Archive | Chico revenue measure RSS feed for this section

Good question Bob: Why do we need to replace Constantin with anyone?

14 Nov

One last word on the departure of Chris Constantin – from a comment Bob left the other day:

Why do we need to replace Constantin with anyone? The truth is the City is over its head in debt and we can’t afford a replacement.

Besides, why should we continue to pay hundreds of thousands of dollars every year for a bureaucrat who does nothing but scheme how to raise our taxes and get us deeper in debt with things like POBs while letting our streets and everything else fall apart.

Wow, good question Bob! So I wrote a letter to the ER about it.

When departing Chico administrator Chris Constantin was hired in 2013, he spoke to the Tea Party. He said our previous finance director was “Loosey Goosey”, bragging about his qualifications to “straighten out the mess” she’d left. He told us, once he fixed things, “you can hire someone cheaper, with less initials behind their name.”

Seven years later, I see a bigger mess. Constantin himself has told us, staff deferred maintenance on streets and other infrastructure while they continued to make bigger payments toward their pension liability (UAL) – this year $11,000,000. But the UAL continues to increase –  this year, the city manager created three new management positions with $100,000+ salaries.

When Brian Nakamura was hired, he went on a firing spree, gutting lower level staffers and bringing his own friends in for management positions – Mark Orme and then Constantin. Since then the assistant manager’s salary has gone from $142,652 to over $189,000/year. Orme and Constantin have also garnered themselves 457 Plans worth an additional $20,000/year each.

From a 2018 report to the California League of Cities: “City pension costs will dramatically increase to unsustainable levels.” Their first suggestion – make more aggressive payments to CalPERS. Meanwhile, “Change service delivery methods and levels of certain public services.” Meaning, squeeze the taxpayers for more money.

Top heavy management and perpetual demands for higher salaries and more benefits has our city upside-down. Constantin’s position should be eliminated, along with other unnecessary management positions, so we can hire the lower-paid workers we need to get this town “straightened out.” 

Juanita Sumner, Chico CA

Tags: ,

SURPRISE! Assistant City Manager Chris Constantin seeking a manager position in San Dimas CA – $220,000/year!

8 Nov

Dear Chris Constantin,

So you are off to San Dimas? I heard it through the Grapevine. (ha ha, get it? Through the Grapevine? Old trucker joke)

It seems like just yesterday you bragged to a Tea Party gathering about all he “initials” after your name. You bragged about the consulting positions you held with agencies all over the state. You told the assemblage that our town was in a terrible financial shape, because our former Finance Director was “Loosey Goosey”. But you bragged about your credentials and promised that you would fix everything, adding, “then you’ll be able to hire somebody cheaper, with fewer initials behind their name…”

Wow, looking around myself, I don’t see that. I see our town is a bigger mess than it was when you got here, while you’ve done very nicely for yourself. You’ve garnered almost $200,000/year in salary and about a $50,000 package. You paid little to nothing for not only a 70% pension but a $20,000/year 457 Plan (special 401K for public workers). Now you’ve used Chico to step along to an “Annual salary of $220,000” as city manager in a rich Southern California town.

I realize you’ve paid the price. I remember when you bragged and bragged about your gorgeous young wife, showing her off around town like a trick pony. Then you left her at home to pop out kids like a popcorn machine.   When you told me about your first child, I told you, “Quit your job, or you’ll miss the best years of your life.”  You should have listened to me Bud. Instead you made an ass of yourself at the podium, whining like a bitch about our town causing your divorce?

That’s on you! Jesus Christ Chris, look what YOU’VE done to our town! 

Good Bye, and Good Riddance Chris Constantin, and please, don’t let the screen door hit you on your ass on your way to San Dimas. It’s already had enough abuse.  

To the people of San Dimas – GOOD FUCKING LUCK with this guy. Here’s what you can depend on – your town is about to get more expensive!

