Opinion: Pacifica Budget—Where's the Urgency?

A Pacifica Tribune article June 23 on the newly passed Pacifica city budget told only part of the story about the city reaching into its reserves to balance the budget. It turns out that the problem is chronic, as evidenced by the words "structural deficit." That, in plain English, means revenues are lower than expenses long term, and the city is depleting its reserves to compensate.

San Mateo County Times reporter Julia Scott reports: "The cash-strapped city (Pacifica) balanced its budget by borrowing heavily from its reserves, which have dwindled to $1.7 million from $7 million two years ago." That's an incredible 75 percent reduction in Pacifica's reserves in the past two years. Local government can't get away with deficit spending like this, and if present trends continue, we'll run out of money in the reserves next year, folks.

Although the city is trying to gain concessions from city employee bargaining units, it is negotiating only with the five units that will have new contracts. The other five units have contracts that have only one year to run, and City Council refuses to reopen and renegotiate these existing contracts, as many other cities in San Mateo County already are doing in this fiscal emergency.

What exactly escapes our elected officials' understanding about the gravity of the situation? Reserves are not supposed to be spent on "structural deficits." Without something other than deficit spending and halfhearted attempts to address an unaffordable city payroll, don't expect voters to pony up endless new tax increases to fund irresponsible fiscal policies going on right now.
 
LIONEL EMDE & RENEE BATTI

Comments

[Bruce Hotchkiss]

That's about right. According to the state, the total cost for me is my salary plus about 35 percent for benefits.

Maybe it would be more productive if we put something on the ballot, listing the whole budget for Pacifica, and let the people vote what they want to keep and what they want to do without. List everything in plain English, no b.s., let it be seen by all.

You want to know how we can afford police and fire protection? By having a vibrant, sustainable economy. Something this town has fought against for decades.

We get more upset about feeding a bunch of feral cats than we do over the fact that we are broke, have been for ever, and we continue to elect a bunch of [NAME CALLING DELETED] who spend like drunken sailors.

We can't even agree on charging a parking fee for the Linda Mar Beach, something that at least might defray the cost of maintaining the beach and parking lot.

So is the answer for us to devolve into some Third World country town with ineffective protective services, crumbling infrastructure, and general chaos? Or maybe, just maybe, is the answer to actually do something that may generate a steady, if small, revenue stream?

[Lionel Emde]

Pacifica Police Chief Jim Saunders said that the starting value of a police position was $131,000.
This was in 2009.
That's all inclusive: salary, benefits, pension.

I'm not saying they ain't worth it, but where the he@@ the money she come from???

[Bruce Hotchkiss]

I agree fully; the problem crosses party lines. Give a politician a dollar of taxpayers' money and he/she will spend at least three.

But let's put things in perspective. According to a web site, www.muninetguide.com, the median household income in San Mateo County is $94,517, and Pacifica's is $82,000.

According to the Bureau of Labor Statistics site, www.bls.gov, the yearly mean wages in the San Jose-San Francisco-Oakland area are:
Fire Fighters: $75,649.60
Police/Sheriff’s officers: $88,379.20
Carpenters (private industry, level 7): $67,912.00
Electricians (private industry, level 7): $78,686.40
Auto Tech (private industry): $48.755.20
Diesel Tech (private industry): $58,052.80

I don't see that the police and fire are out of whack. It's expensive to live and work in the Bay Area.

[Lionel Emde]

Yes, Bruce, you've (as usual) hit upon key elements:
"This council (and every single legislative body in this state) has spent recklessly for decades and now, as usual, it's the workers' fault."
It's NOT the workers' fault, yet they have benefited from higher salaries and benefits.

"The time for hard bargaining with the unions was before the present contracts were negotiated."
YES! But this will not happen, whether it's Democrats or Republicans. Look at all the pension problems, for example, in Southern California. People should check out the OCWatchdog, the blog of the Orange County Register. It has detailed all the follies of pension generosity granted by REPUBLICANS!
Politicians' cowardice is not governed by party label.

