INITIATIVES/PROPOSALS OF EYE ON SACRAMENTO

May 2012

Major Transparency Reforms

After examining transparency policies in other California communities and assessing Sacramento’s needs, Eye on Sacramento has compiled a list of ten proposals to make city government significantly more transparent to its citizens. Two of the ten proposals, however, stand out in terms of their importance to the city and the need for prompt City Council adoption:

1. Sunshine Rule on Major City Contracts. We propose that the City Council amend its Council Rules to require the full disclosure of all proposed major contracts at least 14 days before the Council takes action on such contracts. Major contracts would include all contracts with a value of over $5 million, including all labor pacts.

In addition, the Sunshine Rule would require that city staff publicly, concurrently release a complete analysis of the financial impact of every proposed major contract on city finances, as well as a disclosure of all material staff assumptions underlying its projections.

2. Ballot Initiative Creating an Independent Redistricting Proposal. We propose that the City Council refer to the November 2012 ballot an initiative to create an independent redistricting commission to draw future council district lines. Working in collaboration with other community groups, Eye on Sacramento is preparing a proposed charter amendment initiative that would create a redistricting commission whose members would be chosen by judges on the Sacramento Superior Court, a model based on the successful experience of the City of San Diego over the past 12 years. Extensive public hearings and outreach by the redistricting commission would also be mandated.

Major Budgetary Reforms

Given the complexity of the city budget and resource limitations, Eye on Sacramento has elected to focus its policy efforts on three initiatives for the balance of 2012:

3. Council Rule Prohibiting Multi-Year Labor Agreements (or “Fiscal Out”). In recent years, the City Council has been unable to manage its labor costs due to the existence of multi-year labor agreements. When faced with a budget deficit, the city can only threaten bargaining unions with lay-offs to obtain needed labor cost concessions. This practice has led to the decimation of city services in department after department. By limiting labor pacts to no more than one year, the City Council will preserve the necessary fiscal flexibility to reduce labor costs through negotiation and, if need be, mediation and would no long be compelled to savage city service levels in reaction to union intransigence. Alternatively, all labor pacts should include a “Fiscal Out” granting the city the right to terminate all labor pacts if the Council declares, in its sole and absolute discretion, a fiscal emergency.

4. Launch Task Force to Save City Pools. In next year’s budget, virtually all city pools will face closure absent major budgetary reforms. Eye on Sacramento is launching a six-month project to examine the operations and costs of city pools. It will be appointing a task force comprised of community leaders, pool industry representatives and experts, private swim club executives and parks and recreation department managers to comprehensively study ways to reduce the costs of operating city pools, to explore alternative ways of managing and maintaining city pools and to identify additional resources to support city pool operations.

5. Community Study to Restore City Parks. City parks have borne the brunt of city budget cutbacks and staff layoffs. Many city parks are dependent on volunteers for basic maintenance. The current “triage” approach to city parks is not sustainable and long-term solutions must be identified. Eye on Sacramento, in conjunction with park volunteer groups, community leaders and city staff, will launch a “community study” of alternative solutions, assessing tax options, outsourcing options and the launch of park conservancies.

General Fund Budget Analysis; “Open” Labor Pacts

In addition to pursuing the above policy initiatives, Eye on Sacramento, in discharging its “watchdog” mission, will be offering critiques of various aspects of the city manager’s proposed 2012/2013 general fund budget during budget hearings The central theme of our critiques will be to identify and advocate for long-term, multi-year budget reforms that will help arrest the city’s structural deficit and provide opportunities for the restoration of badly frayed core city services.

The city has two labor pacts expiring this year, including its pact with the city’s largest union, Local 39. The city should use these expiring pacts as opportunities to permanently realign its labor costs to conform to budgetary realities. We applaud the Library Authority for its recent action in submitting a “last, best” contract offer to Local 39 to realign labor costs in the face of union opposition. Cost-saving opportunities in labor pact re-negotiations include:

(a) controlling future pension costs by creating a lower tier of pension benefits for new hires;

(b) eliminating pension spiking by shifting “pensionable pay” from the final year of employment to the final three years of employment; and

(c) requiring employees to contribute to reserves to cover the currently unfunded cost of retiree health care costs (now over $380 million).

EOS 2012 Policy Agenda pdf

Eye on Sacramento’s Final Report on Proposed Water and Sewer Rate Hikes

EYE ON SACRAMENTO’S FINAL REPORT – City of Sacramento Water and Sewer Rate Hikes and Infrastructure Repair Plan

 EXECUTIVE SUMMARY

Through years of neglect and under investment, the city’s water and sewer infrastructure is a mess.  The mess is a consequence of several factors: (1) the city council’s historic failure to focus on long-term needs and its “core” government mission; (2) the failures of the city council and city managers to adequately oversee the Department of Utilities (DOU); (3) broken promises by DOU management on how revenues from earlier rate hikes would be spent; and (4) unsound city policy that has allowed escalating labor costs to crowd out infrastructure spending.

Even if the problem is fixed with massive new investment in utilities infrastructure, how can the city ensure that it doesn’t backslide into such a mess again?  The DOU can avoid a repeat of the current mess by returning utility tax revenues back to the DOU to sustain ongoing infrastructure investment, by adopting smart DOU oversight reforms, by providing specialized oversight of infrastructure spending, by securing concessions from city unions to free up funds for infrastructure spending and by adopting a number of labor reforms.

