I couldn’t believe staffer Brendan Ottoboni had the nerve to propose a discussion about an ice skating rink on the city’s new comments mechanism “Chico Engaged!” He and other staffers told the assembled contractors, landlords and other concerned citizens that the city has no money to fix existing streets, or even maintain them properly. “Chico Engaged” is inappropriate – it’s a way for staffers and others with gain to be made to sprinkle little ideas in the public head – like rainbows and lollipops, and skating rinks. It also gives the public the idea that council is listening – oh yeah, they’re listening, they’re listening to the public being duped.
I had to write a letter about the crazy contradiction between a city that has no money to fix streets or maintain the park but seems to have plenty of money to throw at gimmicks like “Chico Engaged” and ice skating rinks.
At a morning meeting Downtown, Public Works staffer Brendan Ottoboni stated there is no more money to maintain or fix city streets. He said streets that had been on the repairs list for years were being taken off due to lack of funds.
So why would Ottoboni propose an ice skating rink on “Chico Engaged!”?
Look at the agenda for council’s 10/15 meeting – Council will discuss giving management employees a raise while putting a one cent sales tax measure on the 11/2020 ballot. When a city doesn’t even have the money to perform the most basic of services, why even consider giving raises to people already making four times the median income?
Chico has over $138 million in pension liability. Staff recently established the completely restricted “Pension Stabilization Trust”, and this year have transferred over $1.2 million from other funds into the PST. Employees pay 15% or less of “their share,” paying nothing toward the PST. The sales tax increase, a simple majority measure requiring only 51% voter approval, will go into the general fund, available for salaries, benefits, and the PST.
Tax measures are being proposed all over California to fund pension packages that were never approved by voters, made by elected officials who receive donations and other political support from employee unions. The taxpayers even pay for the consultants who guarantee to get the measure passed.
Coincidentally, a tax measure consultant told City of Chico Finance Committee, “We offered them (Heavenly Valley) a skating rink…” and the measure passed.
“Imagine you are a donor to a non-profit organization whose board members receive gifts from employees to whom the board, without your consent, promises retirement benefits. Now the organization is asking you for larger donations to cover surging retirement spending but not disclosing the real reason more money is needed.
That describes the current situation in California as tax increases are proposed across the state to fund retirement promises never approved by voters and made by elected officials who receive donations and other political support from beneficiaries of the retirement promises.”
This is exactly how I feel about the pensions – I was never asked, and I never approved this scheme, but now they hold their hand out to me.
Furthermore, “The state already spends 60 percent more on servicing never-voter-approved retirement obligations than on voter-approved debt obligations…”
I already knew that CARD, for example, spends over half of it’s $8 million budget on salaries and benefits, more if you add in payments made toward their pension obligation. The voters/taxpayers have never been asked to approve the contracts, the benefits, or the “side fund pay-off’s”. Now we are being asked to approve a parcel tax which will be used to float a bond. We are not being asked to weigh in on the bond, the board can decide to go for a pension obligation bond and tie all the parcel tax proceeds up in paying the pensions.
I think this whole process amounts to embezzlement – they’ve admitted to deferring maintenance while making the payments on their pensions. They have their hands in our cookie jar, and we need to slam that lid down good.
“State legislators should require state and local governments, school districts and other public entities to submit retirement obligations to voters for approval and to provide truthful and full disclosure of the real reasons behind proposed tax increases.”
This would only happen if the taxpayers shut down these tax measures and show state legislators we are not going to pay for their mistakes. That is why it is so important to defeat the measures being brought forward locally by Chico Area Recreation District and the City of Chico. We have to stop the gravy train.
Write those letters now. You can write to the CARD board via Ann Willmann and city council via Debbie Presson and ask that your email be forwarded to your elected leaders. Ask that your comments are put on the record.
Let’s have a good laugh, cause we probably need one.
I think that clip is a good analogy of the way public agencies spend money.
Seriously, I’ve been mulling over an article from Edward Ring, a financial analyst, co-founder of the California Policy Center. It’s a good read to get you ready for Halloween. See the link at the bottom of this post.
Okay kids, turn down the lights and let’s sit around in a circle and see who pees their pants first.
“Key Findings”: (1) 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.
