved by voters. Saved for the last attachment in the report are the really difficult items. Hiring freezes, merging of operations with other public agencies, layoffs, salary and benefit reductions, and a second tier of retirement benefits are some of the recommendations.
One of the wild cards here is the public, of whom much is asked in footing the bill for the as-yet-unmodified wage and benefit packages of city employees. The pace and breadth of the tax and fee hikes are unprecedented, and threats of service cuts loom even if all three measures pass. The report’s asserted $600,000 city reserve at the end of the process is very small, almost within the margin of error.
The other wild card is public-employee unions, which have not publicly acknowledged the unsustainability of the present budget situation. Last year’s lame attempt to extract concessions from them to obtain $800,000 in budget reductions largely failed. From the public’s perspective: What is the point of paying more and more for less and less?
Lionel's story also is posted on PENSION TSUNAMI