Pension Obligation Bond on the agenda for Tuesday night, please contact your district representative and tell them this is a bad idea

17 Apr

well, I got the agenda for next Tuesday’s city council meeting, and there it is – staff is bringing forward the Pension Obligation Bond for council’s approval. Four votes is all it takes to “validate” a tax, the proceeds of which will be used exclusively to feather the nests of employees who refuse to make rational contributions to their retirement.

I’ve written here, I’ve written letters to the editor, and I’ve written emails to my district rep, Kasey Reynolds, as well as other members of council. I’ve tried to tell them what I have found in my research regarding POB’s. I’ve read various financial journals, I’ve read reports from public agencies, and the only good things I have read about these bonds come from the Consulting firms that are paid to implement and manage these funds. The Consultants who presented this plan to Chico city council admitted many times there are great risks to implementing these bonds. They also told Council that there would need to be a new Revenue stream to service this Bond, or the payments would be coming out of the general fund at the expense of infrastructure and services. They even mentioned a California City that had to lay off police officers when they could not make the payments on their POB.

Let me explain again how these bonds work. The city has a unfunded balance on employee pensions. With council’s approval, staff will sell bonds, and invest the proceeds in the stock market hoping to make enough money to pay back not only the bond loans, but the unfunded pension liability. If you don’t see the ridiculous nature of this plan, I just don’t know how to get through to you. I just can’t understand a person that would think this is a good idea.

The consultant also explained, that if the city does not come up with a new revenue source to secure this Bond, they will be forced to bottom out the General Fund to make the payments when the stock market doesn’t perform as hoped. This bond supersedes ALL other city debts and expenses- streets, sewer, cops and fire – OMG! – even CalPERS! The consultants mentioned a California jurisdiction that had to lay off cops.

So when I wrote to my District representative, Kasey Reynolds, this morning, I tried to be polite but I really don’t think she’s reachable. She thinks she’s been elected to do whatever she wants, when she’s supposed to be listening to those of us she supposedly represents. I’m afraid that the amount of money she receives from public employee unions during elections has turned her head. I really don’t think she’s qualified or competent in representing the public. She has too many conflicts of interest.

I’d say same for the other four quasi-conservatives who got their seats by promising fiscal responsibility, while taking money hand-over-fist from the unions and their supporters, like Citizens For Safe Chico. CFSC is just a front Pac for Chico PD.

Reynolds is up in 2022, along with Brown and Huber. I have told her, there are a lot of unhappy conservatives in my neighborhood – her tiny new district. . I also think there are more liberals in her new District than conservatives. So, if some unhappy conservative decided to run against her, I think a liberal with a good game plan could blow them both out of the water.

It’s time to remind Reynolds and the other supposed conservatives how they got elected, and who elected them. With these new districts, it takes hardly any votes to get elected. You may have noticed that Schwab lost her ass because she didn’t take Breedlove seriously enough. I believe Coolidge rode into office on the votes that Randall Stone lost to Lauren Kohler. So let’s give Reynolds and the rest of them a good dose of reality before Tuesday night.

That’s firstname.lastname@chicoca.gov. Or you can send an email to the clerk at debbie.presson@chicoca.gov and ask her to forward it to full council.

I wrote this post because last week I read a letter to the editor from some lazy idiot ( I’m sorry to insult this person but I just get so frustrated sometimes…) complaining about rate increases from Waste Management, as well as their threats to fine customers for over-filled bins or contamination in the recycling bins.. That franchise deal with the city was rolled out in 2016. I went to various meetings, and I wrote letters to the editor and I wrote blog posts about this deal. I’m not bragging when I say that my participation in those meetings led Council to reject a proposal to make trash service mandatory, as well as yard-waste service. But I was not able to stop them from allowing the hauler to make annual rate increases and to impose onuris fines. I’m saying, if more of you lazy-asses had shown up at meetings, and contacted your psuedo-representatives, you wouldn’t have to be writing your whiney little letters now, would you?