According to CalPERS “Public Agency Actuarial Valuation Reports,” over the next six years, participating agencies will need to increase their payments to CalPERS by 87%, from $3.1 billion in the 2017-18 fiscal year to $5.8 billion by the 2024-25 fiscal year.
And that, according to Edward Ring, is a “best case scenario”. This guy could scare the shit out of Stephen King.
“Bartel Associates used the existing CalPERS’ discount rate and projections for local revenue growth. To the extent CalPERS market return performance and local revenue growth do not achieve those estimates, impacts to local agencies will increase.”
Now remember, the actual authors here are CalPERS and the League of California Cities, Ring is just the storyteller, and I’m just repeating what he says. Here’s what I’ll add – Chico is a member of the LCC, in fact, Mayor Randall Stone has held office in the League. So this story is about Chico.
Ring continues his analysis, “The report from the League of California Cities includes a section entitled “What Cities Can Do Today.” This section merits a read between the lines”
You can go ahead and read his full article yourself, at least he’s got a sense of humor, but I’ll tell you what the league said, as it relates to the city of Chico, as well as Chico Area Recreation District.
1 – “Develop and implement a plan to pay down the city’s Unfunded Actuarial Liability (UAL): Possible methods include shorter amortization periods and pre-payment of cities UAL. This option may only work for cities in a better financial condition.”
Both the city and CARD have already done this. For example, in 2015, CARD ignored a consultant’s report that Shapiro Pool could be saved for about $550,000, instead making a $400,000 side fund payoff to CalPERS. The city of Chico has also been stepping up their payments, we’ll get to where that comes from in a minute.
2 – “Consider local ballot measures to enhance revenues: Some cities have been successful in passing a measure to increase revenues. Others have been unsuccessful. Given that these are voter approved measures, success varies depending on location.”
The city of Chico and CARD have been hiring consultants to pursue tax measures since 2012. The common factor is former Chico city manager Tom Lando, who has sat on the board at CARD for over 4 years now, and who has also managed the Feather River Park and Rec District in Oroville. Lando is a pensioner, and receives one of the biggest pensions paid out to a city of Chico employee since the death of his predecessor Fred Davis. Of course Lando Man wants CalPERS to be funded.
Lando was the guy who floated an MOU in the early 2000’s to attach city salaries to revenue increases “but not decreases“. Ring discusses such measures. We’ll discuss that later.
3 – “Create a Pension Rate Stabilization Program (PRSP): Establishing and funding a local Section 115 Trust Fund can help offset unanticipated spikes in employer contributions. Initial funds still must be identified. Again, this is an option that may work for cities that are in a better financial condition.”
Back to #1. Despite claims that they are in poor financial condition, both local agencies have established such programs, and have been siphoning money that should have gone into maintenance and capital projects to “step up their payments” into their pensions. That leads to # 4.
4 – “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.”
That’s where I had to stop reading for about a week, I felt like my blood pressure was going to blow my eyeballs out of my head. This is the evidence, I mean, we all knew it. This is where they admit it. ” revenue growth from the improved economy has been absorbed by pension costs.” We’ve been lied to – the economy has been improving but the public employees have been stealing all the money for their pensions. And now, as Chico Assistant Manager Chris Constantin has been threatening in his presentations, “The next round of service cuts will be even harder.” You know it and I know it – they’ve been screwing us on purpose. Think Bridgegate.
5. “Use procedures and transparent bargaining to increase employee pension contributions: Many local agencies and their employee organizations have already entered into such agreements.”
Ring says, “(reading between the lines) – MAKE BENEFICIARIES PAY MORE. Good idea. The League of California Cities might expand on the feasibility of this recommendation and provide examples of where it actually happened (cases where employees agreed to pay more towards their pension benefits but received an equivalent pay increase do not count)”
Yeah, cases where employees agreed to pay more towards their pension benefits but received an equivalent pay increase do not count. Ann Willmann of CARD and city of Chico management have all been given raises to more than cover their “extra shares”. And now, only now, “classified” CARD employees (management) pay 8%, and PEPRA (essentially, non-management employees) only pay 5.5% of the total agency contribution of 14%. City employees pay confusing shares, covered below.
The Public Employee Pension Reform Act (PEPRA) supposedly requires all employees pay 50% of agency costs. CARD “classic” staff has agreed to pay 1% more. I don’t know why CARD PEPRA employees are only paying 5..5%, they may still be phasing in.