There is no easy answer.

[Bruce Hotchkiss]

I fully understand the difference between opinions and numbers. Perhaps my view right now is tainted by what's happening to me with the state. We are constantly told we must "do our part." Fine, but we've been doing our part for two decades.

In my opinion, if the state doesn't value my work, it should just get rid of me. Don't try to bleed me to death. I say the same to Pacifica: If you do not value your employees, get rid of them.

It would probably help immensely if the city's unions saw that there was an effort to put things right in other places. This council (and every single legislative body in this state) has spent recklessly for decades and now, as usual, it's the workers' fault.

Pacifica has made the choice not to have a sustainable economy, and our politicians made a choice to spend like drunken sailors when revenues went up. The time for hard bargaining with the unions was before the present contracts were negotiated.

What is happening now, both here and on the state level, is essentially wage control without price control. It doesn't cost me any less to live, in fact it costs more. The same goes for Pacifica's employees.

By lowering my income, or my retirement, you are not resolving the underlying problem, you are just moving it. If I do not have the income to live here, to be a productive citizen, everyone loses. Same goes for Pacifica's employees.

In my own case, due to my reduced pay, I no longer go out to buy my lunch. I brown-bag it. (Yeah, I know it's probably healthier.) I have resisted seeking a lower assessment for my house because I feel an obligation to pay my fair share, but I really don't know how long I can hold out.

The end result of cutting my pay? In the greater scheme of things, it's minuscule, but if you add up all the people who are spending less it's dramatic.

There may be a need for pension reform, but not just for the cops and firefighters, for everyone. Everyone deserves to live with dignity when they retire. Taking away my pension is not going to make anyone else's quality of life any better.

Let's start with Social Security; let's stop paying Social Security to those who already have an income of a set amount ($150,000 per year?). As for California's public pensions, state or city, let's pay a reasonable amount, but maybe we need to reevaluate the caps? Just a couple of ideas.

I do not trust the politicians anymore, not here in Pacifica, not in Sacramento, and not in Washington. If I give up my "lucrative" pension (to get my max of 80 percent, I'd have to work 40 years, great if I had started when I was 20), do you really think the politicians would start spending responsibly? I'm willing to bet that the first time they anticipated a surplus, they'd have dozens of pet projects that would amount to 10 times the surplus.

I'm not disagreeing that we have a structural deficit; I'm simply saying there is no easy way out.

[Lionel Emde]

It's my understanding that if the City Council asks, and the unions agree, an existing contract can be reopened and renegotiated.

If the unions say no, that should be open and reported. If they are negotiating, we'll have to wait and see.

I'll tell you one thing, people better start differentiating between opinions and numbers. On the present track of reserves being depleted because of an unaffordable payroll (sorry, Bruce!), we will not have enough reserves to pay the bill next year for "structural deficits."

Here's the math: There was $7.1 million in the reserve two years ago. This year's remaining reserve is $1.7 million.

That means we've spent an average of $2.7 million per year of our reserves.

So, all other things being equal, and I think that's optimistic, we come up a cool $1 million short next year without significant reductions in payroll costs.

Even if you factor in a public vote for a parcel tax, that isn't planned for until after the next budget cycle. To plan on that basis seems, IMO, incredibly irresponsible. The hotel tax on this year's ballot doesn't raise nearly enough money to stanch the bleeding of fiscal reserves.

[Bruce Hotchkiss]

Lionel, my comments were aimed squarely at Kathy Jana. I may not always agree with your opinions, but I respect that they do tend to be well reasoned.

I don't know where to go on reopening contracts. On the face of it, a contract is a contract. On the other hand, if the employer has had a reversal of fortune, maybe the employees should give back. As an employee, though, I want some assurances that I will be made whole down the line, and that my employer will not use me as the whipping boy next time.

