EOS Report on Spending of Measure A Taxes & Summary of Findings

MEDIA RELEASE

Date/Time: September 6, 2016, 10:00 a.m.
Contact: Craig Powell, President,
Eye on Sacramento
Phone: (916) 718-3030
E-mail: craig@eyeonsacramento.org

EOS Issues Report that Critiques Spending of Measure A Taxes and

Reviews Implications for the Measure B Tax Proposal

At a press conference held today at Sacramento Regional Transit’s light rail station on Richards Blvd., Eye on Sacramento released a comprehensive report on how local governments have been spending the $669.5 million of Measure A county-wide transportation sales taxes collected from taxpayers since 2009. The report also reviews the implications that its findings may have for Measure B, a November ballot proposal that would double the current Measure A tax, increasing it from a one-half percent tax to a full 1 percent.

Links to both the EOS report (EOS Report on Spending of Measure A Taxes: Implications for the Measure B Tax Proposal) and a summary of its findings appear below.

Eye on Sacramento believes that Sacramento voters deserve to know how well their Measure A taxes have been spent before deciding whether a doubling of the current tax is warranted. Have local authorities been prudent and responsible? Or have they been wasteful and been pursuing the wrong priorities.

Measure A provides significant funds to Sacramento Regional Transit, as well as money to local governments for road maintenance and construction, traffic control and safety, and bicycle and pedestrian facilities. Measure B requires a 2/3rds majority vote for approval.

Key findings from EOS’s report include:

(1) Local governments, acting through the Sacramento Transportation Authority, are engaged in an alarmingly rapid escalation of credit-fueled spending on capital projects, with outstanding Measure A bond debt increasing from $180 million in 2009 to an expected $450 million next year 2017 – a 243% increase. The $350 million in estimated interest costs on STA’s borrowings are diverting funds that would otherwise fund road maintenance, transit operations and new road and transit construction.

(2) STA is irresponsibly issuing expensive interest-only bonds, secured by future Measure A taxes, which are unnecessary driving up interest costs and will waste an estimated $52 million over the next 23 years.  Such waste could rise to over $100 million in future years, depending on the pace of future STA borrowing.

(3) Regional Transit has engaged in a pattern of waste, misuse of funds and misplaced priorities in spending Measure A funds, including two premature expansions of light rail routes, often at the behest of special interests, which have dramatically driven up RT’s operating and financing costs while providing only very modest ridership gains.

(4) Federal, state and local funding sources for RT are not “drying up,” as some RT officials claim.

(5) RT’s waste of Measure A funds is extensive, ranging from a failure to control labor costs that are still rising faster than inflation, failure to deal responsibly with its unfunded pension liabilities, an overtime policy that pays overtime to drivers while on vacation (while also paying overtime to the drivers who fill in for drivers on vacation) and cost-spiking work rules that prohibit the use of part-time drivers.

(6) Spending funds on extending light rail to the airport would be wasteful unless and until population densities in the area justify such an extension.  Measure B, even with federal matching grants, would, at best, fund light rail only half-way to the airport.

(7) Providing RT with additional taxpayer subsidies without insisting that it first adopt extensive operational and governance reforms would be a waste of money.

(8) STA’s scheme for providing “taxpayer oversight” over Measure B spending is a sham.  Similar oversight provisions under Measure A have been largely ignored.

The principal author of the EOS report, Professor Gregory L. Thompson, chairs EOS’s Transportation Committee and is recently retired from the faculty of the Department of Urban and Regional Planning Faculty at Florida State University. Report co-author, Debra Desrosiers, is EOS’s Vice-President – Government Oversight.

To View/Download EOS’s Report on Spending of Measure A Taxes: Implications for the Measure B Tax Proposal, click here
To View/Download the Summary of Findings, click here

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Scandal at the City … Utilities department needs an overhaul

By Craig Powell

Last month came the blockbuster news that in 2013, two employees of the city’s Department of Utilities were caught engaging in sexual activities in the backseat of a city vehicle in a city park on city time. Both were married, but not to each other. City managers gave the couple what was effectively a slap on the wrist: temporary cut in pay, loss of some vacation time and a “no fraternization” order.

But when a whistleblower complaint was filed almost two years later with the city auditor’s office, the full story started tumbling out. The two employees lied during the investigation of the original complaint, claiming that that had done no more than “kiss twice.” It turns out that they were actually spending up to three hours of their workdays in a city trailer having sex. City emails and interviews confirmed that they also bought, sold and used cocaine and alcohol while in the trailer. They admitted that it was “possible” that at least one of the employees drove city vehicles while under the influence of alcohol and cocaine. They also sometimes put in for overtime on days when they partied for hours in the trailer.

