Santa Paula Council: Five and a Half Hours of Soul Searching

By Sheryl Hamlin

History

The Regular Council Meeting of May 2, 2016 was prefaced by a Special Session at 5:00 pm to allow citizens to speak on the idea of a potential Sales Tax, a tax proposed previously at the March 7, 2016 meeting, when the unofficial sales tax council subcommittee consisting of Mayor Hernandez and Council Member Procter proposed a sales tax of 1% directing 50% to police, 30% to fire and 20% to youth programs. Council Member Gherardi had said Council Member Procter’s motion was premature because the $50,000 Fire Sustainability study was not yet ready.

The public forum in the Special Meeting of May 2, 2016 was a result of the March 7th meeting where the council agreed to such a session “as soon as possible” after the $50,000 Fire Sustainability study was released.

The study on Fire Department Sustainability was presented to council at a Special Meeting on April 29, 2016. To read the study, click here. For a report of the April 29th 2016 Special Meeting, click here.

Special Meeting: May 2, 2016

The facilitator, Doug Green, rearranged the chairs in the chambers with an equal amount on both the west side and the east side with the chairs rotated so that the east side was facing the west side. The facilitator stationed his whiteboard at the north end of the chambers, but never used it, although he did pass the microphone. There were two camps: those who wanted to provide money for youth programs and those who wanted support for a 50-50 split between Police and Fire. Curiously, the former group sat on the east side and the latter sat together on the west side of the room. Eleven speakers favored money for youth, ten speakers favored money for Fire and Police, while three speakers appeared to favor the tax without constraint.

Richard Rudman, a member Citizens for Safer Santa Paula and Citizens Corps, spoke of the failed Measure F Tax saying taxes are unpopular but if there is a better idea let’s hear it. Lorenzo Moraza, President of Latino Town Hall, spoke of the Youth Empowerment Initiative and provided a detailed report, which included strategies for crime reduction. Members of the Fire Department said that they will lose 30% of the department without continued funding after the end of SAFER Grant, a grant Santa Paula has received twice, each time for about $900,000 over a two year period.

The theme of all speakers was funding, funding which Santa Paula lacks.

Regular Council Meeting May 2, 2016

Item 10.B. on the Regular Agenda continued the discussion of the potential sales tax as follows:

item10b

In Public Comments, Richard Rudman expressed dismay at the quality of the $50,000 Fire Sustainability Report, saying it was no help and was missing viable pathways for going forward. He suggested asking for a refund. Sushila Woods, originally from Australia, said Australians pay more taxes. She said we would have fewer calls if there were a stronger family unit and noted the disparity between the Santa Paula Unified School District homeless counts and the city’s Project Hope count of homeless. Jerry Byrum, fire fighter, referenced that the increasing call volume is a function of an aging population needing EMS and an aging housing stock calling it “Force Readiness based on Age”. Other speakers in Public Comments had also spoken in the 5:00 Special Meeting prior to the Regular Meeting.

Mayor Hernandez asked each council member to comment.

  • Council Member Tovias said he had not decided about the split, yet was wondering who will run the campaign? He suggested that perhaps a 1.25% tax would work, giving ½ percent to each of fire and police and .25% to community services. He stressed that council needs a Plan B, if the sales tax measure fails again.
  • Council Member Gherardi said that any action at this meeting is premature because there has not been enough public notice. She also said that Fire Sustainability Study was weak and did not give realistic numbers for the actual costs to go with the county fire department. “We still need to address structural issues”, she said.
  • Mayor Hernandez said that the tax had been an ongoing issue for two years. He said the Chief suggested a general tax last year. Recall that the failed Measure F in 2014 was a Specific Tax requiring 66.7% of the vote to pass. A General Tax requires 50% plus 1 to pass. Agreeing the Fire Sustainability Study was weak, he said the consultant did recommend a transaction tax with a sunset date. He also said that consolidating with the county will cost more, according to the report. He reminded the audience that we cannot have percentages in a General Tax. The goal of Item 10B was for the staff to return with advisory language of the tax which would also include an advisory group, he said.
  • Vice Mayor Crosswhite said that by 2017 the city would be in a hole financially. The report had no sustainability and no projections and was disappointing. See previous report here of this meeting.
  • Council Member Procter congratulated Council Member Tovias on his “provocative” idea of a 1.25% tax and asked Counselor Cotti to explain how the ballot could be worded, to which Mr. Cotti said the ballot would mention the specific tax amount with advisory questions. Mr. Cotti will bring examples.

The council discussed using a scientific poll to gauge the feeling of the electorate. This passed unanimously.

Related to item 10B were items 10A (Appointment of City’s Labor Negotiator) and 10C (Planning Session for 2016-2017 Fiscal Budget).

