Healdsburg Postpones Decision on Sales Tax Ballot Measure

NOTE: This story was updated at 1 p.m. on Tuesday, May 1, 2012, to add the text of Bruce Abramson's letter to City Council presented Monday night, April 30.

Healdsburg City Council agreed Monday to wait three weeks before voting on whether to place a measure on the November ballot.

"I believe we will o have more information on what it will look like," said City Councilman Jim Wood. "I want to know where we're at when we're done with [labor union] negotiations."

Mayor Gary Plass said "wants to get more information before we pull the trigger."

Prompted by critics who said the city hasn't yet proven its case as to how the sales tax increase would help correct the city's budget problems, Council asked City Manager Marjie Pettus to prepare a report for the May 21 public meeting to include more details.

Those would answer a series of questions on employee compensation, pensions and other spending that critics such as resident Bruce Abramson said Monday were not clear.

"They really need to answer these basic questions for the public and then the public can judge whether the city has done a thorough job checking it out," Abramson said. "That's all I really wanted."

Abramson, a former city parks and recreation commissioner, is among a group of Healdsburg leaders who posted n Healdsburg Patch and other media in recent weeks. City leaders responded with an in addressing the issues and have plans to do a lot more.

Abramson said he would like to see exact numbers for the current year's budget deficit, and projected deficit for 2012-13.

"The city has not provided the residents with information about constantly increasing employee compensation, which includes salary, benefits, pension, COLAs, etc," he said. "The public does not know the magnitude of these annual increases and what it means to our budget."

Abramson said he can't support the sales tax increase until more details are released.

"The city has not made compelling arguments thus far how this proposed sales tax measure will correct long-term pension, benefits and financial issues," Abramson said.

Plass said the city was dealing with a "perfect storm" of lost redevelopment funds combined with a collapsed real estate market and general economy slump causing declining sales tax, transient occupancy tax and property tax revenues. Those losses have created an expected $1 million deficit in the city's general fund budget for 2012-13.

While the city can raise fees to generate revenue for its enterprise funds, such as electric and sewer, it has little control over generating new income in the general fund, which pays for police, fire and other city employees.

"As a council we will have to decide on an acceptable level of service for our community," Plass said. "No matter what we do to balance the budget, it's not going to solve the structural deficit."

A half-cent sales tax increase from 8 percent to 8.5 percent would generate about $1 million in revenue, according to city Finance Director Heather Ippoliti. City residents said in a poll earlier this year they would support the increase if it went to pay for public safety and for road and street repairs.

Plass said the sales tax increase wouldn't solve all the city's problems, but "from what I heard over the weekend, it's a lot more attractive to many people than he said. A proposal to install parking meters in the downtown area will be discussed at a public meeting at 6 p.m. May 10.

The city also has a $26 million shortfall in its pension fund. Since pension benefits are negotiated in union contracts and since pension programs are controlled by the state through the California Public Employees Retirement System, the city is also limited as to what it can do to make any changes.

"PERS is a large beast that's hard to tame," Wood said. "It's impossible to make changes, it's hard to get information and it doesn't play in the sandbox very well."

The city will also re-think a potential parcel tax ballot measure to fund maintenance of the A question in a poll earlier this year asked if people would support a $29 annual parcel tax plus $460 one-time flat tax per parcel. Bridge supporter Mel Amato said that question was "begging for a 'no' answer."

Amato said the city, which has 4,600 parcels, could eliminate the $460 flat tax, reduce the annual parcel tax to under $20 -- and still finance the bridge maintenance.

"You don't fund capital improvements with a one-time tax," Amato said. "You spread it out over time."

Pettus said she would provide on May 21 a "best case" and "worst case" scenario from the police and fire labor union negotiations currently in progress.

Debra Nelson, a police department staff member, said city workers have already realized the equivalent of a 25 percent pay cut in recent years by not taking negotiated raises and by not receiving cost of living adjustments. In addition, many workers pay a greater portion of their own retirement and medical benefits, she said.

Wood said while the budget issues were large, "the bottom line is that the sky is not fallling in Healdsburg," he said. "We're in better shape than most.

"The difference is we know that if we don't do something now, in a few years we'll be in trouble," Wood said. "We're just trying to be proactive."

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Here is the text of Abramson's questions/concerns presented Monday night to City Council:

I have lived in Healdsburg for 23 years and I have voted in favor of the school, hospital, and city capital improvement bonds.   I am not for this measure for the following reasons.

1.      The City has not completed negotiations with the unions, and the resulting cost savings if any.

2.     The City has not indicated the exact deficit for the year ending 2011-2012.    They have not indicated what the proposed budget and deficit might be in 2012-13.    The public does not know specifically how they are going to correct these deficits.

3.     The City has not provided the residents with information about, constantly increasing employee compensation (which includes salary, benefits, pension, COLA’s etc.)   The public does not know the magnitude of these annual increases and what it means to our budget.    Will we always be in deficit or what specific corrective actions can be taken?

4.     The City, in their Part I and II responses to our commentary, has not specified going how revenue enhancements, department re-alignments, and cost constraints will help get back to the “black” again for our budget.

5.     Finally, the City has not made compelling arguments thus far, how this proposed sales tax measure will correct LONG-TERM pension, benefits, and financial issues.

Does the public know that benefits represent 72% of wages in the general fund for 2011-12?    Does anybody care?   Pension benefits represent approximately 44% and benefits approximately 28%.   Generous pension and benefit concessions made during more prosperous times simply cannot be maintained with these current deficit situations.

I put out copies of the City’s pension and benefit program for the public to see exactly who gets what, or pays for what. 

1.      Police, IBEW, Management, and Mid-Management unions have stepped up to the plate and are contributing 8% to employee pensions.   Fire is only paying 2%. 

2.     On medical benefits, police and fire do not pay anything,  while other unions pay 10%. 

3.     All unions have no COLA increases in their contracts.  But again, fire has received 5% increases for the past 3 years, while the City has been under financial stress. [Ed. Note: Debra Nelson said Monday night that that the fire department declined their negotiated raises for two of the three years of their contract].

The City had made some cost improvements on some of these pension and benefit plans, but it has been a mixed bag, and more needs to be done.  

Other perks should be reigned in such as longevity pay, bilingual pay, 100% dental and vision and life insurance, and car allowances.   Perhaps the Council can take a leadership  position and pay 10-20% of their medical plans, as an example to other employees. 

I request the City to respond specifically to the 5 areas of concern I mentioned above.     I believe the City needs to make changes to these employee compensation packages to show the public that they reflect private sector compensation packages. 

Once all of these avenues have been addressed in detail, then they rightfully can come to the public and seek a sales tax increase.    Until such time they do so, I am not for this proposed sales tax increase.