While framed as a proposed three-year hike in water and sewer rates, the DOU’s plans to borrow $1.8 billion over the next several years will “lock-in” double-digit annual rate hikes for the next 10 to 15 years, as set forth in DOU rate projections  The city council and the public need to be aware that, with the tripling of Regional Sanitation’s sewer rates over the next eight years, the water and sewer rate hikes proposed or projected by the DOU, along with future expected hikes in storm drainage and solid waste rates, will push up the monthly city utility bills for a typical homeowner from $120 per month to over $380 per month over the next 15 years.

The city’s proposed and projected rate hikes will have a profound impact on middle class and working class residents and those on fixed incomes.  The proposed infrastructure repair program will impose an effective lien of $32,500 on the typical Sacramento home.  With local unemployment now back up to 11.4%, 51% of all Sacramento homes underwater on their mortgages and an 8.1% drop in Sacramento home values last year and a further drop of 2.1% projected for the rest of the year, the city council could not pick a worst time to impose a major new financial burden on Sacramento’s citizens and communities.

The recently discussed life-line subsidy idea fails the test of fairness as it would reward better off homeowners while doing nothing to assist worse off renters.

The proposed hikes will have major negative impacts on commercial property, the housing stock, new construction, property tax collections, local school districts and local economic growth prospects.

Before launching a project of this magnitude, the city should install a permanent DOU director with significant experience and expertise in planning and overseeing major, complex utilities infrastructure projects on the scale that is being proposed.  The city council and the public must have confidence in the oversight capacity of DOU management, particularly in light of longstanding concerns with the functioning of the DOU.

With the planned rehab of the city’s two water treatment plants and the city’s placement of numerous underground, stand-by holding tanks in the central city over the past 10 years, the city has substantially diminished the risk of a water or sewer infrastructure failure causing either a significant threat to public safety or a serious disruption of life in Sacramento.  According to DOU director Dave Brent, the principal risk of infrastructure failure is now limited to highly localized impacts that are not expected to endanger public health.  Consequently, there is no public safety reason to initiate major rate hikes in the depths of the current recession and no reason to finance the bulk of the needed work with massive borrowings instead of funding the work on a “pay-as-you-go” basis.

City treasurer Russ Fehr has consistently advised the city council to limit the use of debt financing to only those big-ticket projects that simply cannot be financed out of current cash flow.  He states that the city is “facing a debt nightmare” and that “borrowing for routine maintenance is insane.”

Overreliance on utility debt financing and poor management of utilities infrastructure projects has led to two major municipal bankruptcies this year, in Harrisburg, PA, and Jefferson County (Birmingham), AL.  Bond covenants, including coverage rations, can have capricious effects on utility rates and communities, particularly during sharp economic downturns.

The proposed first tranche of bond financing should only be used to rehab the water treatment plants.  It should not be used to accelerate the installation of water meters, a strategy that would substantially increase ratepayers costs with no significant corresponding benefit.

The DOU’s $250,000 public relations campaign to sell major rate hikes and infrastructure repairs to the public and the city council has been largely a waste of ratepayer funds.  The DOU has maintained a false and misleading narrative on the nature and extent of the proposed rate hikes and has doggedly withheld from public view 15-year rate hike projections and financial plans that would have revealed the full extent of future rate hikes and infrastructure financing.

Eye on Sacramento advises the city council to: (1) to approve single-year hikes in water and sewer rates as a “place setter” to provide the city with the time to renegotiate key labor agreements to unlock cost savings and enact needed reforms and DOU and project oversight measures; (2) authorize debt issuances only to finance the rehab of the city’s water treatment plants; and (3) direct city staff to redesign its infrastructure repair program and its financial plan to fund the lion’s share of the repairs on a prudent, less costly, less risky “pay-as-you-go” basis.

read more of   EYE ON SACRAMENTO’S FINAL REPORT – City of Sacramento Water and Sewer Rate Hikes and Infrastructure Repair Plan

Find Out More About Proposed Utility Rate Hikes

Find Out More About Proposed Utility Rate Hikes

City of Sacramento, Department of Utilities Rate Increases

Pipe Dreams: Sacramento’s water rates will keep climbing

Eye on Sacramento’s Projection of Our Monthly City Utilities Bills Over the Next 15 Years

Sac City Utility to Shackle Rate Payers With $3.9 Billion. That’s $35,000 per Household

Follow The Money

Pipe Dreams, Three-year water and sewer rate hikes would be just a down payment

EYE ON SACRAMENTO’S FINAL REPORT – City of Sacramento Water and Sewer Rate Hikes and Infrastructure Repair Plan

 

Pipe Dreams, Three-year water and sewer rate hikes would be just a down payment

When the utility folks get up to testify at city council hearings, they are typically the last to appear, long after the homeless and Occupy Sacramento activists have left, leaving a weary mayor and city council behind to summon the attention span necessary to ponder the implications of federal clean water mandates and steel-riveted transmission lines. It’s a subject that rarely sustains the attention of either politicians or city voters. Inattention, however, has its own special costs in government, as it does in real life.

To say that the city council has exercised inadequate oversight over the city’s utility systems would be an understatement. The consequences of its neglect range from the current major snafu in garden refuse pickup to a grand jury investigation and lawsuits two years ago over the city’s illegal diversion of millions of dollars of ratepayer funds.  read more …

The City’s Garbage Contract with BLT Enterprises: Time for Full Accountability

Review the full report

IX. SUMMARY

We sincerely hope that Sacramento city officials and the Sacramento County Civil Grand Jury, as well as local media, will investigate and further examine the problems and serious issues that have plagued the City of Sacramento’s administration of its waste disposal contract over the past 15 years, as identified in this Eye on Sacramento report. It is time for full accountability.  … full report