They were dumb enough to exchange sexually explicit emails and pornographic pictures and videos with one another using city email accounts. One of them even had a practice of sending pornographic emails to other DOU employees, including high-level DOU employees, none of whom apparently objected.

Out of respect for their families’ privacy, I’ve chosen not to disclose their names. But since both held senior positions with major responsibilities before they resigned, it’s entirely fair to ask: Did their extended “extracurricular activities,” which apparently went undetected by oblivious senior DOU management for at least two years, compromise public health and safety? One of the them was a project manager in charge of managing city contracts with the contractors that have been installing water meters and tearing up our streets to move backyard water service to the streets in front of people’s homes, the source of much consternation, waste and dangerous construction practices in recent years.

read more … Scandal at the City … Utilities department needs an overhaul

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Eye on Sacramento Special Board Meeting

We would like to extend a personal invitation to you to join Eye on Sacramento for a special Board Meeting this Friday, June 24, 2016 at Noon featuring a special guest speaker: Jorge Oseguera, the City Auditor for the City of Sacramento.

We will meet at the Perko’s Cafe located at 925 3rd Street, Sacramento at J Street & 3rd Street.

If you plan to attend, please R.S.V.P. to Anna Robertson at via email at anna@eyeonsacramento.org by Thursday June 23rd.

We hope to see you there!

Statement of Opposition to RT Service Cuts

Eye on Sacramento’s

Opposition to Regional Transit’s Service Cutbacks

The Sacramento Regional Transit District is proposing major service cutbacks to its system that will reduce ridership by 1 million passengers annually in order to cut operating expenses by $2.2 million. This proposal falls on the heels of a very recent 10% fare increase, and it will likely be followed by another 10% fare increase next year (an RT staff recommendation) which will bring RT fares to the highest in the nation. Annual ridership, which had been growing steadily from 1988 to 2009, when it reached 35 million, has since plunged to 25 million trips with no end in sight to the decline. Every major action that RT has taken in recent years seems calculated to further weaken the transit system’s financial and operational integrity and reduce its capacity to serve the public’s transit needs.

Eye on Sacramento understands the serious financial difficulty in which Sacramento Regional Transit finds itself, much of it due to RT’s own making. For example, RT has approved three to four percent wage and salary hikes in recent years at a time when the cost of living was rising only one percent. The Board also approved spending $45 million in local Measure A sales tax funds to build a single mile of track, known as the Green Line, to a developer’s project site in Township 9 (Richards Blvd.). These were funds that could have been used to support RT’s system-wide light rail and bus operations. They could also have been used to avoid RT’s issuance of costly bond debt which now drains $6 million annually from RT’s beleaguered general fund. Although the operating subsidies that RT collects from various government and tax sources have been steadily increasing at a healthy rate of four to five percent per year, their growth is still not large enough (and, frankly, will never be large enough) to sustain the system while the Board gives its staff excessive wage hikes, wastes tens of millions of dollars to benefit a tiny number of downtown developers, adopts ruinous fare hikes and service cuts and then stands back to watch its patronage and the revenue it brings, plummet.

In a report that EOS delivered to RT’s Board in March, EOS recommended that the Board abandon its ruinous path of fare hikes and service cutbacks to alleviate the financial crisis and turn, instead, to cost cutting that will not hurt patronage.[1] EOS offered 15 recommendations, only one of which included service reductions that would depress patronage. Others included such actions as returning to the bargaining table to renegotiate both wages and work rules to, for example, make widespread use of part-time drivers. They also included the Board asking downtown developers to reimburse RT, in part, for the financially destructive decisions that they have forced upon RT.

[1] “EOS’s Recommendations on RT’s Fiscal Crisis: Avoiding Both Bankruptcy and a Transit Death Spiral,” March 14, 2016.

EOS also endorses the principle expressed by the Sacramento Transit Advocates and Riders (STAR) that RT redeploy resources from the operation of unproductive routes to increase service and patronage on the system’s best routes. This can be done when RT reduces its cost structure. We also endorse STAR’s support for immediately mothballing the Green Line to Township 9, upon which RT squandered $45 million in Measure A funds to build. This service attracts only 300 passengers per day. Mothballing it would save $333,000 each year.   We very much oppose the Board’s thinking that it further appeases Township 9 interests by diverting half of the Gold Line service away from the Sacramento Valley Station to Township 9 to preserve current light rail service to Township 9. Doing so would damage intermodal connections to and from the Capitol Corridor for no reason other than to appease a crony. Doing so would also cut savings from discontinuing service to Township 9 from $333,000 per year to only $235,000. Township 9 already is served by two good bus services to downtown.   If the developer of Township 9 wishes to assure a continuation of light rail service to his project site, he should be invited to fund the cost of it.