So, excuse me for being a little short, but PLEASE get off your dead ass and contact your representative about this POB, cuz I don’t want to read your whiney little letters to the editor in five years about how your streets are crapped out, there’s no cops, whiney, whine, whine.

As you know, Chico has a drug problem…

11 Apr

I made fun of Kami Denlay-Klingbeil yesterday, but I’ll say she’s right about one thing – Chico has a horrible drug problem. Part of the problem is lack of enforcement, part of the problem is the transients who move the stuff. And I’ll agree with Denlay-Klingbeil again that there are not enough treatment facilities in our area.

You might have heard about two different recent drug busts involving heroin, fentanyl, and crank. The bigger one made headlines all over the state:

https://krcrtv.com/news/local/traffic-stop-leads-to-large-fentanyl-bust-in-butte-county

https://sacramento.cbslocal.com/2021/04/10/chico-man-found-with-25-pounds-of-meth-during-traffic-stop-south-of-palermo/

Twenty-five pounds of crank – that should send a shiver right up your spine. Because it’s not just being used in the transient camps, it’s finding it’s way into social circles all over town. This guy was also carrying heroine and fentanyl, the use of which among young people here in town is going way up.

What the news pieces did not cover is Shawn Nowlin’s long history of run-ins with local law enforcement, including past felony drug charges, and the usual failures to appear. In 2016 he was finally sentenced for those offenses – including a felony committed while he was out on bail from a previous charge. He received 5 years of drug court probation, with orders to attend a substance abuse class and a 12 step program. Wow, that should make the average criminal shivver in their boots! That probation was supposed to be up in November of this year. Nowlin didn’t make it. I have to wonder, is this his first offense since 2016, or just the first time he’s been caught?

The same week Nowlin was arrested, an 18 year old boy from Oroville was arrested not only for possession of fentanyl, but accused of selling it to kids at the junior high. Those kids had to be taken to the ER, luckily they all recovered.

https://www.actionnewsnow.com/content/news/Oroville-man-arrested-for-allegedly-selling-counterfeit-Xanax-to-teens-574172371.html

But who knows what will happen to the kid who did the dealing – will he get drug probation, so he can go out and do it again? Will he receive “treatment”?

Chico City Council recently discussed the Butte County Behavioral Health budget – over $73 million/year – but they didn’t discuss how BCBH gets that money. They get it for bringing mental patients, drug patients, and freshly released convicts into our community. But they provide little to nothing in services. The money goes into salaries and benefits. Look at the state salary database for Butte County here:

https://publicpay.ca.gov/Reports/Counties/County.aspx?entityid=4&year=2019

This information is for 2019, showing that the county enjoyed a budget of about $134 million/year. I think you’ll be surprised at some of the salaries – our CEO clocks in at a salary of about $250,000/year, with a $59,000 benefits package – total comp over $300,000, for the CEO of Butte County. Scratching your head yet?

Then you see the problem with BCBH – their director is the second highest paid employee in Butte County at about $240,000/year salary with another $54,000 in benefits. Scroll down – a “contract physician” in the Behavioral Health Department makes $216,000/year, with a $59,000 package. Scroll a few pages – I counted 18 BCBH employees making more than $100,000/year, plus benefits packages of at least $25,000 each. These people are all pure administrators, they don’t go out on the streets with the “crisis teams”. Some of them don’t even work in Butte County, they are more like consultants.

So, you can see part of the reason for the revolving door at the jail. And why Chico PD has a policy to “counsel and move them along” even if they are sitting there with a needle hanging out of their arm. We have hardcore drug addicts and really, really seriously mentally ill people living in our parks, local motels, shelters, and they are not getting any help from the public sector. The only people interested in “helping” them are people like Shawn Nowlin.

Send a link of this post to Kami Denlay Klingbeil. If she really wants to do something about this mess, she needs to start needling the county for further audit of their BCBH budget.