Juanita Sumner

FROM THE SAN DIMAS CITY COUNCIL AGENDA FOR THIS TUESDAY

CITY COUNCIL MEETING AGENDA
TUESDAY NOVEMBER 10th, 2020 7:00 P. M.
SAN DIMAS COUNCIL CHAMBER
245 EAST BONITA AVENUE

a. Consideration of Appointment of Chris Constantin as City Manager, with a start date of January 4, 2021, and approval of City Manager Employment Agreement

RESOLUTION 2020-61, A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF SAN DIMAS, COUNTY OF LOS ANGELES, APPOINTING CHRIS
CONSTANTIN AS CITY MANAGER AND APPROVING A CITY MANAGER
EMPLOYMENT AGREEMENT
RECOMMENDATION: Adopt Resolution 2020-62, Appointing Chris Constantin as
City Manager and Approving the City Manager Employment Agreement.

Tags:

Who will pay the unfunded liability? Taxpayers living on a median income of $43,000/year, or well-paid, well-heeled, entitled public employees making over $100,000/year?

5 Nov

It’s been said, the campaign begins the day after an election.  I like to hit the ground running. Here’s a letter I just sent to the ER. 

Butte County, like the city of Chico, is considering a Pension Obligation Bond.

POBs are a financing scheme that allows state and local governments to get the taxpayers to pay unfunded pension liabilities by issuing a bond guaranteed by tax revenues. Like CalPERS, POB proponents claim investments will pay for both the bond and the retirement fund. According to Oregon PERS manager Mike Cleary, “Some people call this arbitrage, but it’s not, it’s really an investment gamble.”

In fact, in 2013, Stockton and San Bernardino went bankrupt. According to the court, “Generous pensions awkwardly propped up with ill-timed POBs contributed to both debacles.”

In recent years, returns on POBs have often fallen below the interest rate paid by agencies to borrow the money, digging the liability hole even deeper. Nonetheless, they remain popular because they are instant money without voter approval.

Chico’s Unfunded Pension Liability has grown enormously over the past year – from $123,000,000 to $140,000,000, with another $146,000,000 interest – because of unrealistic employee contributions. Chico employees pay, at most, 15% for pensions that run from 70 – 90% percent of hundred-thousand-plus salaries. Meanwhile, taxpayers not only contribute a payroll share, but the annual “catch-up” payments come at the expense of city services – this year $11,000,000.

Who will pay the unfunded liability? Taxpayers living on a median income of $43,000/year, or well-paid, well-heeled, entitled public employees making over $100,000/year?

Let your elected representative know what you think of this scheme to leave the taxpayers holding the Pension Deficit Bag.

Juanita Sumner, Chico

Tags: ,

Contact Mayor and Finance Committee member Ann Schwab and tell her what you think of Mark Orme’s snake oil scheme to put his pension debt on the taxpayers

28 Oct

I got a great comment from Emily this morning. It was good to hear from somebody, besides me, and Dave, and BC, who is worried about the city’s intentions to foist a Pension Obligation Bond on the taxpayers, currently being discussed in closed meetings.

“Thanks for publishing all of this. I live in District 3 and asked both Denlay and Schwab (I do not consider Breedlove a serious candidate) about their plan to deal with Chico’s unfunded pension liability. Schwab emailed me back immediately with the same response she said she had already sent to you: best way is to make sure businesses can thrive here by improving infrastructure etc, state’s payment requirements are unrealistic and Chico is advocating for change, city has a pension stabilization trust w which to grow its payment funds, and city is considering a pension obligation bond though there’s “some debate” whether those are beneficial.“

Thank you again Emily, for taking time to engage the candidates. I had a discussion with Ann, and tried to contact Denlay, who never got back to me.

I’ll give Ann credit – she responds, and she’s honest. But I have to differ with her statement that the state’s requirements are unrealistic. Schwab and her full council signed contracts allowing over-generous salaries and unrealistic employee contributions, and now she says it’s CalPERS’ fault?

Furthermore, she admits there is “some debate” over POB’s being “beneficial“. That’s an understatement, given the warnings the consultant made about the volatility of such bonds. Why would these investments fare any better than CalPERS’ investments, which have been coming in at half or less than their projections? The consultant made it clear – poor returns, which he also said repeatedly are very likely, would be a disaster for the city. The bond holders would take our entire General Fund. That’s about all we have left, besides the already established “Pension Stabilization Slush Fund”.

