Chico City Council forwards two new taxes to Fin Comm for consideration, but fails to discuss Pension Obligation Bond

5 Mar

Tuesday night (3/2/21), Chico city council took on an agenda packed full of troublesome items, but didn’t end up discussing all of them. One item casually left out was the Pension Obligation Bond that staff has been pushing forward since 9/23/20. But, council did take up Mayor (really?) Andrew Coolidge’s proposed “sales tax for police and fire” and “bonds for roads”. 

I thought it was strange that those two items were combined, but it got even stranger during the discussion. Coolidge made a brief introduction – since he’s the horse’s ass who is suggesting two new taxes, he figured it should come straight from him. “our roads are in horrific shape…” despite the fact that “each year we’re spending $3 – 4 million… they are still failing…” 

Yes, that sounds about right, the city spends about $3 – 4 million on our streets each year. But I’ve been to the meetings – a lot of that money comes from very specific state and federal grants. And, it’s not usually maintenance – a lot of times it’s a new bike trail, or an experiment like they are currently conducting with the street lights on Esplanade, or enhancements for new subdivisions that developers paid (?) for. 

Meanwhile, Staff spends at least three times as much toward their burgeoning Unfunded Actuarial (Pension) Liability”. This year Scott Dowell reported paying $11.4 million in “catch up” payments to CalPERS – that’s IN ADDITION to the payroll amount. 

UAL 101: Staff makes two different payments to CalPERS toward the pensions, the payroll amount, and the “catch up” amount. The payroll amount includes the petty 9 – 15% “employee share”, and goes toward the “base” of the debt. The catch up payments are “allocated” out of each department, and include NO EMPLOYEE CONTRIBUTION. “Catch up” payments go toward the unfunded liability, which is created by the abysmally and completely unrealistic and unreasonable “employee share.” 

I just wanted to make that clear.

Mr. Coolidge immediately went about making a motion that these items be sent to the Finance Committee for vetting. The conversation that followed was so confusing I had to re-listen several times.

Coolidge does not seem to remember that the city hired and paid a consultant (EMC) to explore the various nuances of a sales  tax measure. He wants to start that conversation all over again, and I’ll tell you why. The first conversation did not include the prospect of the Pension Obligation Bond. Cause see, that’s what this is all about – they need some new revenue sources to secure the incredible debt they will be taking on with that POB. 

The size of the sales tax increase, Mr. Coolidge opined, “it’s open for discussion… what size bond and what percentage of that sales tax would go for a road bond…”

So, are you hearing that? At the beginning of the conversation, Coolidge very clearly asks for a “sales tax for police and fire…”, but as he winds along, he admits, the sales tax increase will be used to secure the road bond. 

Or does he mean the Pension Obligation Bond? The whole conversation that followed was very confusing, and I felt several members of council were also very confused.

For one thing, Brown is confused between a “special” tax and a “general” tax, and had to have this explained to her. For another, the entire council seems to be laboring under the popular misconception that just because a tax requires 2/3’s voter approval, that it is “special” – designated or “dedicated” to a specific purpose. For example, CARD Measure A, defeated just last March, was a 2/3’s measure that would have been spent at the discretion of the CARD board.

It is all about the wording of the measure. As explained to me by Attorney(!) Rob Berry, “Measure A and sales tax are two different things.  I’m talking sales tax, which has not been written yet.  Measure A is general revenue, but because it is a parcel tax, it requires 2/3.  It is written to leave them broad discretion.  That is different than a special sales tax written to tie their hands as tightly as possible. ” 

Berry added, “You can write a requirement that no general fund line item can be reduced to be funded by this tax, that way preventing them from cutting the general fund expenditure for roads and police for example, and paying the whole thing from the new tax.  It must be IN ADDITION to existing budget line items.”

Brown made it clear that she wants a General Tax, that can be spent at the discretion of council. This led Coolidge and new-found friend Scott Huber to make amends to their first motion. Huber suggested, “the finance committee will discuss the possibility of taxes or bonds for fire and police and roads…” Coolidge added,  “any configuration of those…” 

This seems to leave the door open to just about anything. I felt they were pandering to Brown, and I think they all want a measure that can be interpreted loosely. But they forwarded the motion anyway. Denlay, saying she wanted more budget information, ABSTAINED. Why didn’t she just vote NO? HUBER: YES MORGAN: YES  TANDON: YES REYNOLDS: YES COOLIDGE: YES BROWN: NO 

Morgan and Reynolds both made very limp-wristed statements about wanting to vote no, then quickly voted yes. 

I’ve followed the conversation since Staff brought forward the POB last September. The consultant Mark Orme hired made it clear they would need an additional revenue source to guarantee the POB. And here we are!

Expect this conversation to go as underground as the POB conversation has gone. While they can’t put any tax measure on the ballot until November 2022,  I fully expect council, under the direction of Svengali Mark Orme, to implement the POB within the next few months. And then they will pursue both a bond measure and a sales tax measure that will be used to secure the POB, not to fix streets or hire more cops or firefighters. A POB would put the taxpayers PERMANTLY on the hook for the pension deficit, employees will never pay a rational share, and our economy will tank. 

Unless we put the heat on them right now. And hard. Reynolds, Huber and Brown are all up for re-election in 2022.

 

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