Orme needs to go out the door with his Shelter Crisis Designation

10 Apr

 

While the Facebook groups are all a-twitter about an “action” council took at this past Tuesday meeting, the Shelter Crisis Designation has NOT been rescinded. From Action News out of Redding:

https://www.actionnewsnow.com/content/news/City-officials-clear-up-confusion-over-shelter-crisis-declaration-in-Chico-574174441.html

A city council declaration is creating some confusion about the state of Chico’s homeless problem.

Chico city officials say that the action taken by council during Tuesday’s meeting did not officially rescind the shelter crisis declaration.

‘There would have to be a vehicle that came back to the city council in the same form as what actually put it in place, and that’s a resolution,’ said Chico city manager, Mark Orme.

Orme says council would have to adopt that resolution to get rid of the 2018 crisis declaration.

According to this article, the SCD was set to expire in June anyway. So why do they have to adopt a resolution, why can’t they just refuse to renew it? And, will they have to give back any/all of the money? When the liberals got Andrew Coolidge to sign on to this mess in 2018, city Staff received almost $5 million.

Kami Denlay (married name Klingbeil) seems very confused in her comments to Ch 7.

When asked about the potential financial impacts ending the declaration could cause, Denlay says, ‘That’s part of the tricky part with all of this, is we’ve been asking for a long time for really detailed funding, because it’s complicated to see what streams come into the county, what comes from the state, the feds, what are the requirements for all of the funding, and every funding stream has totally different requirements, some may be tied to the declaration in part, some might be solely tied to the declaration, some may not be at all. And we get to see that because it’s complicated and we’ve never gotten a straight answer, we’re going to get straight answers now,’ said Denlay.

I knew she didn’t understand half of what goes on Downtown, I don’t think any of them have a rat’s ass of an idea what they are doing. They allow themselves to be led by Orme. Denlay Klingbeil claims, “we’ve never gotten a straight answer …”

Straight answer from whom? City Manager Mark Orme and his staff brought forward this proposal in the first place. Is Denlay Klingbeil accusing Orme of not giving council straight answers?

I’ve been asking my district rep Kasey Reynolds about the SCD for months, but I have never got a straight answer. When I actually phoned her at her business, Shuberts, I was shocked that she wanted to talk while she was at work. I was also shocked at the angry rant she went into, expressing how much “hate” (her word) she has for the various programs like Project Room Key. She went on and on about that. But she would not answer my questions about funding. She also told me she was waiting for information from the city attorney, and that she’d get back to me about that. End of conversation. I’ve emailed her several times since then, asking for those answers, but she has never responded. If I ever talk to her on the phone again, I’ll be sure to record the conversation. Reynolds was like a flaming bat out of hell, she went all over the place, but no answers.

So I’ll be interested in how this conversation plays out. Here’s what I’d like to see – Mark Orme being handed his hat.

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

Time for “Truth in Accounting”

8 Apr

I’ve noticed lately this blog is getting alot of traffic from a really interesting website called “Truth in Accounting”:

https://www.truthinaccounting.org/

This website is operated by a well-credentialed group of individuals, out of Chicago – a city with big pension problems. It is a really good source of information about pension systems nationwide, including the federal government systems, which have driven our national debt for years. Didn’t you ever wonder how this nation could end up with such astronomical debt?

They are featuring the post I made the other day about the city of Irvine, California, and Defined Contribution Pension Plans. So, I must be onto something, these people are all financial big-shots. I don’t think they’d run it if I were shooting blanks at the moon.

We here in Chico, and all over California, 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 these outrageous pensions. Why would Staffers who make enormous salaries care about our hardships – they want the fucking money.

Do you know how many members of council are either public pensioners or are married to pensioners? Andrew Coolidge’s wife teaches at Chico State. Sean Morgan is also employed by Chico State, as is Alex Brown. Kami Denlay (married name, Klingbeil) is married to a public safety worker.

