The city of Chico already has their hand in your wallet/purse, and what have you got to show for that? And now they want more sales tax?

11 Jun

About a month ago I realized the city would have to move forward with their sales tax measure, that the deadline was approaching for them to turn it over to the county clerk for the November ballot. My husband reminded me that school would be out soon, with Memorial Day on the horizon, so we decided to take our last swipe at a vacation before the roads became clogged and gas prices went any higher, and before I got distracted with various election issues.

We went up to Portland to see relatives. Oregon is strange country. You drive over the border into the State of Jefferson, and the signs change immediately. Within a mile, “FUCK BIDEN” speaks prominently, in bold, capital letters, from barns, sheds, dead tree stumps – big, professionally made signs, you bet. The Oregonians are willing to spend money declaring their dissatisfaction with the federal government.

Then you get to Portland, where they seem to love the government. They use public transportation, they embrace high-density living, and they pay car registration fees based on the fuel efficiency of their car. To me, that’s like showing a stranger your panties.

I’ll tell you where the Oregonians have the right idea, they are one of only five US states that have NO SALES TAX. (the others being Alaska, Delaware, Montana, and New Hampshire).

I’ll be honest, I have never understood sales tax. To me, it’s a blatant, “in your face because I can... ” TAKING. It’s a shake-down, a racket. We already pay fuel and car taxes for the roads, which are embezzled away to pay for bike trails and trains to nowhere. We already pay developer fees on our homes, and then property taxes, which are directed not only into the pensions but into the pallet shelters, the cooling tents turned shooting galleries, and the constant state of emergency that is created in a town where certain people are not held responsible for their behavior. Pay a sales tax to a government that does nothing to secure your safety or even the safety of the supply chain? That’s a racket, wake the hell up. Why don’t you just go Downtown and give your purse/wallet to the first creep that holds his hand out?

Of course BC opined recently that “If you want perfect streets, perfect parks, top notch City services with free candy for the kids and a well functioning municipal government, you have to have lots of money. That is a tax increase.”

Well, I saw all those things in Portland. I might have to post a blog about the parks I’ve seen there, city parks, gorgeous. Incredibly maintained natural areas, restored forests and marshes. The streets, even in my son’s older, high density neighborhood, are in perfectly good condition – no potholes that void the warranty on your tires. You can walk the length and breadth of the city on safe sidewalks. Portland also has a state-of-the-art sewer system, integrating their old sewer system with new technology.

Free candy for the kids? Well, I don’t know why I’d want that, but what they do there is “food truck courts”. They have solved that problem with restaurants and food trucks, by designating a city-owned parking lot, located away from “brick and mortar” restaurants, for food trucks several nights a week. They’ve furnished tables and a little plaza, family-friendly setting where you can get a cheap meal, hang out with friends, from a different truck every night.

Did you know, Chico City Plaza was set up for food trucks, with electrical outlets and specially-built curbs to pull in the trucks. But it has never been used for that. In fact, the last time I looked, the fee schedule for Downtown Plaza was really onerous. That’s why Chico Farmer’s Market would not locate there, insisting instead on making a pretty behind-closed-doors deal with Chico City staffers to use the city parking lot instead.

BC is arguing an old line – give us the money or it will get worse. The city of Chico has admittedly deferred services and infrastructure maintenance for years, while paying increasing payments to CalPERS. In 2018, the California League of Cities, of which Chico is a long time member, released a report saying, in part, “City pension costs will dramatically increase to unsustainable levels, (2) Rising pension costs will require cities to nearly double the percentage of their general fund dollars they pay to CalPERS, and (3) Cities have few options to address growing pension liabilities.

The report first suggested creation of a pension stabilization trust – a fund dedicated to pensions. The next suggestion was a revenue measure. Followed by this dark advice: “Change service delivery methods and levels of certain public services: Many cities have already consolidated and cut local services during the Great Recession and have not been able to restore those service levels. Often, revenue growth from the improved economy has been absorbed by pension costs. The next round of service cuts will be even harder.” In other words, starve the taxpayers for services and they’ll pass your revenue measure.

Since 2018, we’ve seen the institution of two dedicated pension funds, meaning, they can only be used to pay the pension deficit. Those funds are siphoned from every department, ahead of any infrastructural or service needs, just TAKEN. They are used to make the annual “catch-up” payments to CalPERS, which are growing every year, millions of dollars taken from infrastructure, public safety, and every day services like development support

Ever wonder, why is housing getting so expensive when they’re building like crazy? Well, that’s because every few years they raise developer fees, which are essentially a tax, and which drive up the cost of housing, no matter how much you build.

The city of Chico has a lot of taxes you might not know about. The garbage “franchise fee” (trash tax), the cable “franchise fee” (tv tax), PG&E franchise fee (PG&E tax, which does nothing to secure our safety from wild fires). There’s some you might have forgot – look at your utility bills, how much are they shagging you in “local” or “Utility User Tax”? The city raises no protest when Cal Water or PG&E raise rates, because it means MORE UTILITY TAX. There are some I’ve probably forgot here, suffice to say, the city of Chico already has their hand in your wallet/purse, and there you are, being asked for an increase in Sales Tax?

There it was, in last Tuesday’s agenda. Here’s the report:

There’s your homework. Let’s talk about it next time.

4 Responses to “The city of Chico already has their hand in your wallet/purse, and what have you got to show for that? And now they want more sales tax?”

