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Mark Orme’s sales tax increase measure: With salaries well in excess of $100,000/year, the people who really make and implement these decisions are well-insulated from any negative impacts. In fact, they directly benefit from any increase in taxes

6 Jan

Here’s another letter writer who does not support the city’s sales tax increase measure. From the Chico Enterprise Record:

Don’t trust this council with more money

As a current taxpayer in Chico,, I do not support the proposed sales tax put forth by the city council’s conservatives. They already can’t manage the current city budget, what makes them think they can take on more responsibility? For example, millions of dollars are spent on Chico PD “overtime” pay and for Chico Firefighter’s “disability claims” right before they retire. They need to do a better job of examining loopholes and the exploitation of city funds by these groups.

This city does not need more money: what we need are people who know how to manage city funds in ways that actually support the community and address issues such as homelessness, poverty, climate change, etc. — Alicia Trider, Chico CA

I’m so glad this person is familiar with the police and fire contracts. People need to read this stuff, we are on the hook for it. The cop and fire contracts are very generous, I’ve written here about it many times. Here are a couple of posts from last year that proved very enlightening:

Q & A for your district rep: What is CTO?
CTO = “compensated time off”
Take a cup of OT and add a cup and a half of CTO, pour in some STO, and you get an IOU
Look at the calisthenics these people go through to spike their last year’s earnings and, subsequently, their pensions.

I don’t know if Trider actually read the contracts, as I have many times, but if she did, she’d find all kinds of stuff that just raises the cost of public safety for no other reason than PURE GREED.

Trider goes on to list her priorities, which put her at 180 degrees from previous letter writers. So, this sales tax measure has already raised hackles on both sides of the aisle, as I expected. The skating rink also raised hackles on both sides of the aisle, as did using taxpayer money to hire a consultant to push the measure. So far, Staff and Council seem to be putting their foot in their own doo-doo at every turn. In fact, I’d say, Council keeps stepping in Mark Orme’s doo-doo.

A tax increase is a negative for everybody – business owners and consumers are connected at the hip. Businesses need healthy consumers, and consumers need healthy businesses. Raising taxes eats people’s “disposable income,” and that means less money to spend to support local businesses. I’m not threatening to leave – think you’re gonna get rid of me that easily? I’ll just take my business elsewhere. In 2012, when disgraced ex-city-manager Brian Nakamura and despicable ex-city-manager Tom Lando initiated this conversation, I discovered online shopping, and I love it. I also enjoy a trip to Oregon now and then, where they have NO SALES TAX.

Well, I should say, this measure would be a negative for almost everybody. With salaries well in excess of $100,000/year, the people who really make and implement these decisions are well-insulated from any negative impacts. In fact, they directly benefit from any increase in taxes.

Write to your district rep, include the whole council, ask them to pull out of this dive before it’s too late.

If we allow the city’s sales tax measure to pass, the taxpayers will be on the hook for the outrageous pensions and benefits forever

3 Jan

A couple of letter writers weighed in recently on the proposed sales tax increase measure our city manager and council are moving toward the ballot. I don’t want to get too confident, but I’m starting to wonder if this measure will be the slam dunk the city is hoping for.

From the Enterprise Record:

More jobs, no tax increase
Here’s a novel idea. Have Chico’s “less fortunate” get jobs and become self reliant (like the rest of us) and we won’t need a city sales tax increase.— Jeff Saine, Chico

Long time local newscaster and well-known meteorologist Anthony Watts included the measure in his 2022 predictions:

Forecasts for 2022
No. 1: The legislature will pass and Gov. Gavin Newsom will sign an “exit tax” on people leaving the state for a better life. They’ll tax U-Haul, Ryder, Bekins, United Van Lines, etc. on any out-of-state move contract. This will create a black-market for clandestine movers. It will also create a reverse “Grapes of Wrath” effect; people loading up their vehicles and leaving the state to escape the “great depression” of California.