And then there are the contributions from public employee unions – Deepika Tandon in the latest election and Kasey Reynolds in 2018 both received their biggest contributions from the unions. I’m not sure about Huber, but he’s already expressed his desire to add more taxes to your bills with as little public participation as possible.

I don’t believe people with such obvious conflict of interest should be allowed to make these kind of decisions. 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 you have to ask yourself why they won’t ask employees to come to the table with more reasonable contributions. And why they don’t make any effort to get out of CalPERS and ask new employees to take a Defined Contribution Pension Plan.

The main reason is that the voters don’t make it a very important issue. That’s probably because most people have no idea what’s going on. You can blame COVID, but I’d say, the public is very poorly educated as it is, and Staff does everything they can to obfuscate the issue. I’d bet my last $5 that most council members barely understand what they are doing, they are following Mark Orme into the swamp. As long as they have their fingers in each other’s belt loops, they will make it out okay.

But Chico is sinking, look around yourself. And then look at the city budget, millions of dollars that should be spent on streets and other infrastructure going to the Unfunded Actuarial Liability – their obscure term for the pension deficit. And then look at your property tax bill – if you’re a renter, ask your landlord about it.

I think there’s a letter to the editor here, I’ll have to work on it. You too.

It’s time for The Discussion: Who will pay for the pensions?

6 Apr

Last time we discussed a Defined Contribution Pension Plan offered by the city of Irvine California. The city of Chico uses a Defined Benefits Pension Plan. What’s the difference? Plenty. Here’s a good read from Investopedia:

https://www.investopedia.com/ask/answers/032415/how-does-defined-benefit-pension-plan-differ-defined-contribution-plan.asp

The operative words here are “Benefits” and “Contribution”. Defined benefits means, whether or not business is good, the employee gets the pension they were promised. ” Defined-benefit plans provide eligible employees guaranteed income for life when they retire. Employers guarantee a specific retirement benefit amount for each participant that is based on factors such as the employee’s salary and years of service.

In California, the state retirement systems made “guarantees” they couldn’t keep – 70 – 90% of highest years’ pay with minimal to no contribution from the employee. ” Employees are not expected to contribute to the plan, and they do not have individual accounts. Their right is not to an account, but to a stream of payments.

In the beginning, CalPERS even told employers they didn’t have to contribute much of anything – CalPERS said they would make wise investments, and that would pay for these crazy pensions. That didn’t work out, so the employers – cities, counties, and public agencies all over the state – are on the hook for the pensions. And they are turning to the taxpayers like Mack the Knife. See, the contribution was never defined in this plan, so it’s whatever CalPERS demands. Like a junky on the street corner, they want it NOW!

On the other hand, the most common kind of Defined Contribution Pension Plan is a 401K. “Defined-contribution plans are funded primarily by the employee. But many employers make matching contributions to a certain amount .”

In Irvine, the city put up a little over 12% of salary. The employee is allowed to contribute whatever they want, and to control the investments. An interesting notation in that agreement is that the employee must wait 5 years before they are “100% vested” in the plan, meaning, they don’t get a full pension until they’ve proven to be a good and loyal employee.

And a DCPP is less risk for the employer. “As the employer has no obligation toward the account’s performance after the funds are deposited, these plans require little work, are low risk to the employer, and cost less to administer. The employee is responsible for making the contributions and choosing investments offered by the plan. Contributions are typically invested in select mutual funds, which contain a basket of stocks or securities, and money market funds, but the investment menu can also include annuities and individual stocks.

Both set-ups are risky for the employee. If CalPERS fails, and that’s looking more likely all the time, pensioners GET NOTHING. With a DCPP, the employee makes their own investments, if they aren’t market savvy, they stand to lose there too. But, given CalPERS’ track record, I can see where an employee would be wise to opt for a DCPP.