  1. Dave June 11, 2022 at 4:50 pm #

    I haven’t had time to go through the 2021 ACFR report and the reports from prior years (when they were called CAFR), but did find these interesting tables from the 2021 ACFR report https://chico.ca.us/sites/main/files/file-attachments/1_2021_chico_city_acfr_-_signed.pdf

    See https://ibb.co/2vh3cY3 and https://ibb.co/4S6dDPs

    Strangely, it says these numbers are unaudited. (Then why are they in the report?) So I am assuming the real numbers are worse. (Any experts in municipal finance out there who can tell us what is going on?)

    Anyway, it says the unfunded pension liability is 144.5 million dollars (combined safety and non-safety employees) and that’s assuming the pie in the sky CalPERs future return rate. And the unfunded pension liability is growing (and when the stock market collapses again it will be much worse). The numbers go back to 2015. (And remember, none of this includes the unfunded healthcare costs.)

    Yet in the same period the City’s revenue went up nearly 40%. See https://ibb.co/yfZ3hSr

    Even with that and near record stock prices up to the end of that reporting period the pension deficit went up 45% since 2015. That shows you that no matter how much money the City Council takes it will never be enough.

    NO ONE on the City Council is mentioning any of this and certainly not mentioning that the only answer is to reform the unfunded liabilities.

    Also, NO ONE on the City Council mentions that they will use the sales tax increase to float a bond that will get us hundreds of millions more in debt. And much of that sales tax money money siphoned into the bond will not go for the streets, more cops or even the pensions. It will go to Wall Street for interest and fees. For example, CARD’s failed tax increase also included a bond and for every 3 dollars of the tax applied to the bond, 2 dollars went for interest and fees.

    Why is it that NO members of the City Council mention ANY OF THIS?

    Because instead of spending our money wisely and fixing the unfunded liabilities, they are doing all they can to take more of our money and get us deeper into debt to satisfy the special interests – the people they really represent, not us.

    This tax increase and massive new indebtedness is just an effort to kick this untenable financial situation down the road a few more election cycles when they will be back for more tax increases and debt. You can count on that because that’s what has happened with every city that takes the approach of tax increases and more debt instead of solving financial problems.

    But isn’t solving these problems what they are elected to do? Of course not. Their job is to satisfy the special interests.

    • Juanita Sumner June 12, 2022 at 6:39 am #

      “That shows you that no matter how much money the City Council takes it will never be enough.”

      Yes, you’re right, the deficit just keeps going up because they keep giving themselves raises and creating new positions. Orme created three new positions at over $100,000/year, that I know of.

      And isn’t that funny – we found out about the CAFR, so they changed the name to ACFR? Yeah, that’s the kind of people we’re dealing with – liars, cheats and thieves, it’s like WWE.

  2. BC June 16, 2022 at 12:35 pm #

    When it comes to understanding Municipal Finance in Chico, there is the CalPERS Pension cost, and there is everything else. If you understand this one issue, the (lack of) funding of every other budget item becomes very clear.

    The current City Manager says this: Hahn says, “the largest financial challenge is increasing contributions to CalPERS retirement benefits.”

    Here are the (very) oversimplified basics for taxpayers to understand.

    The City of Chico has an “Account” at CalPERS. City employees and taxpayers contribute to this account every year. CalPERS invests the money and assumes that they will earn over 7% per year, every year, compounded, after all fees and charges.
    If all of these factors are computed correctly, the “Account” will have enough money to pay the retirement pensions of the City employees.

    Today, the “Account” is about $150,000,000 short. That is One Hundred and Fifty Million short. As the current investments of CalPERS are down about 20% +/-, the Chico “Account” is more likely to be $200,000,000 short.

    But it’s actually much worse than that. The $200 million that you don’t have in the “Account” was supposed to earn 7%. At the end of the year, you are $214 Million short ($200 + ($200 X .07)) =$214 million. The shortfall is called the unfunded liability.

    The “Account” must be funded to pay the contractually obligated pensions. The question is the “Account” going to get funded?

    Investments will not fund the missing $150 million. If the account was fully funded, the 7% investment return target might be reasonable. But since the account asset base is underfunded, the smaller investment base would need to earn 20%+/- over time to do the job. Keep in mind that the S & P 500 compounded at 17.8% from the financial crash in 2009 until COVID, and we are still in this hole.

    City employees will not make any contribution to the underfunding under current contract. The deductions from the city employees pay is the amount needed to pay the CURRENT value of future benefits. It does not reduce the PAST cost of any underfunded debt.

    These numbers are from the City of Chico Annual Comprehensive Financial Report for the Year Ended June 30, 2021. See section 11, PP 61-67.

    Inactive employees or beneficiaries receiving benefits 603
    Inactive employees or beneficiaries entitled but not yet 265
    receiving benefits
    Total non-contributing but will receive benefits 868

    Current employees contributing 357

    Summary. You have an account with 357 paying in, 868 taking out, and the account its $150+/- million in the hole.

    Which finally brings us to the matter of the City Sales Tax increase. Funds in the general account of the budget are Fungible. They can be moved, allocated, and spent without any further oversite.

    The ballot measure may say that the intended use is general purposes. The ballot language will imply that the funds will be used to improve many quality-of-life issues: cleaner parks, nicer streets, more services, more classes for the kids. There may be some games at the budget level, but the money from the tax increase will end up in pensions.

    The proposed sales tax is on current residents, to pay debts that they City ran up in the past.

    Why, when the budget has been managed this poorly, would you give the City more money?

    • Juanita Sumner June 17, 2022 at 6:38 am #

      Thanks BC, nice summation, and I would have to answer NO.

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