City of Chico employees have a totally different set-up, which confirms that the individual boards and employees have a lot more to say about this arrangement than either Chris Constantin or Ann Willmann will admit.
I asked City Finance Mangler Scott Dowell (formerly with CARD, there’s just so much footsie in local government) what the shares were. According to Dowell, the city pays different amounts for “miscellaneous” (everybody who is not a cop or firefighter) employees and “public safety”, as well as “classic” and “PEPRA”. Pay attention.
While CARD pays 14% total on all employees, City of Chico pays a total of 21% for miscellaneous classic and 20% for PEPRA. For public safety employees (CPOA, IAFF), the city pays 31% for classic, and 33% for PEPRA. The employer/employee split is as follows:
Dowell says the figures above include a 3% share of “employer cost” paid by employees. That’s confusing. That would make the “employee share” less than half the total cost. According to PEPRA, shouldn’t they just be paying half? Why say they are paying 3% of the employer’s share, and it only amounts to half? And, management (classic) make big yaya about paying 1% of “employer cost” – but PEPRA pay less than the employer share? What the heck?
Dowell also said that CPSA (public safety) employees pay 6% of “employer cost”. What? He says that is included in the figures above. You see, both classic and PEPRA public safety employees pay less than half. And that includes 6% of the “employer cost”? What? Look – fire department classic members are paying 12% to the city’s 18.843% (19%). That’s not 50% of total costs. Do they think we don’t know the math?
So that all leads to the POB – pension obligation bond.
6 – “Issue a pension obligation bond (POB): However, financial experts including the Government Finance Officers Association (GFOA) strongly discourage local agencies from issuing POBs. Moreover, this approach only delays and compounds the inevitable financial impacts.”
Both the city of Chico and CARD have said they will use the proceeds from their proposed tax measures to secure a bond. What kind of bond they have not specified, but I don’t know if they need voter approval to do this. Constantin has suggested issuing bonds for road and street maintenance. Whether or not Contantin is lying, here’s Ring’s analysis:
6 (reading between the lines) – GO INTO DEBT TO PAY OFF DEBT. Pension obligation bonds are at best a dangerous gamble, at worst a deceptive scam. The recommendation itself (above) dismisses itself in the final sentence, where it states “this approach only delays and compounds the inevitable financial impacts.”
Yeah, going into debt to pay off debt. I think the old people called that “robbing Peter to pay Paul.”
Ring makes an interesting observation. “Not everyone wants to blow up the defined benefit system,” referring to the CalPERS’ model of guaranteed payouts.
“I think defined benefit is a tremendous opportunity. It can be sustainable. It was sustainable. And then they jacked up all the benefits by 50 percent and made it retroactive — basically doubled liability overnight. Now, they’re not sustainable. Make them sustainable again.”
Look back to #2 – that’s where Tom Lando, in the early 2000’s, pushed through a “memo of understanding”, getting a weak and stupid bunch of council members to sign off on attaching salaries to revenue increases “but not decreases”. That guy is the head of a very foul smelling fish.
Ring is a good read, he’s written extensively on this crises, how we got here, and how he thinks we can get out.
In the late 1990’s, Governor Gray Davis and other union-friendly legislators set up the current pension system, agreeing to “defined benefits”. Public employees had previously been given a “defined contribution” system. The difference being, with a “defined contribution” system, the employer agrees to pay a certain amount, with a “defined benefit” system, the employer agrees to provide specific benefits, no matter the cost.
About 2006 an “MOU” – memo of understanding – was approved by the sitting Chico City Council, with the recommendation of then-city manager Tom Lando, to “attach salaries to revenue increases but not decreases…” Read that again – “but not decreases…”
Does that sound right to you? Think about that – give them raises when we’re flush, but no “adjustments” when we’re bust, just lay people off and cut services. That’s been the pattern in Chico for 15 years now. After Lando floated that turd, his salary went from about $65,000 a year to over $150,000 within a couple of years. His successor came in at $190,000/year.
Council handed out raises of 14%, 19%, 22%, until that memo was outed to the public and the taxpayers started to howl about it. But too late – City of Chico salaries had progressed well over $100,000 for management and public safety, and other salaries were not far behind. Council approves automatic raises in the contracts so the salaries just keep going up. Even though former city manager Dave Burkland agreed to take a lesser salary than his predecessor, our current city manager now makes over $200,000/year. Add his benefits package and he is taking almost $300,000.