Why hasn’t the city of Chico (or the county of Butte, or any of the local gov agencies…) offered a DCPP? I think that’s a no brainer. The DBPP is more lucrative, as long as they can keep propping up the failing CalPERS. The most popular form of prop these days is the Pension Obligation Bond.

It’s time for The Discussion about who will pay for these outrageous pensions. Will the employees step up to the plate and do the right thing, or will council allow Staff to force the taxpayers to the wheel with new debt and higher taxes?

Next time, on This Old Lady and the POBs!

While Mark Orme claims we can’t get out of CalPERS, Irvine California has switched to a Defined Contributions Plan and cut their UAL by 23% in 4 years

4 Apr

This Tuesday, city council will be looking at a number of “MOU’s” – Memos of Understanding – with various employee bargaining groups. I haven’t had time to read them, but I would be surprised if there’s any discussion of employees paying more of their pension and benefits costs.

When Dave Howell brought that option up at last month’s Finance Committee meeting, Mark Orme blurted out “we want pension reform, we’ve lobbied for it, we’ve met with Marcie, the CEO of PERS…” But no further discussion. I doubt we’ll ever be privvy to these conversations, and haven’t the faintest notion what Orme means by “reform”. What stuck out to me was that he knows the CEO of CalPERS by first name.

Marcie Frost, the current CalPERS CEO, has come under fire for allegations that she made false educational claims on her application for the job. But that didn’t stop the board from giving her a salary of $330,720 for the 2019 fiscal year and a 26.7% bonus of $84,873 in 2018. These people, including Orme, who makes a base salary of $207,000/year, are so out of touch with the people they are supposed to serve, I think Orme may really believe he’s doing his best, and that he fully deserves to get 70% of that salary in retirement, having paid less than 10% of the total cost.

But he’s not doing his best. The city manager of Irvine California is doing a lot better. While other cities are considering the high stakes game of Pension Obligation Bonds, Irvine is breaking away from the pack, and saving a ton of taxpayer money without throwing the taxpayers in front of the train.

https://www.ocregister.com/2020/11/15/as-public-pension-costs-soar-some-southern-california-agencies-turn-to-controversial-borrowing-to-fill-deep-holes/

The authors examine the current abyss of debt that most California cities are now facing over false promises made by CalPERS back in the 1990’s. According to Stanford University’s Pension Tracker, there are two different “lenses” through which we can look at this situation.

  • The rosier one, used by California officials, assumes that investments will earn returns of about 7%. That puts unfunded liabilities at $352.5 billion statewide, or the equivalent of $27,187 per household.
  • The darker one, used by Stanford’s Joe Nation, a former Democratic state assemblyman and professor of public policy, assumes the much lower return rate of 3.25%. That pegs unfunded liabilities at nearly $1.1 trillion, or $81,634 per household.

In my opinion, scenario No. 1 is a flat out lie, the dark reality has set in, CalPERS hasn’t made their projected returns for years and years. “While the giant retirement system plans on a 7% return on its investments, it returned just 4.7% this year. ” But public agencies all over California have continued to wear their rose-colored glasses while they have handed out ridiculously over-generous salaries and benefits packages without requiring employees to step up with realistic contributions. That, says the author, has created a hole.

If that hole isn’t filled up with meatier earnings and heftier contributions from public agencies and their workers, taxpayers will be called upon to fill it directly. Some argue that’s already happening. In 2020, there were at least 99 local sales tax measures on the ballot in California. None of them said, ‘We need more money, in part, to pay for spiking public pension costs,’ but they did say things like ‘for municipal services, including emergency response, public safety, clean drinking water, local businesses, street repair, after-school, youth, disabled and senior programs, and addressing homelessness’ and ‘for general city services.’”

Yes, while they didn’t exactly lie, they worded these measures in such a way as to leave the revenues open for general spending, and that means, siphoned into the pensions. POB’s have to be secured with a new revenue stream, and the consultant who came before the Finance Committee said sales tax measures are the easiest and most common way to do that.