EOS urges the RT board to start thinking of the best interests of its riders and the populace of Sacramento when making decisions rather than the interests of politically connected developers.

If you have any questions regarding this statement, please contact Professor Greg Thompson (Emeritus), Chair, EOS Transportation Committee, e-mail: greglthompson123@gmail.com, telephone: (916) 246-9230.

Steinberg’s Consulting Arrangements with Metropolitan Water District

MEDIA RELEASE

Date/Time: June 2, 2016, 3:00 p.m.
Contacts: Craig Powell, President,
Eye on Sacramento
Phone: (916) 718-3030
E-mail: craig@eyeonsacramento.org

Eye on Sacramento Calls on Mayoral Candidate Darrel Steinberg

to Fully Disclose the Details of His Contractual Relationship

With Southern California’s Metropolitan Water District

Sacramentans learned for the first time yesterday from a Sacramento Bee story that Darrell Steinberg, while actively seeking the support of Sacramento voters for his mayoral bid, has been covertly providing strategic consulting services to the politically powerful Southern California-based Metropolitan Water District (MWD) whose interests are very much at odds with the interests of the City of Sacramento and its residents on just about every major water issue facing our region. Steinberg’s law firm, Greenberg Traurig, has been collecting $10,000 per month from MWD for Steinberg’s services since July of last year.

Eye on Sacramento (EOS) has been championing the adoption of meaningful transparency and ethics reform in the City of Sacramento for the past 18 months. EOS co-hosted 10 public forums on the subject last year, helped form a broad coalition of supportive community groups and presented reports and proposals for a model ethics code, a robust ethics commission, a strong Sunshine Ordinance and an independent redistricting commission.

We are troubled that Sacramento voters who have already voted via absentee ballot (now fully half of all Sacramento voters) did so without the knowledge that one mayoral candidate was effectively on the payroll of the MWD. While nothing can be done at this late date to cure that significant informational failure, there are some immediate steps that Mr. Steinberg can and should take to fully explain the nature and extent of his relationship with MWD for the benefit of voters who will be casting their ballots on Election Day.

Questions that Mr. Steinberg should now answer include: When did he and MWD first begin discussing a consulting arrangement? How much of his time over the past year has he devoted to providing “strategic advice” to MWD as called for in the contract? Has he been maintaining time records of his services? Will he publicly disclose such records? Has he provided any “deliverables” to MWD, such as reports and other documentation? Will he and MWD now disclose such documents? What public officials in our region did he meet with in the service of MWD’s goal of building relationships with North State stakeholders? Will he and MWD voluntarily release copies of their e-mail communications with one another, without the need for submitting formal public records requests? (Note: Steinberg was providing “consulting services” for MWD, not legal services which would have been protected from public disclosure under the attorney/client privilege).

The voters of Sacramento deserve to know if Mr. Steinberg, in providing consulting services to MWD while campaigning for Sacramento mayor, has been acting appropriately, ethically and loyally as both a Sacramento resident and an aspirant to the mayor’s office or has he acted in a manner that is at odds with the long-term best interests of Sacramento and its residents?

By promptly and fully disclosing these matters to the Sacramento public, Mr. Steinberg will go a long way towards allaying legitimate public concern over the role he is playing with MWD. If Mr. Steinberg fails to provide such disclosures, we would encourage the Sacramento County Civil Grand Jury to consider initiating an investigation into Mr. Steinberg’s relationship with MWD to uncover the facts. One way or the other, Sacramento voters deserve to know the facts and implications of Mr. Steinberg’s dealings with MWD.

The contract between WMD and the Greenberg Traurig law firm involving Mr. Steinberg’s consulting services to WMD may be viewed on the EOS website via this link.

