Eye on Sacramento’s Statement to the Sacramento City Council Regarding the City Budget

Eye on Sacramento’s Statement to the Sacramento
City Council Regarding the City Budget

June 11, 2013

Good evening. I’m Craig Powell, President of Eye on Sacramento. It’s been awhile since we’ve appeared before you.

EOS, like much of city management, has been busy with the arena proposal. We issued a detailed report on the arena deal and city financing plan on March 26th. We’re busy working on Phase II of our arena report, which includes (1) analyzing the feasibility, cost, risk and legality of your arena financing plan; (2) examining the extent of the city’s understatement of taxpayer subsidies devoted to the arena; (3) assessing the likelihood, cost and financial responsibility for freeway improvement costs; and (4) examining the claims of arena supporters that recently constructed arenas have transformed the downtowns of cities that have built them.

You started off the year strong on budgetary matters. You approved a set of prudent principles to guide how you spend Measure U funds. You agreed not to use Measure U funds to close structural deficits. You agreed to reserve some Measure U funds to ease the impact of the abrupt end of Measure U in 2019.

Since those promising early days, it appears that you have experienced a fiscal personality change. You are breaking faith with your Measure U spending principles left and right. You are poised to use Measure U revenues to cover half of next year’s structural deficit, in direct violation of your clear pledge not to do so. You are poised to break your promise to create a Measure U reserve to ease the impact of Measure U’s expiration.

There’s more. You are poised to ignore your own city manager’s prudent advice to base your Measure U spending decisions on careful projections of future revenues, not revenues you hope and pray the city will achieve in the future. You’re starting to act like the imprudent homeowners who overextended themselves buying more house than they could afford because they just knew that property values would always go up. If you base spending decisions on overinflated estimates of future revenues you’ll put us right back in the same box that helped devastate city budgets and city services over the past five years. This time, however, you will doing so in the face of a stern warning from Mr. Shirey of a coming fiscal cliff. You are about to return to the bad old days of reckless city spending.