And, I don’t think the consultants were being fully honest about the streets leasing deal, I think that’s even more risky than they are willing to admit at this stage.

Denlay’s response to Emily was worse.

“I had to follow up with Denlay, who did respond with her ‘instincts’ about how to deal with this problem: get diverse stakeholders together to understand the problems as a whole before working on a solution, need to get different stakeholders to agree on a plan to pay it down within 30 years, but that Chico has ‘many pressing issues even beyond pension liabilities,’ including illegal encampments, needle handout programs, and the state of City Plaza.”

That’s what I’ve been saying about Denlay – she is way over her head. She doesn’t understand that the pension deficit is the biggest debt the city faces, that it is being paid by the taxpayers at the expense of all our city services, and if we don’t do something about it, we’re in for BANKRUPTCY. Worse, she obviously didn’t watch the consultant’s presentation, which is just plain LAZY, girlfriend. The first thing I look for in a candidate is their knowledge of the committees. I’m going to guess she doesn’t even know what committees or who is sitting on them.

But she has been tutored about the POB, because a reader sent me the response he got out of her. That’s what she’s talking about when she says “get diverse stakeholders together to understand the problems as a whole before working on a solution, need to get different stakeholders to agree on a plan to pay it down within 30 years.” The operative word here is “stakeholders” – is she including the taxpayers? Because the consultant also made it very clear that this bond will not go to the ballot, meaning the taxpayers are out of the conversation.

Emily added, “I’m at a bit of a loss bc I can’t believe Schwab is even considering the pension obligation bond, but it doesn’t look like Denlay understands the issues very well.“

Thank you Emily, you put it in a nutshell.

But, I’ll still say, at least Schwab is honest, and she responded more clearly. I’ll also tell you something else about Schwab – she wants to get re-elected, I believe she wants to hold onto her seat until she is termed out, so I believe she listens to criticism better than most.

So, it’s time to contact Schwab – she’s not just the District 3 candidate she’s your mayor, and a member of the Finance Committee that is forwarding a recommendation to Council. Tell her what you think of this insane idea.

Tell her you know the sneaky, dirty truth that Mark Orme doesn’t want us to know. This isn’t the kind of bond that shows up on your property tax bill. It’s the kind of bond that drains city finances, written to be paid ahead of any of our other debt and ahead of financing services. This POB will show up in the form of PUBLIC SAFETY SERVICE CUTS, UNMAINTAINED STREETS, A FILTHY PARK, AND HIGHER SEWER FEES.

And there’s the next thing that will show up on the horizon – another tax proposal. They’ll let the streets go to crap, the park will remain a giant hobo camp, and you will continue to see “quality of life crimes” without any response from the cops. When they think we’re about up to here with it, they’ll offer another tax increase. They’ll tell us it’s for the streets and public safety. Oh yeah, remember – just like they told us the Trash Tax would go to the Street Fund. The truth is, they’ve voted year after year to put it in the General Fund, out of which they make their 7-8-9-10-and now 11 million dollar UAL “catch up” payments.

So tell Ann you’re hip to those kind of tricks. Yes, we need to address the pension deficit, head on. Meaning, THE EMPLOYEES, ESPECIALLY MANAGEMENT, NEED TO PAY MORE. And they need to do it without the raises council has given them every time they’ve agreed to pay more of their pension – how asinine is that?

That’s ann.schwab@chicoca.gov

Tags: , , , , , ,

Quiz: How much do you know about Chico’s pension deficit?

18 Oct

Here’s Part 1 of the quiz I was promising. These questions are all from the first 10 or 15 minutes of the video presentation posted here:

Here’s the video from that Sept 23 Finance Comm meeting – ever wonder what people are saying about your money behind your back?

If you feel like it, send this video to your district representative/candidate, see how many of these questions he/she can answer.