For a change, I noticed, those measures did not do as well as they have in past. A good number of them failed, including sales tax measures in Tehama and Shasta Counties. The voters have started to figure out this trend, which I believe is why so many agencies are turning to Pension Obligation Bonds. POB’s don’t have to go on the ballot.

Our council members have all drank Mark Orme’s Kool Aid, they are telling us they’ve done all they can to rein in the pensions. No, they haven’t. First of all, they are doing nothing to control employee costs. Second, they will not ask employees to pay higher contributions. Orme created three new management positions last year, and council has rubber-stamped every new contract that comes in front of them without asking for more realistic contribution from employees, even when doling out raises.

But not every town in California is going along with the scam. While Mark Orme (and Ann Willmann over at Chico Area Rec Dist) says we can’t get out of CalPERS, Irvine started offering an alternative as early as 2003. This article explains how they’ve reduced their UAL 23% over the past four years without issuing Pension Obligation Bonds.

“Irvine continues its streak as the healthiest large city in America when examined through the lens of long-term fiscal soundness, according to Chicago-based watchdog group Truth in Accounting. It has curtailed spending, frozen vacancies and asked its vendors and contractors for price reductions — and most of them actually said yes, said Marianna Marysheva, Irvine’s interim city manager.

“The city has managed to shrink unfunded liabilities by 23% over four years, making millions of dollars in additional payments annually.”

Part of the savings was getting employees to volunteer to drop out of CalPERS and participate in the city’s Defined Contribution Pension Plan (DCPP). Read this, from the city of Irvine HR page:

 https://legacy.cityofirvine.org/civica/filebank/blobdload.asp?BlobID=18082

The provisions of this Section 2.1 shall apply to employees, as
of June 30. 2003. who elected to decline the CalPERS benefits.

  1. The City shall invest an amount equal to 12.448% of each
    employee’s base salary in the City of Irvine Defined Contribution
    Pension Plan (DCPP). Employees shall become fifty percent (50%)
    vested in such plan upon completion of the probationary period.
    Thereafter, such vested interest shall increase at the rate of five
    percent (5%) for every Plan Year in which the employee completes
    one-thousand (1000) hours of service. Once the employee has
    completed five (5) years of service, he/she shall become 100%
    vested in the retirement plan.
  2. The City will deduct an amount equal to 6.552% of each employee’s
    base salary to invest in the City of Irvine DCPP
    this payroll deduction shall be mandatory fo
    elected to remain in the City of Irvine DCPP.
  3. All employees who elected to remain in the City of Irvine DCPP shall
    not be entitled to any CalPERS benefits, past, present, or future, as
    provided under Section 2.1.B of this Resolution. Employees, who

elected to remain in the City of Irvine DCPP, shall continue
participation until the employee terminates his/her employment from
the City for any reason.

  1. The City will utilize retirement plan forfeiture funds to offset the City
    of Irvine DCPP administration and management costs.

In my next post, we’ll look at the difference between DCPP’s and “Defined Benefit Plans”, but I bet you could figure it out. Next time on This Old Lady and the POBs.

Coolidge admits the sales tax increase revenues would go toward the bond payments – “then it would fall away and it would just include public safety…”

1 Apr

Back to the March 24 Finance Committee meeting. I’ve already hashed over the Business/Residential Residential Tax conversation, the next item on the agenda was a discussion of the proposed sales tax increase and “road bond” measures.

Andrew Coolidge, mayor and FC chair, opened the meeting with comments about “the struggles of 2019“. What struggles? Did your house burn down Mr. Mayor? Did your town burn down? No, actually, the city of Chico rode out the Camp Fire with more than $20 million in surplus revenues by July 2020, mostly sales tax. Staff received “back fill” from the state for all “lost” tax revenues. And, the demand for housing went through the roof – according to the finance report at the end of the meeting, property values in Chico went up 5% more than the rest of the county in 2020. Currently home prices in Chico are up 8%. This windfall has resulted in more revenues from not only property taxes but an increase in RDA revenues.