No. 2: State sanctioned theft of electricity becomes the new normal. On Jan. 27, 2022, The CPUC will approve the new NEM3 system that will create the highest solar tax in the country and hugely reduce the bill credit solar customers get for selling electricity back to the grid. It also imposes new fees for the “privilege” of connecting to the grid. NEM3 will pay 25 cents on the dollar per kilowatt-hour of electricity generated by home and small business solar owners, where under NEM2 it was 95 cents on the dollar. The result; a huge drop in installed solar on existing homes, and black-market electricians to wire solar to directly power homes instead of the grid.

No. 3: “Climate change” will be blamed for Nos. 1 and 2. Newsom and/or some idiot lawmaker will say “climate change” is the real reason people are leaving the state, and “climate change” is the reason we must steal electricity from your solar panels without fairly compensating homeowners.

No. 4: If it makes the ballot, the proposed 1% sales tax in Chico will fail spectacularly in November.— Anthony Watts, Chico

I’m fairly certain this measure will make the ballot, but I’d like to believe it will fail. Now that the city is hiring a consultant to peddle it, it’s up to us to make sure the voters get both sides of the story. Important facts have been left out of the media interpretations of this measure – most important, staff and council members have already talked about using the revenues from this measure to secure bonds, including a Pension Obligation Bond. Bonds are permanent debt. As of now the city has no bond debt. The only real obligation against the city is the pension deficit, and who’s responsible for that is negotiable. If we allow this measure to pass, we’ll be on the hook for the pensions forever.

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Please write to Howard Jarvis Taxpayers Association and tell them we need their help with this illegal bond Staff is trying to shove down our throats

2 Jun

Well, the cat is out of the bag – the city of Chico is trying to foist an illegal bond on us without taking it to the ballot. Howard Jarvis Taxpayers Association has sued both the state of California and the SoCal town of Simi Valley and stopped them in their tracks, Simi Valley council voting unanimously to rescind their POB just last year.

Other towns have gone through with these bonds, because nobody stood in their way.

So yesterday I wrote a note to the HJTA office in Sacramento – that’s info@hjta.org I simply told them my city is taking a POB to court for approval, and asked them how I can stop that.

And I’m asking others to do same. Please write a quick email to HJTA and tell them you would like more information about stopping your city from issuing Pension Obligation Bonds. I’m afraid my little email won’t catch their attention. These people are busy with a lot of requests, we have to get on their radar if we want to get help with this illegal tax.

I also wrote an email to District 3 council member Kami Denlay, because she was the only council member to vote no when Staff brought this bond forward, telling me she thought it should go before the voters. I sent her links to the story about Simi Valley. I asked her what court Staff is taking the bond to. She responded,

“I will double check the details for you this evening. When I previously asked about this I was told that legal counsel was taking it to court to check our legal ability to pursue the bond. I did not receive a lot of detail, so I will be happy to follow up and let you know what information I get.“

Her response makes me suspicious – Staff is not telling council everything. They never told council about the Simi Valley case. Staff tends to treat council like children, manipulating them by omitting important facts and just plain lying. They have repeatedly denied this is a tax, denied that it will result in new debt, and refused to discuss other avenues for paying down the UAL.

I had almost given up on my own district rep, Kasey Reynolds, but I will also send this information along to her. Please send your rep an email, send them the link to the Simi Valley story. We need to nip this mess in the bud before it ends up costing any more money. They’ve already shelled out for consultants and put a $$$$ of Staff time into it. Let’s stop it before it goes any further. Here’s the Simi Valley story,

City of Simi Valley reaches settlement with taxpayer groups, rescinds authorization for pension obligation bonds

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Howard Jarvis Taxpayers Association has successfully sued at least twice to stop POBs on the grounds that they must have voter approval

29 May
Bonds are a risky way to deal with pension woes
This article from the Howard Jarvis Taxpayers Association sheds some legal doubts on the whole POB scam.

