Budget Checkup … City Hits List of 20 Most Financially Distressed U.S. Cities

By Craig Powell

After devoting my last two columns to Sacramento’s homeless crisis, I figure we’re due for a review of the city’s financial situation since Darrell Steinberg became mayor.

Among the more than 3,300 issue files that Eye on Sacramento (the civic watchdog group that I head) maintains on municipal issues is one that is often whimsical: our city rankings file. We track every time a study or publication ranks Sacramento against other cities on everything from its appeal to millennials to the quality of our coffeehouses. (There’s considerable crossover there.) But the latest ranking, published by JPMorgan Chase, is anything but whimsical. It’s disturbing.

Since JPMorgan Chase manages about $90 billion in municipal bonds, it’s pretty concerned about whether cities will be able to pay back their bond debt. So it created what one financial analyst calls a comprehensive guide of “which municipalities haven’t the slightest hope of surviving their multi-decade debt binge and lavish public pension awards”—i.e., Chicago, Pittsburgh, Atlanta, Cleveland.

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Billion-Dollar Budget … City spending to increase 25 percent over five years

By Craig Powell

First, there’s the headline number: The city is poised, for the first time in its history, to spend more than $1 billion in the fiscal year that begins on June 30. Total general-fund spending (which pays for police, fire, etc.) is set to hit $450 million next year, while “enterprise” spending (primarily, the utilities department) consumes $584.2 million.

The city expects to employ 4,552 people next year, a slight increase over the current year, but an increase of 720 positions from five years ago. The city expects to employ 130 fewer people than it did in 2008.

City officials are forecasting that the budget will sink into major deficit beginning in just two years, when a general-fund operating deficit of $11 million is expected to grow to $26 million by 2022. You would expect that a city manager, facing the prospect of such red ink, would propose a city budget for next year that calls for major cuts in spending to head off the coming fiscal ditch. But you would be wrong. Fiscal discipline is a very foreign, even suspect concept at City Hall these days. In fact, city manager Howard Chan’s recently released budget forecast anticipates sharp increases in general-fund spending on city operations over each of the next several years, rising from $412.9 million this year to $515.9 million in 2023, a 25 percent increase in operations spending over five years—a spending pace that’s more than twice the inflation anticipated during that period.

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Fire Alarm … Ambulance Reform Would Challenge Firefighters Union

By Craig Powell

In some sense, the city’s fire department is a 20th century relic operating in a 21st century world. And with its entrenched practices staunchly protected against change by what’s acknowledged to be the city’s most powerful union, Fire Fighters Local 522, the fire department has been essentially immune to efforts by city officials to drag it into modernity. Few have even tried to reform it; none has come anywhere close to succeeding.

To his credit, freshman Councilmember Jeff Harris has stepped up to the plate and is making cost-saving reform of the city’s ambulance service, operated by the fire department, a major priority. What’s more, he may very well succeed where most haven’t even bothered to try.

Why is the fire department so resistant to change? Fire chief Walt White is only the 21st chief in the department’s 165-year history. And he’s the first chief in city history to be appointed from outside of the ranks of the fire department. Organizational change is not exactly a prevailing value in the fire department. White didn’t have to travel far to take the job. Before joining the fire department last year, White spent his career with the Sacramento Metropolitan Fire District, a nearby district with a long history of paying firefighter salaries that are among the highest in California and a district board dominated by members elected with the financial support of Local 522.

Apart from history and tradition, the status quo in the fire department is vociferously defended by Local 522, whose political action committee typically brings in $150,000 annually and whose cash balance stood at $330,000 at the end of last year. It showers money on candidates for city council. When Angelique Ashby ran for the council in 2010, Local 522 not only gave her campaign $6,500; it spent another $26,826 in an independent expenditure campaign on her behalf. Such outsized political “investments” buy influence and power.

