Proposed City-Wide Project Labor Agreement Mandate: Look Before You Leap

Dear Mayor Steinberg and Councilmembers,

We write to urge you to postpone consideration of the proposal to mandate that all city projects of $1 million or more include a project labor agreement, which appears on your agenda for tomorrow evening.

The consideration of such a measure with zero public awareness and no opportunity of the public to adequately express their views would be an affront to any concept of open, transparent government or inclusive public engagement. Slamming this proposal through the city council without adequate time and opportunity for real public input would further undermine the public’s already attenuated trust in city government and city leaders.

This is not the way a participatory, inclusive democracy behaves. This is the way slick politicians who want to sneak things past the public behave. We trust that you wish to count yourselves among the former and not the latter.

The proposed mandate would have a huge and as yet unknown impact on the city’s budget and on the burdens of city taxpayers. We all know that project labor agreements serve to effectively restrict city contracts to union-only contractors, thereby reducing the number of eligible bidders on city contracts, thereby needlessly driving up city and taxpayer costs by 10% to 20%, according to the studies of independent analysts.

Such cost spikes will likely drive up taxpayers costs by tens of millions of dollars each year in Sacramento, depending on the volume and magnitude of city capital improvement projects each year. Over a 10-year span, such a mandate could drive up costs by as much as $200,000,000, all for the sake of benefiting a narrow special interest, the construction trades unions, while unfairly cheating the 90% of skilled trades workers who are not union members out of the opportunity to earn a living.

It would also especially harm minority and women-owned businesses, the great majority of whom are non-union businesses.

We also note that Sacramento residents will vote this fall on your proposal to double and make permanent the temporary Measure U one-half percent sales tax hike that expires in March.

As chair of the campaign to defeat the double-the-tax Measure U, it would behoove me to remain silent and even encourage you to approve such a budget-busting PLA mandate on city projects as it would hand our No on Measure U campaign a vivid example of how our city government is shoveling millions of dollars out to back door of City Hall into the pockets of politically connected special interests at the expense of average Sacramentans.

But I also happen to be a citizen who deeply cares about the long-term fiscal health of our city. I cannot stand idly by while the proponents of this deeply flawed proposal drive the city’s financial future into a ditch.

We urge you to do the right thing and direct staff to do a comprehensive, independent fiscal analysis of the long-term impacts of the proposed PLA mandate on future city budgets, non-union workers and minority and women-owned Sacramento businesses. If you are serious about restoring trust in city government, you must provide the public a reasonable opportunity to learn about this proposal, study it and then communicate with their representatives their views on it.

If you wish to discuss this matter, please do not hesitate to contact me.

Sincerely,

Craig Powell, President
Eye on Sacramento
Phone: (916) 718-3030

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Eye on Sacramento’s Position on Mayor’s Effort to Double Measure U Sales Tax Hike

MEDIA RELEASE

For Immediate Release

Date/Time: July 31, 2018, 6:00 a.m.
Contact: Craig Powell, President,
Eye on Sacramento
Phone: (916) 718-3030
E-mail: craig@eyeonsacramento.org
Website: www.eyeonsacramento.org

 

Eye on Sacramento’s Position on Mayor’s Effort to Double Measure U Sales Tax Hike

 

Below is a link to a letter that was sent today by Eye on Sacramento President Craig Powell to Sacramento Mayor Darrell Steinberg regarding EOS’s position on the Mayor’s effort to double the Measure U one-half percent “temporary” sales tax hike in the City of Sacramento.

Measure U will be on the agenda of two Sacramento council meetings today, July 31st, one at 2:00 p.m. and a second meeting at 5:00 p.m. Mr. Powell will be available for interviews both before and after the 2:00 p.m. council meeting.

Letter to Mayor Darrell Steinberg

###

Is Steinberg Being Reckless? … Mayor wants to double a ‘temporary’ sales-tax hike

By Craig Powell

If all you knew about the performance of Mayor Darrell Steinberg in office was what you read in the pages of The Sacramento Bee, two things would be apparent. First, you’d think Steinberg was that rarest of creatures: a politician incapable of making a misstep or a bad policy choice. Second, you’d be woefully ill-informed about the potential downside consequences of his policies—and some of the cynical political calculations behind them.

Since the June primary, the mayor has been a man on fire. His first salvo was to publicly press the City Council and city voters to support his campaign to double the “temporary” one-half-percent sales-tax hike known as Measure U, which was approved by voters six years ago as an emergency response to city service cuts in the Great Recession. He seems not to care that Measure U was sold to voters as a temporary tax designed to fill the coffers of a recession-battered city.

Neither the mayor nor The Bee bothers to point out that city revenues have fully recovered from the recession. City revenues have risen 16 percent over the past two years and were up 6 percent last year. The mayor and The Bee have also failed to mention that the city’s labor costs soared 8.5 percent last year on the heels of pricey new city union contracts and soaring pension costs. How pricey? Under the new police contract, officers with more than four years on the job were given 17 percent pay raises (not counting the impact such raises have on city pension costs), while average annual increases in the CPI were less than 1.3 percent over the past four years.

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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.