  1. What is the city’s current Unfunded Actuarial Liability (aka “pension deficit”), not including interest?
  2. How much has that figure grown in the last 5 years?
  3. What are the two types of payments the city currently makes to CalPERS?
  4. How much are those payments projected to increase over the next 5 years?
  5. What is CalPERS investment return target, and what have they been averaging over the last 20 years?

Well, that ought to give you something to chew on, I’ll get more questions when I have a minute.

Tags: , , ,

No on Measure E; and there will be a quiz later today about that Finance Committe meeting!

16 Oct

Wow, who would have guessed Measure E – city council districts – would be such a hot topic. Looking at the stats the last week or so, that’s what people have been hitting – “Measure E – Divide and Conquer”.

In the music business, they would call that a “throwaway piece.” I was just annoyed and frustrated over the response I got from the city clerk when I asked about this measure. The clerk is like a sphinx, you could know her 30 years, and I almost have, and never know what’s on her mind. She states the facts, she answers a question as you ask it. Never opines. But, this time she seemed genuinely confused – it’s a stupid measure. And it makes a person think, council pulled a fast one – like the cell phone tax they collected illegally for years – and they need the public to approve it.

I hope that’s what other people are thinking, and I hope it fails. Districts are not only unnecessary, they are a ploy by both the liberals and the conservatives, who both seem to think they can manipulate this system.

Prepare to be manipulated!

And if somebody feels like emailing city finance man Scott Dowell, scott.dowell@chicoca.gov, they could ask him how much it is going to cost to REDRAW THE DISTRICTS after the upcoming CENSUS.

I’m also shocked to see how interested people are in the school board race. I’m sure glad, and I’m sorry I don’t have anything better to offer than “vote for people who aren’t/haven’t ever been school district employees”, but that’s my story, and I’m standing by it.

But I’m sincerely grateful to those of you who have downloaded and watched the video I posted –

https://gofile.io/d/zqp5BI

with big THANKS to DAVE for that link. Since I posted that last Friday, almost 100 people have seen it, and, as committee member Sean Morgan agreed, that’s a helluva lot more people than actually attend those meetings.

So, after I finish my chores this morning, I’m going to make a QUIZ! We all love a quiz, don’t we? I’ll try to make it good and tough. And yeah, I’ll probably allow cheating. The teachers I learned the most from were the ones who allowed open book/notes tests. And that’s the point here, I want more people to see how the city operates behind closed doors.

Tags: , , , , ,

The Elephant in Election 2020: The pension deficit and staff’s efforts to shift the burden fully onto the taxpayers

7 Oct

Yes, I am still pissed off about being locked out of the Finance Committee meeting two weeks ago. But, I got a flash drive from staff, and having loaded it onto my laptop, I will post that video asap, with my usual snappy narrative. 

I wish I had waited until I saw the  meeting. I had endorsed all three members of that committee – frankly, on a “lesser of evils” strategy. After I watched the meeting, I found myself even more in support of Randall Stone, while my feelings for Morgan and Schwab have cooled considerably. 

I still say those latter two are the best bet (mind you, we’re talking about gambling) in their respective races, but I can’t endorse them. If they were horses I’d turn them out to pasture. Both of them voted to take this Pension Obligation/Lease Revenue Bond scam to the full council. But I don’t expect their challengers would have done any different. They all have a vested interest in funding the pensions. 

Finance Committee Chair Stone was the one who reminded everybody at the meeting that the consultant’s proposal was assuming CalPERS would achieve their full investment target of 7%. The consultant acknowledged this fact, adding,  I quote, “but we know that’s not going to happen…”  He repeated almost those exact words several times in the subsequent conversation.

Even though Morgan acknowledged same – “we’re certainly not going to fix CalPERS, I don’t expect they’re ever going to do any better on returns…” – he also said “we owe it to staff...” to continue the conversation with full council. Schwab agreed. Admitting that the conversation “raised a lot of questions,” she predicted the consultant would have a “much better, more prepared presentation for council.” Yes, I’m sure he will, having heard the criticisms of the plan, he will downplay the risks and play up the supposed benefits. 