When the public found out about this scheme the city dumped that revenue-based raises mechanism, but came up with something better – “the employer paid member contribution.” That meant, the city not only paid a share of the employee’s benefits, but paid a portion – in some cases the entire portion – of the employee’s share as well.
This finally ended a couple of years ago, when, under intense criticism, those staffers – public safety and city management – agreed to pay their whole portion. And, hold onto your hats – about a year ago, these people even agreed to pay 3% of the “employer share.”
Excuse me, my hat didn’t even jitter on that, because that makes the employee’s total share less than 10 percent. Anybody who has been a member of CalPERS for 15 years is a “classic member” and pays only 6%, plus that extra 3% – 9%, for a pension of 70 – 90 percent of their highest year’s salary is absolutely RIDICULOUS.
Meanwhile, the employer share has increased and increased, not to mention, the employer is making altogether separate payments toward the deficit, by way of the newly established “Pension Stabilization Trust.”
So, I imagine you saw this article in the paper recently.
This article gives a good historic overview of how the pension deficit has grown. I call it “rabbit math” – first they based the contributions on the employees’ salaries, and then they jacked up employee salaries.
I wonder how many other cities in California used Tom Lando’s ploy of attaching salaries to city revenue increases and then going on a development binge. When overdevelopment finally tanked the local market a few years later and revenues plunged, the salaries, benefits, and automatic raises, stayed in place. Salaries got higher no matter how revenues dipped for Chico. And the pensions and city contributions are based on the salaries.
Getting dizzy yet? Maybe a little pissed off? Well this is where we’ll close and pick it up again tomorrow.
I saw Patrick Newman’s letter calling (jokingly I assume) for a limit on letters about President Trump. I had to laugh – there have been letter writers, and probably requests made to the editor, to limit Newman’s letters. People have contacted the editors of both the ER and the N&R asking them to stop printing my letters. Some people only want to hear stuff they agree with, that’s nothing new.
I have to agree with Newman’s assertion that people need to pay more attention to what’s going on locally. Not that federal matters are not important, but I feel a person can have more effect locally. And, as citizens become more powerful in local affairs, those localities become more powerful and have a bigger effect statewide, and eventually nationwide.
I think excessive taxation is becoming a huge problem in Butte County, and the state of California, I wish more people would wake up and act. In the city of Sacramento, taxpayer groups who supported their sales tax Measure H quickly realized the funds weren’t being used as promised – too late, they’ve already approved the tax, and Mayor Darrell Steinberg has proposed even more taxes as a result.
I think the root of excessive taxation is incompetent, insubordinate public employees who have fostered a negative and hostile environment for the rest of us. Their salaries and perks not only raise our taxes, but the salary imbalance makes a normal middle class lifestyle unaffordable for the rest of us. These public salaries raise the price of everything from housing to groceries to healthcare. How can the family living on $43,000/year compete with public employees making in excess of $100,000/year? Especially when we are on the hook for their outrageous healthcare and pension packages.
Here’s an irony – most of us get by with catastrophic care, with huge co-pays, packages that won’t get us into a lot of hospitals. Hospitals and doctors can actually refuse our insurance. Meanwhile we fund “defined benefit” health packages for public employees that guarantee them the best of care at top hospitals.
What’s your retirement plan? Die? Well, as long as you live, you’ll be paying pensions of 70 -90% of $100,000+ public salaries. Our city manager, in his 50’s, is already making over $220,000 a year – do the math – if he retired tomorrow we’d be paying him $154,000/year, plus cost-of-living-adjustments, for the rest of his life. Unfortunately I’m afraid he has quite a few more years of self-service left in him, especially since he has what amounts to automatic annual pay raises based on a percentage of his salary.
Currently more than 100 city employees receive salaries of $100 – 225,000/year. Another 25 make $90 – 99,000/year. These folks pay less than 10% of their pension cost, they want us to pay the rest in the form of a 1 cent sales tax increase. They say the money will be dedicated toward streets and safety, but even if they are sincere here, that just loosens up other money to be transferred into the Pension Stabilization Trust. And who can believe what they say when they promised to fix the streets with the trash tax but have instead transferred it into the General Fund?