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

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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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The Pot Tax … Helping kids at the expense of the general fund

By Craig Powell

Jay Schenirer means well, he really does. But programs launched with the best of intentions are no guarantee of sound policy or effectiveness, as Schenirer’s recent proposal confirms.

His basic idea is to dramatically increase city funding of programs for children and young adults by getting voters in June to approve a “new” 5 percent tax on marijuana cultivation, with the proceeds directed exclusively to youth services, bypassing the city’s general fund. Schenirer and his hardworking staff have spent the past year compiling research studies that show the benefits such programs can have on outcomes for kids.

Schenirer is certainly not new to youth issues: He’s spent most of his adult life working on them—in state service, on the city school board, as an education consultant and as the founder of youth-focused nonprofits since his 2010 election to the city council. (He’s raised more private funds for these nonprofits from corporations and foundations than any other councilmember with the exception of our city’s star private fundraiser, Mayor Kevin Johnson.) Schenirer is almost certainly the council’s foremost authority on youth issues, with Rick Jennings—the long-term CEO of the Center for Fathers and Families who served on the city school board alongside Schenirer—a close second.

Schenirer and his staff have prepared a thoughtful 22-page blueprint for how to create a new city department of youth services, an idea that city manager John Shirey threw cold water on by calling it a wasteful increase in city overhead. Shirey prefers to have the parks department, which administers the city’s current youth services programs, handle any expansion of such programs.

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Expansive Plans … The mayor’s budget message proposes wide-ranging ideas

Published on Wednesday, 01 April 2015

Expansive Plans

The mayor’s budget message proposes wide-ranging ideas

By Craig Powell

As I wrote last month, the mayor and city council have taken aggressive steps in the past few months to assert much greater front-end control over both the city budget and the city manager (hiring an independent budget analyst, forming a new council budget committee, public outreach on budget matters). But the process changes were just the beginning. On March 10, the mayor took the unprecedented step of releasing a “Mayor’s Message on Budget Priorities” that lays out what is likely the most expansive plan ever proposed for the role of city government in Sacramento. It proposes a cautious approach to city spending and debt management in the near future while proposing more than a dozen new and unprecedented programs and initiatives.

Notably, the mayor’s plan was not the product of deliberation and consensus by the council’s new budget and audit committee. Instead, it is the mayor’s own vision and was slated for initial council review late last month. If it ends up being approved by the council, it will represent marching orders to city manager John Shirey on how to draw up the city budget for the next fiscal year that begins July 1.

The central premise of Johnson’s plan is that the city must exercise spending caution in the short term as the city nears a fiscal cliff in 2019 (due to escalating pension contributions and expiration of the Measure U half-percent sales tax hike), but that the city must ultimately fix its fiscal problems by taking aggressive steps to grow the local economy, resulting in higher city tax revenues. His ideas for growing the local economic pie are bold: He proposes a slew of new investments, plans and programs that, if approved, would inject the city more assertively into local economic development than ever before.

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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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Balanced in Name Only … Small budget surplus is no cause to break out the champagne

Published on Sunday, 01 June 2014

Balanced in Name Only

Small budget surplus is no cause to break out the champagne

By Craig Powell

There is only a tiny handful of policy wonks who actually look forward to the release each year of the city manager’s proposed city budget for the fiscal year that starts on July 1. I’m one of them. City budget manager Leyne Milstein drove that point home in my interview of her last month, joking that I was one of only three people who have actually read the document that only a wonk could endure, much less enjoy.

But endure it I did and, knowing that most of you don’t spend your nights curled up with the city budget, I’m offering you the CliffsNotes version of it this month.

The good news is that after five years of battling chronic budget deficits, city manager John Shirey is proposing a $383 million general-fund budget that actually ekes out a small $2 million budget surplus. (The total city budget, which includes fee-collecting “enterprise funds” like city utilities, the convention center and marina, is actually $872 million, but most attention is paid to the city’s general-fund budget, which funds basic city services such as police, fire, parks, etc.) That means no cuts next year in services or city employees.

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Uncertain Future … Before upgrading the community center theater, homework’s Needed

Published on Saturday, 03 May 2014 20:05

Uncertain Future

Before upgrading the community center theater, homework’s Needed

by Craig Powell

One thing my experience with city government in Sacramento has taught me is that city policy is too often driven by an often unhealthy deference to conventional wisdom. The great pitfall of herd mentality governance is that key assumptions go both unquestioned and unexamined. A proposal to renovate the Sacramento Community Center Theater at a cost of as much as $53 million is chockablock with unexamined questions.

For example, why is the city council poised to spend tens of millions of dollars renovating a civic asset like the theater when it has received no briefings on the asset’s current financial performance? Is the theater a moneymaker or a money loser? If it’s losing money, how bad are the losses? Since the council hasn’t been briefed on its performance, it hasn’t a clue.

Eye on Sacramento (the watchdog group that I head) issued a report in September on the combined financial performance of the three city assets that make up the “convention center fund” assets: the Convention Center, Memorial Auditorium and the theater. EOS reported that the three assets have been losing a whopping $12 million annually for years, but EOS did not break out the operating losses of the theater. City staff should.

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