Stone was the only committee member to speak plainly about the risks of these schemes – namely, the CalPERS debt and the bond debt will be paid ahead of any other expenses, including staffing and services – including law enforcement and fire personnel. The consultant spelled that out very clearly under the power point heading “Eyes Wide Open to Risks” .  If these proposals were ski runs they would be labeled “Black Diamond”.

Stone was the only one to openly discuss the truth behind these bonds. ” I’m uncomfortable shifting the burden from the beneficiaries to the rest of the city.” Meaning, not only does this proposal shift the burden of payment from the employees to the taxpayers, it shifts our resources away from services to paying the pensions. Period. Both the consultant and Chris Constantin made it clear this was a risky proposal that could bottom out our General Fund and cause layoffs. The consultant specifically mentioned public safety. So, this proposal to guarantee the pensioners their pensions would come at the cost of future employees, and that means, city services.  

The pension deficit and staff’s efforts to shift the burden fully onto the taxpayers is the Elephant in the upcoming election, but nobody cares? Chair Stone announced that no other members of the public had signed in, having acknowledged that I couldn’t get in. So, I’m pretty sure the only candidates who “attended” the meeting were the committee members. I wonder where the challengers stand on any of this? You might want to ask your candidate about that, if your district is on the ballot. 

The consultant set a timeline for this bond – including the discussion period – staff hopes to be signing off on this deal by next spring. So the public needs to weigh in. Now, because, the “upside” to these bonds, as pointed out by the consultant, is there’s no “validation process,” meaning, no voter approval. Is that really okay with you? 

It’s not okay with me, so I wrote a letter about it:

The city Finance Committee discussed restructuring the pension debt – now at over $280,000,000, including $140,000,000 interest. Two schemes presented: 1) Pension Obligation Bond, 2) Lease Revenue Bonds, using our city streets as collateral. The borrowed money would be invested. Ideally, the investments would pay off, and staff would make bigger UAL payments, eventually achieving a lower interest rate from CalPERS.

There is a razor’s edge to this proposal. Worst case and very likely scenario: both CalPERS and the city fail to meet their investment goals, the taxpayers end up owing both the bond investors and CalPERS.

Committee member Randall Stone commented that the consultant’s recommendation assumes a CalPERS investment return of 7%. The consultant acknowledged this fact, admitting, “but we all know this isn’t going to happen.”

Staffer Chris Constantin added, if the city’s not able to pay, “they could forcibly take the money from the General Fund… “ without regard to direct impacts on staffing and services. The consultant reported that a large Southern California county may soon lay off public safety personnel “so they don’t violate their bond covenants.”

Stone voted NO, commenting, ”I’m uncomfortable shifting the burden from the beneficiaries to the rest of the city.” Members Schwab and Morgan voted YES. Morgan admitted he doesn’t expect CalPERS “will ever do any better on their returns…” Schwab concurred.

The Government Finance Officers Association does not recommend these bonds, their first objection being CalPERS’ history of poor returns. What are Schwab and Morgan thinking?

 

Tags: , ,

Another hair-brained scheme from Orme and Constantin – Finance Committee to discuss leasing our streets to pay the pension deficit. No, I’m not joking.

21 Sep

This Wednesday the city Finance Committee will be discussing the Unfunded Pension Liability. The agenda says they plan to “restructure,” but you know, the real dirt is in the reports, available at this link. 

https://chico.ca.us/sites/main/files/file-attachments/9-23-20_finance_committee_agenda_packet.pdf?1600381637

So, I wrote a letter to the paper about it yesterday. We’ll see if Speed Wolcott (if he’s even in town) can get it in before the meeting! 

Chico Finance Committee meets this week (9/23) to discuss “restructuring” the $146,000,000 pension deficit. Topics include a Pension Obligation Bond and “lease revenue bonds”.

Pension obligation bonds (POBs) are taxable bonds used to fund the unfunded portion of pension liabilities with borrowed money.  The presumption is that investments will pay the debt service. However, as with CalPERS, failure to achieve the targeted rate of return means the taxpayer is stuck with the debt service on the bonds.  And, we’re still stuck with the pension deficit. POB’s are a jump out of the frying pan, into the fire.