On a tip from a reader, I found this article, originally printed in January 2020. Jon Coupal begins with statewide bond measures, but picks up with a warning about Pension Obligation Bonds. “...at the local level, taxpayers need to be aware of a recent resurgence in the use of pension obligation bonds, a risky financing method that fell out of favor during the recession but is now making a comeback.”

Coupal analogizes, “A POB is basically paying your Visa bill with your MasterCard,” adding, “Pension obligation bonds (POBs) are bonds issued to fund, in whole or in part, the unfunded portion of public pension liabilities by the creation of new debt.“

Council members Andrew Coolidge and Sean Morgan, and other proponents of POBs, are denying that a POB is new debt, they chant it like a mantra, because they think they can hypnotize us into believing it.

Coupal continues, “The use of POBs relies on an assumption that the bond proceeds, when invested with pension assets in higher-yielding assets, will be able to achieve a rate of return that is greater than the interest rate owed over the term of the bonds.“

Even Staffer Scott Dowell has used the word, “gamble“, even while he and city manager Mark Orme have pressed forward with this scheme. Council has given them permission to send this bond for judicial approval. The consultant told council and staff that this type of bond does not require voter approval. They said it would only take approval from a judge, which should only take a few months. The expect to implement this thing within the next few months.

If this seems odd to you, you’re not alone, the HJTA is on your side.

“Back in 2003, the state of California attempted to float a statewide pension obligation bond without voter approval.

The Howard Jarvis Taxpayers Association sued to invalidate the bonds and prevailed in court.“

That’s not the only lawsuit HJTA has pursued against POBs. The reader who tipped me to all this sent me the story of HJTA vs the city of Simi Valley.

City of Simi Valley reaches settlement with taxpayer groups, rescinds authorization for pension obligation bonds

“The Simi Valley City Council voted 5-0 on April 6, 2020, to rescind a December 2019 resolution authorizing a $150 million pension obligation bond and future similar bonds, thanking the Ventura County Taxpayers Association for working with the City in avoiding what could have been a lengthy battle over legally questionable bonds. The rescission was part of a settlement agreement with the VCTA and the Howard Jarvis Taxpayers Association.“

Apparently, the city asked for validation from the Ventura County Superior Court. HJTA and the Ventura County Taxpayers Association then “answered” the suit. And the city backed down, but I’m not really sure why.

“In settling, the Simi Valley City Council recognized the constitutional concern in the VCTA/HJTA answer to the City’s lawsuit — whether the California Constitution requires two-thirds voter approval of any such bond. Agreeing to wait for legal clarity, and with each side bearing its own costs, the City agreed to dismiss its lawsuit with prejudice, and rescind the bond authorization resolution.“

“recognized the constitutional concern” ? ” Agreeing to wait for legal clarity” ? I’m not sure what has happened since then – has the court given any further ruling on these bonds? Any legal clarity? I’ll have to look into that. But I think that’s a good question for Staff at that POB forum.

DAY: Tuesday, June 8, 2021
TIME: 2:00 P.M.
PLACE: City Council Chamber – 421 Main Street

CANCELLED: City hosting an interactive forum to discuss POBs

27 May

I got this notice from Dave – thanks Dave!

I also got the cancellation notice from Dave – thanks again Dave!

DAY: Tuesday, June 8, 2021
TIME: 2:00 P.M.
PLACE: City Council Chamber – 421 Main Street


The City of Chico’s employees and retirees participate in the CalPERS retirement system. CalPERS has
determined that the City has an unfunded accrued liability (UAL) of over $140,000,000 which carries an
interest rate of 7%. As such, the City Council is researching all options on reducing this liability. One
possibility is to issue pension obligation bonds (POBs) at a lower interest rate than 7% and use the
proceeds to pay down the CalPERS UAL.


The City is hosting an interactive forum to discuss POBs including the benefits and risks associated with
their issuance. The consulting firm of NHA Advisors will be conducting the forum on June 8th starting at
2:00 pm and concluding by 4:00pm. This forum will be interactive and participants are encouraged to ask
questions and provide feedback to the consultant. Attendees are encouraged to join in person at the City
Council Chambers or watch online. There is no cost to attend this educational forum.