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Police and Pension Reform … Burden of new contributions erased by pay hikes

Published on Friday, 01 August 2014

Police and Pension Reform

Burden of new contributions erased by pay hikes

By Craig Powell

After three long years of informal and formal bargaining, mediation, more formal bargaining and, finally, a binding determination by an arbitrator, the city has a new labor contract with the Sacramento Police Officers Association. City police will finally join all other major city bargaining unions and be required to contribute the full employee’s share into the California Public Employees’ Retirement System (9 percent of their salaries)—and then some. In addition, city cops will be required to pony up another 3 percent of their salary to pension contributions—replacing a portion of the city’s existing contribution to cop pensions—for a total contribution by cops of 12 percent of their salary. In contrast, members of the next highest contributing city union, the firefighters, contribute 9.2 percent of their salaries to pensions.

To ease the pain of such a major reduction in take-home pay, the arbitrator awarded the police salary hikes, starting next year, of 3 percent in each of the next 3 years, totaling 9.3 percent once fully implemented. (Sergeants will get 7 percent raises.) The new contract’s near-term impact on the city’s general fund budget: a savings of $1.25 million in the current fiscal year and $2.24 million in 2014-2015, shifting to a net cost of $300,000 in 2016-2017 and $1.59 million in 2017-2018.

The arbitrator’s decision caps off a three-year effort by city manager John Shirey to require all city employees to contribute 100 percent of the employee’s share of their pensions. Until Shirey’s initiative, most nonpublic-safety city employees paid between 3 and 4 percent of their salaries to their pensions, while police, firefighters and city managers paid zip toward pensions. Shirey kicked off his campaign to require full contributions by setting a good personal example: He insisted that his own employment agreement require him to make a full 7 percent pension contribution. (Of course, that’s a little easier when you are making $258,000 per year.) Next, he required all nonrepresented city employees, including all city managers, to pony up. Then, as each city union contract expired, he insisted that each contract require workers to make full contributions.

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Eye On Sacramento Objects to Repeal of the 10-Day Sunshine Rule

Statement from Eye on Sacramento to Sacramento City Council on the Repeal of the 10-Day Sunshine Rule on City Contracts over $1 Million

Monday, March 10, 2014

Dear Mayor Johnson and Members of the City Council,

We are writing to express our strongest possible objection to the proposal before you tomorrow evening to gut the current city council rule that requires that all city contracts involving more than $1 million be posted on the city’s website and be made available to the public at least 10 days before the council takes action on such contracts.

This 10-day posting/disclosure rule is commonly known as the city’s “Sunshine Rule” and was adopted to assure that the public and the media have adequate time to review and provide feedback to you on the terms of major city contracts before you vote on them (Council Rules Chapter 7, Section E-2-d; found here).

The council’s adoption of the Sunshine Rule has been the single most important upgrade in city government transparency in the past 20 years.

Had the Sunshine Rule been in place when the city was considering approval of its 20-year exclusive, no-bid prime garbage contract with BLT Enterprises (now Waste Management) in 2010, it is unlikely that such an unfair and grossly burdensome contract would have been imposed on hapless city utility ratepayers. Because the Sunshine Rule was not in place at the time, the egregious city/BLT Enterprises contract was jammed through late at night during the final session of the term of the city council with zero public or media awareness or analysis. The Sacramento County Civil Grand Jury has castigated the city for both the atrocious terms of the BLT contract and the shady circumstances under which it was approved (Grand Jury, 2011-2012 Reports, page 39; found here).

The proposed draft of the new council rules proposes that the Sunshine Rule apply in the future only to city labor contracts – which are already covered by the current Rule since every city union contract involves more than $1 million. Gutting the Sunshine Rule would return us to the council’s bad old days when it all too often provided de minimis notice to the public and the media of the terms of large contracts that have a lasting and major financial impact on the city. That is simply unacceptable.

How can you expect the citizens of Sacramento to trust the city council and city government when you are taking active steps to hide from them the details of major city contracts? When you intentionally change the rules so you can provide inadequate public notice of the terms of major contracts you only breed public cynicism and suspicion over what it is you are trying to hide from the public.