“Lease revenue bonds” involve municipalities issuing bonds (borrowing money) using their own city streets or buildings as collateral to pay down their unfunded pension liabilities. From the 9/23 agenda: “A lease revenue bond structure (leased asset required, such as streets or buildings) would avoid validation process [meaning, the voters] and could proceed on quicker schedule.”

Essentially, a city leases their streets to a special Financing Authority, which will pay the city their up-front money, and “rent” the streets back to the city, in order to pay off the bonds. (Forbes)

And the taxpayers pay the “rent”.  “The municipality will generally appropriate money during each budget session to meet the lease [rent] payment.” (Forbes) These appropriations come at the cost of public safety and infrastructure.

Lease revenue bonds are essentially pension obligation bonds, but can “proceed on quicker schedule” because there’s no voter approval.

A real solution for the pension crisis – ask employees to pay more.

Juanita Sumner, Chico CA

Tags: , , ,

City sales tax measure in June 23 agenda – speak up, we might still be able to keep this measure off the ballot

20 Jun

The agenda is out for this Tuesday, June 23, so-called “special” and most certainly CLOSED city council meeting. You can look at it here, on the Chico Engaged site.

https://chico-ca.granicusideas.com/meetings/706-june-23-2020-special-city-council-meeting/agenda_items

I hate the report they’ve presented for 3.1 on the Consent Agenda – the mysterious Supplemental Allocation/Budget Modification. That’s a holdover from a cancelled meeting in April. Remember, they had a rainbow list of stuff to spend that projected money on, until Orme pulled the plug with dire predictions of COVID tanking our finances.

Now, look at the report in Tuesday’s agenda, Item 3.1, it’s nothing like the straight forward report in that April agenda. Can anybody tell me exactly where the money comes from, whether it exists or is still only a projection, and what exactly they intend to spend it on? They wrote the report “not for dummies,” so I don’t get it.

When will council get it? This is exactly the kind of stuff that leaves the public with a taste of mistrust.

Then there’s the ballot measures – wow, these all merit more serious discussion in OPEN meetings, but see how these guys are shoveling through this stuff just as fast as they can while they have the cover of COVID.

Again, this is what fosters mistrust in these people. Just keep it comin’!

Here’s my favorite ballot measure:

Shall an ordinance to fund essential city services such as preserving the number of on-duty police officers and fire fighters, protecting 911 emergency response times, maintaining and repairing streets, sidewalks and Bidwell Park, and funding other general services and essential activity, by establishing a 0.5 percent sales tax, providing approximately $9,000,000 annually until June 30, 2029, subject to annual audits, with all funds staying local, be adopted?

I’ve been waiting for this measure for years. They’ve been talking about it since at least 2012, when Tom Lando ran a survey. He reported a “negative” response, but the idea stuck. Since then both the city of Chico and Chico Area Recreation District have hired various consultants, all on taxpayer money, to run surveys trying to convince us that we do want to pay more taxes.

Here’s how that works. The consultant asked respondents to “rank” various arguments. “I’d like to read you statements from people who SUPPORT the Chico City Services Measure. After each one, please tell me how convincing [very convincing or somewhat convincing] that statement is as a reason to vote FOR the measure.”

That’s the Band Wagon Effect – telling you that other people support this measure. And then they begin campaigning for the measure by reading you reasons to support it.

They hold out a stick in one hand – implying cuts to fire and police – “We need to pass this measure to make sure city services can keep up with the increase in population, keeping us all safe and protecting our quality of
life...” – and a carrot in the other – “much needed revenue for road upgrades and repairs“.

As you can see, looking at the proposed measure above, they use the most popular responses to write the measure.

I always wonder – am I the only one who is offended that they use my own money to manipulate me in this way? Using a survey of 400 people in a town of over 90,000? Really think I’m that dumb? Really?

When I looked at Chico Engaged I didn’t see any comments posted. I hope more people will tune in and chime in – we still might have a chance to stop this measure before it gets to the ballot.