Orme and Dowell want to take the city of Chico on a Tax-stravaganza

25 May

Tomorrow the Chico Finance Committee is meeting, again, CLOSED in a room with public participation limited to Zoom, to discuss the smorgasbord of taxes and fee increases brought forward by city manager Mark Orme and Administrative Services (Finance) Director Scott Dowell. I will try to “attend” on Zoom, but in the meantime I wrote a letter to the ER.

The city of Chico is embarking on an unprecedented “tax-stravaganza”. At the 5/26/21 Finance Committee meeting, Mark Orme and Scott Dowell brought forth an incredible list of tax measures and fee increases for council’s consideration, including a sales tax increase, and new cell phone tax. Staff also suggested raising sewer fees by implementing volume charges, raising the transient occupancy tax, and increasing franchise fees on PG&E, the waste haulers, and other service providers. Mayor Coolidge has also suggested a road bond.

The common thread here is the pension deficit. Staff is desperate to pay CalPERS, to save pensions into which they have contributed less than 15% for 70-90% of their highest year’s pay.

The city has been receiving more sales tax, property tax, developer fees, and Utility Tax revenues every year as development brings more people to Chico. Instead of maintaining and improving infrastructure, Staff has poured these funds into their pension deficit, $11,500,000 this year, by 2025, $13,000,000. This money is allocated from all the department funds, at the expense of infrastructure and services.

Instead of pursuing new taxes that will hurt our local economy, council needs to switch from CalPERS’ defined benefit plan to a defined contribution plan, like 401Ks. Why should the taxpayers but never the employees bear the burden of the risks taken by CalPERS? The POB scheme, which Dowell admits is “gambling”, puts ALL the burden on the taxpayers, forever. Any new revenues will go to the pension obligation first.

We’re paying Staff for nothing but perpetuating their own retirement system.

Juanita Sumner, Chico

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Business taxes, housing taxes, parking tax, pot tax, poop tax! City of Chico is on a Tax Blitz!

22 May

I got the agenda for next week’s CLOSED Finance Committee meeting and it’s a gobstopper.

https://chico.ca.us/sites/main/files/file-attachments/5.26.21_finance_committee_agenda.pdf?1621544673

Item A, Business Tax Analysis Update – just what it sounds like, only this also includes a tax on rentals.

Item B, Cost Allocation Plan – another (why?) presentation from consultant Chad Wolford about “allocating” money from one fund to another to pay management salaries and benefits.

Item C, Sewer Enterprise Study and Rate Analysis – oh, you people on sewer are not going to like this and those of you who have still held onto your septic tanks better take good care of them.

Item D, Overview of Revenue Enhancements – this is an item that brings the art of Euphemism to a new level. Yes, Dammit, they’re talking about taxes!

These items all have one thing in common – a greedy, desperate city staff that wants to fund their pensions, damn the torpedoes. I’ve talked about A, B, and C, and will talk about them again in future, but right now let’s dive into D, which I will call “Operation Tax Blitz”.

City Manager Mark Orme and Admin. Services Director Scott Dowell have announced budget surpluses the last three years running, but are still making dark predictions for the future, and trying to tell us we need to raise taxes.

“Although the City has made great progress to overcome deep financial deficits and reestablish reserves,
projections point to a likely budget deficit in the coming years if revenue enhancements are not
approved.”

What they won’t say, is that our problem, which Orme has called “The Elephant in the Room,” is the pension deficit, the Unfunded Actuarial Liability. They’re trying to tell us we’re cheap asses who don’t pay enough taxes. As a member of a family living on less than $50,000/year, with tenants who all live on about same, it is really tough to take that kind of smack from some asshole making over $200,000/year with a benefits package of over $50,000 who only pays 9% of the cost.