For example, is it sheer coincidence that this move to gut the council’s Sunshine Rule is occurring just three weeks before you are set to approve a massive public subsidy of a new sports and entertainment facility, set for April 1st? Somehow we doubt it.

There has been no showing whatsoever of any need to water down the Sunshine Rule. The council already has a relief valve in place in cases of exigent circumstance: the council, by a 2/3rds vote, can choose to waive the 10-day posting requirement.

We can only surmise that some council members are seeking to gut the Sunshine Rule now in order to deprive the public and the media of a reasonable opportunity to review the several hundreds of pages of legal documents that will comprise the “arena deal.” We can only conclude that you don’t want the public and the media to have adequate time to review the documents, determine the impacts and provide citizen feedback to you, their elected representatives.

If you approve this rule change tomorrow evening you will be sending a clear signal that you want to keep the public and media in the dark for as long as possible about the final terms of the arena deal and deprive them of the time needed to adequately review the final deal and provide informed feedback to the council. No council member voting to gut the Sunshine Rule could ever again creditably claim to be supportive of transparency and openness in city government.

We beseech you: please show a higher level of respect for your constituents and reject this misguided effort to gut the city’s Sunshine Rule. Thank you.

Very truly yours,

Craig Powell, President

Phone: (916) 718-3030

cc: Mr. John Shirey, City Manager
Ms. Shirley Concolino, City Clerk
Mr. James Sanchez, City Attorney
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City of Sacramento Receives “F” Grade on National Survey of Transparency of Major U.S. Cities

MEDIA RELEASE

For Immediate Release
Contact: Craig Powell, President, Eye on Sacramento (EOS)
phone: (916) 718-3030; e-mail: craig@eyeonsacramento.org
website: www.eyeonsacramento.org
Date: January 30, 2013; 10:50 a.m. 

City of Sacramento Receives “F” Grade

National Survey of Transparency of Major U.S. Cities

A report published this week by U.S. Public Interest Research Group (PIRG) graded 30 major U.S. cities on how well “checkbook-level” information is presented on-line to citizens. The study – the first of its kind assessing local government transparency – found that Sacramento finished 29th out of 30 cities surveyed, earning an “F” grade in financial transparency.

In an interview with Governing magazine, PIRG senior analyst, Phineas Baxandall, said, “Transparency is really important for good fiscal management and checking against corruption so citizens can feel confident in how their governments spend tax dollars.”

PIRG evaluated each city’s transparency efforts by measuring a series of 12 criteria. Part of the assessment looked at the breadth of information provided, such as vendor payments, detailed tax expenditures and budgets. The report also scored the extent to which the information was readily available, emphasizing centralized websites, searching capability and downloadable data.

On June 12, 2012, Eye on Sacramento asked the Sacramento City Council to adopt ten Transparency Reforms which would greatly increase city residents’ access to their city government and help restore trust in the integrity of city government leaders, including one on “checkbook-level” transparency:

EOS Reform #2: Post the city’s check book and other payments on-line in Excel format so that the public can see for themselves how every city dollar (general fund and enterprise funds) is being spent. City activists and enterprising local media will pour over these records and seek out explanations for payments that strike them as potentially inappropriate. When city check writers know that every check they write and payment they authorize will be scrutinized by the public, they will be on their best behavior.

To date, not one of the EOS transparency proposals have been adopted by the city council. EOS President Craig Powell said today, “Our hope is that the “F” grade given to Sacramento by PIRG this week will awaken the city council from its slumber and motivate it to take the immediate actions necessary to open up its books to the city taxpayers who pay its bills. Sacramentans deserve much, much better from its city leaders.”

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Summary of Eye on Sacramento’s Transparency and Budgetary Reforms

June 12, 2012

Transparency Reform Proposals

EOS Reform #1Post the city’s organizational chart on-line.  The chart should list every city job position and the name and contact information of every city employee other than lower level employees whose jobs involve no interaction with the public.  Without such information, the public frequently has no clue whom to contact in the city hierarchy when they have a problem.