In my opinion, if the unions really saw a good-faith effort to correct the problem of chronic underfunding, they might be more willing to reopen their contracts. But on the other hand, if they see business as usual, why bother?

[Dan Underhill]

"Clearly neither side did enough to prevent the crisis."

Isn't that kind of like saying that neither the civic leaders of New Orleans nor the civic leaders of Evangeline did enough to make sure the Army Corps of Engineers did a decent job of building the levees? Since we bailed them out, Wall Street is still gambling and paying itself bonuses while cities, counties, states, and unions are left to fight over the crumbs of a pie that was already eaten by the perpetrators of our glorious corporate capitalist system.

I don't know anything about what might help in the short term, but for the long term we need our legal system to recognize that corporations ARE NOT "natural persons." They are financial tools that MUST be carefully regulated or they will cause the end of life on this planet. Profit cannot be used as justification for any and all behaviors regardless of their other consequences.

[Matthew Levie]

Kathy, if that was a joke, it was in very poor taste. If it wasn't a joke, I'm at a loss for words.

Lionel, I don't understand your demand that the city "reopen" contracts. A signed contract is law. Cities cannot abrogate them unless they declare bankruptcy.

In your own article on this Web site back in April, you said that eight of ten city unions refused to renegotiate existing contracts. So the city apparently did what you wanted, and asked for givebacks. The unions said no. Legally, that's their right.

On the other hand, if you want to go after the unions for not being team players, you might want to consider the fact that most of our employees are paid significantly less than their equivalents elsewhere in the county. So they might have felt that they were already making sacrifices, and the council may have felt that they were already trying to keep expenses down.

Clearly neither side did enough to prevent the crisis. But I'd like to paraphrase something Dave Mineta said at a recent PSD budget meeting: It's important that we work together to deal with this crisis, put the blame on Sacramento where it belongs, and not turn on each other and tear each other apart.

[Lionel Emde]

Bruce: Where do you think I'm placing the blame?
It ain't on city tree-trimmers, that's for sure.

I don't believe in faith-based finance.

[Bruce Hotchkiss]

Thank you, Kathy Jana. Just for your information, California's almost 300,000 employees happen to be real people, with real mortgages and debts. I am one of them. If you really think putting even half of them into bankruptcy will help the economy, you, my dear, are as wrong as Uncle Arnie.

And by all means, let's reduce pensions to levels that ensure that all retirees will never again be able to contribute to the economy.

For 20 years I have worked hard to help Californians who feel they have been ripped off by crooked automotive repair shops, and I have worked diligently to enforce the smog inspection program and make the air we breathe cleaner. The department I work for is self-funded and does not take any money from the General Fund.

Frankly, all those of you who think public employees should always take less are just plain mean-spirited, in my opinion. I've worked for the state for 20 years and in that time I've received increases of less than the cost of living on average. I've gone almost five years at a stretch without an increase. I've received IOUs instead of pay. In place of making a salary close to what we might earn in the private sector, we get benefits and a retirement that hopefully evens things out. Now those are under attack.

So instead of going after the CEOs who have seen their pay skyrocket, let's pile on those of us who have barely been getting by.

As for Pacifica, yup, you're right, it's the working folks who have run this city into the red. They are the ones who haven't planned for the future. So let's blame them, not the idiot politicians who really put us in such dire financial straits.

[Kathy Jana]

The City of Pacifica would do well to reduce its staff overhead even further:

[1] Follow the State of California's lead, and make all city jobs minimum wage.

[2] Significantly reduce pension commitments today.

[Lionel Emde]

If I thought that the $8.5 million in "concessions" that city workers are supposed to give up over the next five years had any basis in reality, I'd be more willing to watch and wait.
The fact that the council didn't direct that an immediate reopening and renegotiating of existing employee contracts when the crisis was apparent two years ago also gives pause, especially now that we know that one of the consequences is that 75 percent of the reserve fund is gone.
How do you think currently negotiating workers are going to feel about being asked to bear the whole brunt of cuts, while the other half of the workforce gives up next to nothing for the last year of their existing contract?