“California cities have a variety of avenues to increase revenues for services and capital projects, which ranges from general and special taxes to bonded indebtedness.”

And the report proceeds to list those avenues.

Admissions Tax – Admissions tax is a revenue enhancement used when people attend a show, performance, display or
exhibit.

Business License Fees – Business license fees are considered a tax and any increase would need to be approved by a majority vote of the electorate.

Cannabis Tax – A sales tax measure on cannabis is already being discussed by the City Council.

Construction/Development Tax – A construction or development tax is an excise tax imposed for the advantage of building within the City. The tax is imposed only on new construction and is generally based on number of units, number of bedrooms or square footage. These taxes differ from development impact fees in that impact fees must be spent on services or facilities to mitigate the impact of development. [NOTE: This is a redundant tax – in addition to Impact Fees, and not restricted to mitigating the impact of development. In other words, it’s just a GRAB, as are so many of these suggestions. This is one way the city adds to the cost of housing.]

Documentary Transfer and Real Property Transfer Tax – A document transfer tax is a revenue enhancement allowed under the State Transfer Tax Act on documents which transfer the ownership of real property… Butte County and the City of Chico enacted this tax ordinance and the City received one half of the tax, $0.275 per $500 in recorded value. [NOTE: So, the city already has an ordinance with the county, but here Staff suggests a separate ordinance just for the city, which will raise the cost of housing] Dozens of California charter cities have enacted their own transfer tax ordinances. The tax rates vary with rates as low as $1.10 per $1,000 to $15.00 per $1,000.

Local Vehicle Registration Tax – Local vehicle registration taxes are special taxes collected by the DMV in the form of vehicle registration fees and remitted to the participating counties who in turn remit to the City. [NOTE: Butte County already has this program]

Parking Tax – A parking tax is imposed on citizens who rent parking space that is privately owned.

Property Tax – Generally, property tax cannot be modified by the City and would require State action. California’s
property tax is ad valorem, meaning it is based on the value of the property. Proposition 13 limits property tax to one percent and restricts the enactment of any additional ad valorem property tax, transaction tax or sales tax on the sales of real property. Proposition 46 modified this rule to allow for an increase towards funding indebtedness. [NOTE: the only real “indebtedness” the city faces right now is the UAL]

Parcel Tax – Parcel taxes are a tax on a parcel of property and are not directly based on property value, which is what
allows a parcel tax to circumvent Proposition 13. [NOTE: Staff reports these have had a dismal showing lately, mentioning CARD’s failed attempt at passing Measure A last year.]

I’ll stop here to say, with the exception of the Cannabis Tax they are already discussing, I don’t think any of the above suggestions are serious. Tomorrow I’ll pick up with what they are really getting at – sales tax increase. Although, there is a frightening report on raising the Utility Tax, as well as a very frank discussion of the other kind of tax – franchise fees.

Next time, on This Old Lady goes to a Tea Party!

No wonder Staff wants the POB, the sales tax measure, and the “road” bond – their Pension Stabilization Trust investments are only returning at 2.7%

13 May

I wrote to Chico Administrative Services Director Scott Dowell the other day and asked him what is the current interest return on the investments that have been made with the Pension Stabilization Trust. Remember, the PST is made up of “allocations” (stealing) from all the other city department funds, a percentage of department payroll. The money is invested in the stock market, very much like the proposed Pension Obligation Bond scheme.

I was kind of perturbed when Dowell responded with a 265 page download, telling me, “The information you want is on page 264…” You know he knows the exact figure, he just doesn’t want to admit it. I think, frankly, he’s in denial, he’s desperate to get council to agree to this.

But there it was, and I can see why he’d have trouble actually saying it, or even typing it into an email – it’s kind of embarrassing. Especially when he is trying to convince city council to go along with the POB scheme. See, if they don’t make enough money off investing the BORROWED money they will get from the POB holders, gee, they not only won’t be able to make those “extra” payments toward the Pension Deficit, but they won’t be able to pay back the bond money either. Oh my goodness, you know what that means – another day older, and deeper in debt.