EOS Reform #2:  Post the city’s check book and other payments on-line in Excel format so that the public can see for themselves how every city dollar (general fund and enterprise funds) is being spent.  City activists and enterprising local media will pour over these records and seek out explanations for payments that strike them as potentially inappropriate.  When city check writers know that every check they write and payment they authorize will be scrutinized by the public, they will be on their best behavior.

EOS Reform #3:  Post all credit card charges and itemized travel expenditures of city council members and city staff on-line, which will ensure that public eye balls are on this most commonly misused and abused form of spending by city officials.

EOS Reform #4: Post the expenditures that city council members make out of their individual $55,000 annual discretionary accounts on the council member’s city web page.  These funds are designed to give council members some flexibility in funding local needs without going through the formal city budget process.  There is a public perception that such accounts are being misused by some council members as slush funds to advance members’ political interests.  By posting such expenditures on a council member’s web page for all to see, the funds will be less likely to be spent in self-aggrandizing ways (i.e. golf tournaments, electronic toys).

EOS Reform #5: Post all campaign contributions to a council member on that council member’s city web page so that the public can see at a glance who has invested money in each of our elected officials.  Currently such information is only available through a portal on the city clerk’s web site which is difficult to find and cumbersome to navigate.

EOS Reform #6: Create a Twitter feed for real time public comments on the action at live city council meetings and place the feed on the city council’s web page along side streaming video of council meetings, making such comments part of the public record of council meetings.  A live Twitter feed for council meetings would allow members of the public to share comments, interact with one another and raise public engagement in the policy-making process to a new level.

EOS Reform #7:  Seek city council approval for placement on the November 2012 ballot of an initiative creating an independent city redistricting commission.   This is a proposal being jointly developed by Eye on Sacramento and Empower Sacramento, a coalition of ethnic groups and leaders organized in the aftermath of the council’s redistricting decision.  Removing council members’ power to draw their own council district lines and shifting that power to an independent redistricting commission will protect the public interest from being subordinated to the narrow and often self-serving political interests of incumbent politicians.

EOS Reform #8:  Adopt an ordinance that prohibits the approval of any major contract and any labor contract until at least 14 days after its terms have been fully disclosed to the public via media release and prominently posted on the city’s web site, coupled with city staff’s good faith projections of both the short-term and long-term total costs to the city of such contract, as well as specific disclosures of the assumptions that underlie staff’s cost projections.  These disclosures will give the media and the public the time and opportunity to scrutinize and comment on the fairness of labor contracts to the city and its taxpayers.  With labor costs now constituting close to 80% of the city’s general fund budget, public scrutiny of proposed pacts is vital to democratic governance in the city.

EOS Reform #9: Require city employees who testify at city council hearings to be sworn.  Regular and close council observers have witnessed occasions, albeit rare, in which city staff making statements or presentations to council have been less than fully candid in their remarks, sometimes spinning or shading the facts or professing ignorance of embarrassing or uncomfortable matters, typically to avoid upsetting one or more council members.  To assure that the council and the public have the benefit of candid, independent and impartial information and advice from staff, city staff statements to council should be sworn under penalty of perjury to be the whole and complete truth.

Budgetary Reform Proposal

EOS Reform #10:  Adopt an ordinance that prohibits the city from entering into multi-year labor agreements.  In recent years, the city council has been unable to effectively manage its labor costs due to the existence of multi-year labor agreements.  A city bound by multi-year labor agreements can only close deficits by threatening unions with lay-offs to secure needed labor cost concessions.  The practice has led to the decimation of city services in department after department.  Barring multi-year labor pacts will preserve the council’s vital fiscal flexibility to reduce labor costs through negotiation and, if need be, mediation and arbitration.  The city should end the practice of savaging city service levels as a response to union intransigence.  A less preferable, but acceptable alternative, would be to limit the term of labor pacts to not more than two years.

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