Tags: , ,

Orme and Constantin propose to use the sales tax proceeds to incur bonded debt for capital – what does that mean?

16 Jun

Bob reminds me that city staffers Mark Orme and Chris Constantin have made it pretty clear they want to use the proceeds from the sales tax measure to secure a bond (bonds?). But it never really comes into the conversation.

In his report at the June 9 meeting, Item 5.2, proposal for a tax measure, Orme explained the “sensitivity range” for the tax – meaning, what they expect to get from the tax, from worst case scenario ($12 million annually) to the best ($21 million).

Using an average estimate of $18 million, Orme begins a sales pitch for a bond. “In Exhibit 3, the City would receive approximately $18 million on average. The exhibit highlights both the worst and best scenario for revenue with the worst case being the amount which could be safely relied upon for ongoing expenditures. As such, the City may incur bonded debt for capital or hire staff and not have a high risk or need to default or layoff should the economy shift.”

He talks at first about hiring more staff but here he tells us he wants $9 million for debt service on the bonds while only $3.8 million for hiring staffers. “As debt for capital represents the largest ongoing commitment, the exhibit shows the amount available for debt service should the City Council determine to allocate 50-80% of the worst case revenue amount for capital. The remaining revenue would be available for other ongoing uses, and what is left in each year may be used for onetime type of expenditures. For example, if the City allocates no more than 70% for capital, the City may safely use almost $9 million for capital debt and $3.8 million of staffing and related expenditures annually.”

“Debt for capital” means either a loan or a bond. Investopedia explain this as it relates to private business, but it’s the same for public agencies.

https://www.investopedia.com/ask/answers/032515/what-are-different-ways-corporations-can-raise-capital.asp

“Debt capital is also referred to as debt financing. Funding by means of debt capital happens when a company borrows money and agrees to pay it back to the lender at a later date. The most common types of debt capital companies use are loans and bonds— “

As you know, a business goes under when it makes bad decisions and can’t pay it’s debts, but when a public agency makes bad decisions, the taxpayers get stuck with the debt service. Orme wants 50 – 80% of this sales tax for servicing the bond, but like Bob pointed out, nobody on council raised a single question when he flew through this report.

And here’s the whammy – they can do this without the consent of the voters. It will not be mentioned in the text of the measure. Council and staff will make those arrangements behind closed doors. One option they will probably discuss is a Pension Obligation Bond.

According to Howard Jarvis Taxpayers Association President Jon Coupal, “POBs are bonds issued to fund, in whole or in part, the unfunded portion of public pension liabilities by the creation of new debt. It is like paying your Visa bill with your Mastercard.”

State’s ongoing fight over pension obligation bonds

And, I believe it’s a tax passed without the voters’ consent. Coupal reminds us, “A policy reflected in the California Constitution since the 1800s is that government debt should be approved by the voters.  The reason for this is simple — today’s politicians should not be allowed to burden tomorrow’s taxpayers without the consent of those financially obligated for the repayment. Back in 2003, the Howard Jarvis Taxpayers Association sued the state of California for its attempt to issue a statewide POB without voter approval. HJTA prevailed and the POB bond proposal was invalidated.“

But Coupal reports that cities in California are still procuring POB’s without voter approval. Even after their victory against the state in 2003, HJTA joined the Ventura County Taxpayers Association to force the town of Simi Valley to rescind an illegal POB by demanding it be put before the voters.

Furthermore, “Other cities are considering or have actually pursued POBs without voter approval, including Riverside and Montebello.”

The Government Finance Officers Association warns that “the invested POB proceeds might fail to earn more than the interest rate owed over the term of the bonds, leading to increased overall liabilities for the government…“

This is exactly what has happened to CalPERS – poor investment returns led to increased overall liabilities for the government, and you know, that means the taxpayers.

They will bring this all back to the table at another closed meeting on June 23. Between now and then we need to let our city council members know we know what’s going on and we’re not going to go for it.

Tags: ,

← Older Entries
Newer Entries →