New debt.

Here’s the bad news – the PST has only been returning 2.7%. With an investment of $1,868,000, taken from the streets, sewer and other city funds, Staff got $3,887. Three thousand, eight hundred and eighty-seven dollars. Staff reports our “extra” payments, now $11.5 million, will be $13 million within a few years.

I know, I’m starting to sound like a late-night waterbed salesman, but I’ll say it again – watch the video!

The consultant from NHA spoke of borrowing bond money at 3-4%. CalPERS, to whom we owe a whopping $146 million, charges 7% interest. Dowell reports we get a 3.5% “discount” for making those “extra” payments, but I’m not sure how that works. The PST is only returning at 2.7%. The market, volatile for a year now, is not looking good lately.

https://www.cnbc.com/2021/05/11/stock-market-futures-open-to-close-news.html

This POB plan looks more ludicrous every day.

I also asked Dowell who manages the PST and how much do they charge. That’s another issue – these investment firms charge high fees, how much do they eat? We’ll see if he gets back to me there.

Joe Azzarito: Let’s DO EQUITY, not just TALK IT!

11 May

Thanks to Joe Azzarito for this thoughtful take on city resource allocation.

The term equity has been bandied about by social progressives lately as cause for radical change in
society. By definition, equality means “the state of being equal, especially in status, rights and
opportunities.” It has to do with giving everyone the exact same resources, whereas equity “involves
distributing resources based on the needs of the recipients”.

Let’s apply these terms to City of Chico expenses, specifically to its employees’ salary, pension and other
benefits. Much has been rebutted against the use of Pension Obligation Bonds as a panacea for its
enormous and growing unfunded actuarial liability due its staff.

If we consider the most appropriate use of available revenue in the service of citizenry, it behooves the
Chico City Council to find a solution to the many ignored uses for money. The recipients of the excessive
largesse, in the form of city paid pensions, would not in the slightest be equitable when balanced off
against needs of citizens. With their six figure incomes, they can well afford to fund their own
retirement, regardless of what has gone before.

Chico’s many problems, such as affordable housing for all, street repaving, safety both from crime and
fire, should be the focused uses for reported increased revenues. The double indebtedness that pension
bonds would create, between bondholders and CALPERS, is not establishing equity. It is exacerbating the
problem. The city‘s citizens have more unmet needs, in the form of services, than well heeled staffs do.
Let’s DO EQUITY not just TALK IT!

Joe Azzarito, Chico CA

I’ll say this – the fox is in charge of the henhouse, so the fox gets what he wants, and the hens, well, they just get it.

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Letter to the Editor: The pension deficit burden needs to be borne by the employees who created it through unrealistic contributions, not the taxpayers

8 Apr

We here in Chico have a big decision to make and we need to make it quick, before it’s made for us by a group of individuals who stand to gain substantially at our expense. If council approves the Pension Obligation Bond, it’s over Folks, we pay for the outrageous pensions at the expense of public infrastructure and services.

Four of our seven-member council are either public pensioners or married to public pensioners. All of their campaigns have been heavily influenced by public employee unions, who are the biggest contributors in every election. these PACs are allowed higher contributions limits than the average voter, and they can make contributions on their own and to other like-minded PACs.

I don’t believe people with such obvious conflict of interest should be allowed to make this kind of decision unfettered. At the very least, they should have to declare their personal interest in furthering the POB and continuing to prop up CalPERS, an agency they all know has put us in horrible debt through mismanagement. At the last finance committee meeting, both Sean Morgan and Andrew Coolidge acknowledged that CalPERS continues to make bad investments. So why won’t they ask employees to make more reasonable contributions? And why don’t they make any effort to get out of CalPERS and ask new employees to take a Defined Contribution Pension Plan?

The pension deficit is a burden that should be borne by employees who created it through unrealistic contributions, not the taxpayers.

Juanita Sumner, Chico

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