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Metropolitan Water District of Southern CA agreement with Greenberg Traurig LLP

Metropolitan Water District of Southern CA agreement with Greenberg Traurig LLP

Metropolitan Water District of Southern CA payments to Greenberg Traurig LLP

 

RT’s $10 Million Streetcar Design Contract

MEDIA RELEASE

Date/Time: April 25, 2016, 4:00 a.m.
Contacts: Erik J. Smitt, Policy Director,
Eye on Sacramento
Phone: (916) 215-2275
E-mail: erik@eyeonsacramento.org

REGIONAL TRANSIT’s $10.2 MILLION CONTRACT

DOWNTOWN RIVERFRONT STREETCAR DESIGN SERVICES

Tonight, Sacramento Regional Transit District’s Board of Directors will consider approving a $10.2 million contract with HDR, Inc. for design services of the Downtown Riverfront Streetcar Project. These design services will cover complete track-routing and all other facets of the proposed 4.2 mile system. The $10.2 million will come from federal Congestion Management Air Quality funds.
But there is more to the story.

The community does not want this useless streetcar. Last June, city of Sacramento registered voters in a proposed assessment district voted a resounding “NO!” to a $38 million bond measure to fund the city’s share of the $195 million streetcar project. This “NO!” vote created a significant hole in the streetcar construction funding. As yet, after ten months, the city has not found a funding source for their commitment to the project. Also, the State of California has not firmly guaranteed their $10 million share of construction.

Now, with significant funding still in limbo, the RT Board is asked to roll-the-dice on this $10.2 million financial commitment, which could be used on more important projects.

Another consideration: As pointed out in our recent report, “EOS’s Recommendations on RT’s Fiscal Crisis,” Appendix 1 (www.eyeonsacramento.org), based upon research by transit authority Dr. Gregory Thompson, annual operational expenses will likely range from $6.3 to $8.8 million. The streetcar project’s operational cost projections are woefully below this range, adding another significant project risk.

We want and need smart, long-range decisions for transit problems. Not needed are decisions, such as the one before the RT Board tonight, that may not only cause chronic operational red ink, but also become a waste of taxpayer funds if anticipated local monies fail to materialize.

Unless construction funding by all governmental agencies committed to this project are firmly identified, Eye on Sacramento urges a “No” vote on this Downtown Riverfront Streetcar design services contract.

(The design contract is #13 on RT’s Agenda. The board meeting begins at 6:00 pm and the meeting chambers are located at RT’s headquarters, 1400 29th St.)

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Statement from Eye on Sacramento to the Sacramento Transportation Authority

Statement from Eye on Sacramento to the Sacramento Transportation Authority

14 April 2016
by Greg Thompson, Chair, EOS Transportation Committee

EOS strongly opposes the proposed sales tax measure for the following reasons:

Regional Transit receives generous and growing sales tax subsidies that amounted to over $80 million this year alone, an increase of over 4% compared to the previous year, and over 9% over the past two years. RT’s existing sales tax subsidy is growing 3 to 4 times faster than the CPI, and yet RT management says that it is not enough to keep its system safe, clean and in good repair.

EOS thinks the existing subsidy is more than enough to do that, and in a report that we presented to the RT Board in March, we outline how (see link 1 below). We oppose any more tax revenues piled on top of those RT already is receiving until RT puts its own house in order. Without RT reform, its costs for running the existing system will continue to rise faster than its subsidies, and it will be back at your door, again and again to ask for additional subsidies just to keep the existing system running.

It is unconscionable placing this ever-growing burden on the backs of RT riders, not only asking them to pay among the highest fares in the country, but also high and ever-growing taxes.

An unreformed RT also blocks the region from having the discussion that we should be having now, which is about our vision for transit in the region’s future. EOS thinks that with RT reform there is an important role for transit in the region’s future. EOS hopes that regional leaders will support RT reform so that the region may start that conversation soon, and EOS will gladly participate in it.

1 Eye on Sacramento. EOS’s Recommendations on RT’s Fiscal Crisis: Avoiding Both Bankruptcy and a Transit Death Spiral, Sacramento, 14 March 2016.

Professor Gregory L. Thompson 
Secretary and Board Member, Train Riders Association of California
Chair, Transportation Committee, Eye on Sacramento
Professor Emeritus, Florida State University, Department of Urban and Regional Planning
Chair, Light Rail Committee of the National Transportation Board based in Washington, D.C.

RT on the Rocks … Fight over fare hikes splits transit board

By Craig Powell

 

To get a sense of how broke Regional Transit is, consider this analogy. Let’s say you’re part of a Sacramento family. You have a fairly well-off, middle-class lifestyle, but in the last couple of years you’ve really splurged, buying yourself a big, new Mercedes and a big, pricey cabin up at Lake Tahoe, all financed to the hilt. Meanwhile, the small business you run, RT Clothing, has never regained the boatload of customers you lost when you decided to jack up your prices by 20 percent in the middle of the last recession (oops), leaving you with a flat income for years. Fortunately, your wife, a retiree who collects both a military pension from the federal government and a healthy state government pension, has been collecting cost-of-living increases for years. She brings home close to 80 percent of the family income these days, bless her. Together, you have a family income of close to $150,000 per year.