[Dan Underhill]

Thank you, Matthew Levie!

[Matthew Levie]

I respect Lionel's view, although I think the situation is more nuanced than he presents it. You can't just ignore the sudden effects of the recession and the state cash grab.

We'll see what happens in November, but it's likely that some or all of the incumbents will still be with us. As far as I know, as of today there are no alternatives. We have to find a way forward immediately.

The Financing City Services committee worked very hard and came up with very sensible solutions.

If Mary Ann, who we all consider sensible as well, stands behind those solutions, I'm willing to give them my full consideration. I'd like everybody on Riptide to do the same, rather than dismissing the plan because you think it's tainted by association with a council you don't like or because it doesn't solve the problem exactly the way you would have.

[Lionel Emde]

I appreciate Mary Ann's comments, even if I don't agree. Where are the other councilmembers? Why are they not explaining why 75 percent of our reserves have been spent on "structural deficits?"

That's not how other cities do it.
Two examples:
Foster City used $1.9 million of its reserves this year. Two council members voted against the budget for that reason. But they have a $16 million reserve.
Menlo Park used approximately $500,000 of its reserve and people in the community are unhappy about it. They have a $26 million reserve!

Pacifica should be defending the reserve at whatever the cost in hurt feelings, resentment, etc. We have no way of getting that money back, it's gone.

[Mary Ann Nihart]

For years, Pacifica has been a city short on cash. Part of the problem started in the 1990s when the state of California decided to replace money cut from the state budget with money that previously went to cities to pay for local services. This makes it almost impossible to plan a budget, especially in small cities like ours. Try managing your checking account when you don't know how much your paycheck will be each month.

Pacifica has lost more than $27 million to these state takeaways, enough to run our city for a year. That's why I, along with many other city council members in California, worked hard to gather signatures needed to place Proposition 22 on the ballot in November. I am now working on the campaign committee to support this statewide effort. For more information, go to www.savelocalservices.com.

I recognize that this is only one of the reasons our city is in trouble. For the past year, we have focused on developing a five-year plan to turn our finances around. Several people, including City Manager Steve Rhodes and I, have taken cuts in salary or benefits or both. We eliminated several positions in the past, so the Financing City Services committee and the City Council decided to try to save city services and employees first. The plan has many steps and and has backup plans if any one step fails. I am ready to make the hard choices if those become necessary, but I hope that the plan will improve our financial situation.

The city manager and I, along with members of the committee, have held employee meetings and are now presenting at public meetings, trying to help everyone understand exactly what is happening. In addition to the plan, we will continue to focus on economic development. You will hear from me frequently in the weeks and months ahead. I will make every effort to keep you informed. I am convinced that we can meet this challenge and change the pattern, but we must work together. Please stay involved and informed.
All my best,
Mary Ann

[Lance]

It would seem to me that one of the most important City Council meetings of the year is the one where it votes on the budget. I would suggest that those who are concerned with the state of our city ask the incumbent Mr. Vreeland why anyone should considering voting for him in November when he can't even show up for the most important meeting of the year. Absolutely unacceptable in my book. In fact, Mr. Vreeland seems to manage to be MIA at EVERY important or controversial council meeting.

[Lois Rogan]

What's the problem? It's the way the federal government is running the country.

[Dan Underhill]

Everybody I know, with the exception of my very wealthiest plumbing customers, is dipping into (and in many cases depleting entirely) their reserves. We should all share, with the city, with the Tribune, with Riptide, and with one another, any ideas that might improve our personal and governmental economies. Just don't tell anyone to put a bucket under it instead of calling their friendly local plumber.

[Dave Yuhas]

It would be nice if we had a newspaper that would interview the City Council members to get their side of the story. But the Trib has the cat feeding story covered.