So we have a sales tax increase measure from the city of Chico and a parcel tax coming from the Chico Area Recreation District. Two regressive taxes aimed at the same population, neither agency having any concern for the economy.
Newman is right – get involved locally. There are a lot of meetings, scheduled at different times, at which you can not only learn more about how these agencies operate, but you can get into the conversation. Check out the schedules and agendas at these links:
Already July! Fourth of July travelers are on the highway – I wonder if they noticed, the gas tax went up today.
Something nobody seemed to get about SB 1 – the gas tax increase instituted by the state legislature in January 2018 – is that it allows the legislature to raise it at will, no input from the voters.
Honey, that’s called TAXATION WITHOUT REPRESENTATION.
It could get worse – in May, Assembly Constitutional Amendment 1 was ordered for a third reading, not yet scheduled. ACA1 lowers the voter threshold for [the following italicized portions have been added to the original text] “Bonded indebtedness incurred by a city, county, or city and county city and county, or special district for the construction, reconstruction, rehabilitation, or replacement of public infrastructure or infrastructure, affordable housing, or permanent supportive housing for persons at risk of chronic homelessness, including persons with mental illness, or the acquisition or lease of real property for public infrastructure or infrastructure, affordable housing, or permanent supportive housing for persons at risk of chronic homelessness, including persons with mental illness, ” from 2/3’s to 55 percent voter approval.
Why? Because it was hard to get 2/3’s approval from the taxpayers. So they are changing the rule. What kind of crap is that? Should the legislature be able to just change the constitution without a vote of the people?
Furthermore, do you really think it’s okay for 55 people to tell the other 45 that they must pay a tax for programs they don’t want to support? I think that’s mob rule, and it’s divisive. A community should agree on stuff, not be subject to the loudest bullies in the group.
The bar at the top of the page includes the history of the bill, current status (waiting for a third reading), and who voted how. So far it’s been through the Assembly Local Government Committee, and the Assembly Appropriations Committee. I don’t know where it goes next, but I’m watching this page.
So, this week, when you are trying to enjoy various events, try to remember why we celebrate this holiday. Do some homework, learn something about the process by which they steal your money and ruin your community.
I’ll tell you what my family did to start the week off right – we watched “Vice”, the 2018 movie about Dick Cheney. Sure, it’s silly and fantastic in places, but it tells, factually, how our government works, and why we have to be on top of our politicians.
And then we watched the Nixon movie, “Dick,” which is the best telling of the Watergate story I have ever seen. I was 12 years old when the Watergate story broke in the newspapers, I remember that was the first time my parents didn’t know all the answers. People were stunned, because they knew nothing about how much power the president really had. They thought we dumped the king back in ’76, but they were wrong.
I was using the May 9 issue of the News and Review to wipe out the inside of a peanut butter jar (another time, another blog…) when I noticed an editorial I hadn’t read. It was offensive to see that these “journalists” are still pumping the city’s bullshit about being overwhelmed by the Camp Fire evacuees. That is one of the Big Lies they are using to get a sales tax increase, and I’m sick of hearing it from both the print and tv media. We have no journalism in Chico.
So I wrote a letter about it!
(“Chico needs a lifeline” 5/9/19) Chico has not grown by 20 percent in the wake of the camp fire. Like I said in my last letter, the figures the city is using to support the assumption that Camp Fire evacuees are placing a strain on city services are all estimates.. Go out at rush hour – the traffic impacts we suffered in the weeks immediately following the fire were temporary. Today there are over 200 houses for sale within the city. Housing prices spiked remarkably immediately following the fire because desperate buyers were very competitive, but prices are now back to 2017 levels.
The city’s financial problem is the pension liability. Ask public employees to pay more of their own pensions. For example, the city manager gets over $225,000 in salary, over $80,000 in benefits, and 70% of his highest year’s salary in pension at age 55. He pays 11% of his salary toward that pension. The taxpayers are asked to pick up the rest of his tab, including an IRC 457. If he is sincere about “living within our means” he needs to pay more of his own pension – new hires pay 50 %, why are “classic” employees still paying so little?
Join the conversation at chicotaxpayers.com
Juanita Sumner, Chico
I wish some of you would write – I know there are those of you out there who think they can’t write letters. All you have to do is arm yourselves with the facts, the letter will write itself.