The charming new home you bought 30 years ago in Light Rail Estates is showing serious signs of age and, let’s be honest, neglect. Your roof is shot, the paint’s badly peeling, you may need a new furnace and your backyard pool has algae stains and a rather unpleasant odor. Lately, some of the sketchier kids in your neighborhood have been jumping over the fence when you’re not home, swimming in your pool, hanging around for hours on end and leaving their trash everywhere. It’s gotten so bad that many of your longtime friends no longer accept invitations to your summer pool parties. You’ve spotted some of them going into Bob and Nancy Uber’s backyard down the street. The Ubers put in a nice, new pool last year and they let their friends drop in to swim whenever they want.

Things are going so-so until one day you decide to open up your bank and credit card statements for the first time in six months. You’re stunned (stunned!) to see all of the savings you thought you were socking away each month have somehow evaporated. Not only that, you owe a whopping $18,000 on your Visa bill. (How did that happen?) In a panic, you check the balance in your checking account and your heart sinks further. You have just $3,000 in cash and, at the rate your family burns money, it will be long gone in three months’ time.

read more … RT on the Rocks … Fight over fare hikes splits transit board

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Eye on Sacramento Urges City Council: Give Back the Tax!

MEDIA RELEASE

Date/Time: March 21, 2016, 4:00 p.m.
Contacts: Craig Powell, President,
Eye on Sacramento
Phone: (916) 718-3030
E-mail: craig@eyeonsacramento.org

Sacramento City Council Poised to Increase Utility Taxes By

$10 Million/Year as Part of its Major City Utilities Rate Hikes;

Eye on Sacramento Urges Council: Give Back the Tax!

Tomorrow evening, the Sacramento City Council is poised to approve double-digit, four-year hikes in city water and sewer rates. In 2018, the council is expected to seek voter approval of 16% annual hikes – for four straight years – in the city’s storm drainage rate. Collectively, the water, sewer and storm drainage rate hikes, if approved, would draw an estimated $88 million more each year from the pockets of Sacramento residents and businesses once fully implemented.

But there is more to the story.

Because of an imbedded 11% city “utility tax” that is unknown to most city residents, close to $10 million of the $88 million will be siphoned each year from utility customer payments and diverted into the city’s general fund to pay for the general costs of government. The diversions will reduce resources available to keep city water safe and clean, and to keep our sewer and storm drainage systems operating effectively. The diversions also drive up the need for future city utility rate hikes.

“The Council has a clear conflict of interest in deciding whether and how much to increase city utility rates,” said Eye on Sacramento President Craig Powell. “They know full well that for every dollar they increase city utility rates, they automatically divert 11 cents of that dollar into the city’s general fund due to the utility tax. This creates an almost perverse incentive for tax-hungry politicians to raise utilities rates as high as possible so as to inject more dollars into the general fund which councilmembers can spend any way they please,” Powell added.

“The Council can eliminate its conflict of interest and ease the burden on hard-pressed Sacramento residents and businesses quite easily: by returning to the Department of Utilities the $10 million in higher utility taxes that the utility rate hikes would generate each year, preferably with instructions to rebate 100% of the funds to utility customers,” Powell said.

“Several councilmembers have made public statements that major utility rate hikes are needed to upgrade and maintain our water, sewer and storm drainage systems. If that is, in fact, their sole and honest motivation for supporting major rate hikes, they can prove it quite easily by returning the nearly $10 million in higher utility taxes that the rate hikes will generate each year back to the Department of Utilities, instead of snatching it from the pockets of hard-pressed ratepayers for purposes entirely unrelated to utilities service,” Powell concluded.

Just how hard-pressed are Sacramento residents? Based on the most recently available data from the U.S. Census, EOS has computed that the mean household income in Sacramento has declined a stunning 12% from 2007 thru 2013.

The City Council will meet tomorrow evening, Tuesday, March 22nd, at 6:00 p.m. at City Hall, 915 I Street, Sacramento, CA 95814. Make your voice heard by phoning, e-mailing or coming down to City Hall tomorrow evening to make your voice heard on these important issues. Join us in urging the City Council to “GIVE BACK THE TAX!”

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