Appointment of City’s Labor Negotiator

Saying that the city’s previous labor negotiator was changing direction, City Manager Fontes proposed Melanie L Chaney from Liebert Cassidy Whitmore. With a stellar career defending cities in successful litigation cases, Ms. Chaney comes highly recommended. Mr. Nick Bacigalupo, Santa Paula Fire Department, spoke against Ms. Chaney, saying the council needs to look elsewhere, clearly not favoring the chosen firm presumably because Ms. Chaney had successfully won cases for municipalities against union represented public safety and municipalities. Ms. Chaney was approved.

Planning Session for 2016-2017 Budget

Finance Director Easley presented a lengthy budget template, page by page. City Manager Fontes prefaced the presentation with the caveat that this was not THE budget. Clearly, Director Easeley’s document was in preparation of the FY 2016-2017 budget and was a budget. During the presentation Mr. Fontes interjected that they had added a one percent salary increase for employees, which appeared to preempt the newly appointed labor negotiator.

With pages and pages of department detail, there was only one table showing a summary and that of only of the General Fund. Council Member Gherardi said they were drowning in minutia and needed summaries of where they have been and where they are going. None was forthcoming. Director Easley noted that property taxes had been flat for the last few years, but sales taxes were increasing to $2.46 million per HDL forecast. She did not say if there were particular businesses creating the increase or if it was an overall increase across all businesses. Though not discussed, this would be important information if the city had an Economic Development Manager position. She also mentioned increases to pensions and benefits and large utility increases from Edison. It was late, but presumably in the near future the city will look at offsetting these energy costs with solar. Council Member Gherardi said she had many thoughts and wanted to increase staffing for the Public Works Department, which could include an Assistant Director and a permanent Director. The budget as shown was negative $288,857, but with carryovers could become positive $62,132.

To watch the video of the Regular Meeting, click here. The Special Meeting was not recorded. Agendas and packets are found here.

How does this all tie together?

Santa Paula’s inability to fund its Public Safety and/or Fire is not uncommon. The 2009-2010 Santa Clara Grand Jury Report gives an excellent description of the financial problems hitting municipalities. With revenues flattening, yet the cost of employees continues to rise, particularly the cost of benefits and pensions. Employee benefits and salaries are increasing faster than revenues, creating an unsustainable condition. As reported earlier, the city’s General Fund is decreasing with the city depending more and more on grants.

In the adopted budget for the current year, there is a chart showing salaries and benefits for the past five years. The Compound Annual Grown Rate (CAGR) of salaries is 5.1%, but the CAGR for benefits is 7.7%. Remember, that a number growing a 7% doubles in ten years. This means that in a decade, the benefits package will double. This is unsustainable. At what point do cities cry “uncle”? How many tax increases (not a sustainable answer) will citizens accept?

Sustainability means that a system is in balance with the inputs equaling the outputs. Until the Santa Paula Council and all other governmental bodies demand that benefit and pension costs be tied to a metric like a moving average of revenue growth, then cities will just keep cutting services only to pay pensions and benefits. The key, as the Santa Clara Report shows, is a collaborative effort with the labor groups.

A website dedicated to analyzing California Municipal Finance provides data showing various cost metrics. One for Santa Paula is the cost per resident of the Police, Fire and EMS (Emergency Medical Services). The graph below shows the dramatic rise:

cost_resident

With a projection of twelve years before Santa Paula feels the benefit of East Area I, the costs of Police, Fire and EMS will have risen off with chart without action.

We are living longer and retiree health benefits are expected to skyrocket according to the California LAO (Legislative Analyst Office), another source of statistical information. Here is how one community approached the retiree health benefits crisis. This is a case study worth analyzing.

Another site with invaluable data is Transparent California, where one can download individual or municipal salary and benefit data for all employees. For example, below is the salary and benefits information for a fire engineer in the Santa Paula Fire Department. His total pay is $72,108 for 2014 with a benefits package (health, retirement, and pension) of $24,373 or 33% of his Total Pay. His total pay and benefits equals $96,481. Compare that to the average salary of those working, according to the Santa Paula city website, is $34,485.

Clearly, the sales tax increase will give the city a few years breathing room, but as Council Member Gherardi said there needs to be a plan to solve the structural imbalances.

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For more information about the author, visit sheryhamlin.com

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Sh

Re: sales tax increase. Details in link below. The increase is not due to activity, but estimated based on the following article where the State “borrowed” from the cities, now is repaying it …

http://www.lao.ca.gov/LAOEconTax/Article/Detail/55

Sh

Mr Rudman’s full statement … ‘I was going to close this comment suggesting you ask for a refund. Instead, please make sure that we all have access to relevant information as we try to find the best to support public safety in our community.”