But remember, Coolidge was setting the scene for not one but TWO revenue measures. Can’t tell people the real truth – revenues in the city have been more than staff predicted every year since the Camp Fire. The real reason Staff wants these tax measures is to secure the Pension Obligation Bond they are quickly implementing behind closed doors.

In fact, Services Director Scott Dowell informed the committee that any bonds, whether Pension Obligation Bonds or “road” bonds, would “have to have a revenue stream attached to pay for those bonds“.

Coolidge referred to the sales tax increase measure, commenting, “then it would fall away and it would just include public safety…” .

Yes, they intend to use the sales tax measure, which they’ve sold as a “special tax for cops and fire”, to secure the POB. The city is broke, where else we gonna get the money to make those bond payments, but a sales tax increase? The consultant who presented the POB said that most jurisdictions that implemented POB’s had to raise sales tax to cover it.

Coolidge would like us to believe there would be something left over for “cops and fire”, whatever that means, but let’s face it – with a $147 million pension deficit, and another $150 million interest owed on that deficit, there’s not EVER going to be anything left of the sales tax revenues. In fact, I’ll tell you what – they’ll take the bond money from the “road bond” too – there’s nothing to stop them from transferring those funds into the General Fund.

Well, I’ve had an incredibly hard time posting this. No, I don’t have the greatest internet, as observed by Sean Morgan during the meeting. I’ll leave it here – you got the point.

Joe Azzarito: Council needs to “serve notice to all city employees that as of a determinable date they will be paying the full cost of their ‘silver spoon’ pensions”

30 Mar

Joe Azzarito is a retired accountant who lives in Chico. Here’s a letter he recently sent to the city of Chico regarding the Tax-a-rama council has embarked upon since a “conservative” Super Majority took over in January. Thanks Joe, I hope this email inspires other people to express their outrage with this obvious ploy to leave the taxpayers holding the Pension Deficit Bag.

To all Chico city councilors and Senior City Staff:

The topics of municipal revenue enhancements, namely a sales tax increase and pension obligation bonds keep surfacing in the course of discourse and analysis by concerned citizens such as myself

Now why would that be? Could it be that you all are not listening to your constituents demands that these disastrously wrong ill conceived options, for funding the massive unfunded pension obligations that this city has forced upon its citizens, be abandoned? Whenever I read or hear about these plans of enduring us to untold costs to fund city staff’s, be they unionized or not, exorbitant salaries and pensions, it makes my blood boil. Your dark of the night surreptitious intents, without transparency, to enact either of these programs is a dereliction of duty, maybe not to your sponsors, the unions, or your fellow colleagues, but certainly to your constituents – the people that pay your salary through taxes. 

I have heard that programs such as these can be implemented, without the consent of the voters. How dare you! It is not enough to seek input from us but for us to approve of these wild schemes fraught with danger. Given that the ruling class of Chico earns far and away much more than the median income of the people of Chico, you have the gall to push these down our throats.

 For those on the council, recently elected and those previously, you are not conservatives, in the slightest sense fiscally. You all seem to some how, symbiotically, look after each other’s tail. Unions give you campaign funds so that you can win elected office. In turn, you fulfill their needs by ensuring their members are well paid. Wherein do the citizens fit into your scenario? Oh, yes, we are to fill the city coffers with the funds you promised your benefactors. Our needs lay at the bottom of a very deep hole, somehow they are only minimally attended to. It shouldn’t be that way! We should come first as it is our sweat and toil that makes it all possible. 

I have spoken many times of the badly written about California Rule that keeps you from “doing the right thing” – that being to serve notice to all city employees that as of a determinable date they will be paying the full cost of their “silver spoon” pensions and that salary structures must be revised, downward, to allow the city to adequately meets its obligations to its citizens, first. Promises, previously made in prior eras when economic conditions were much more rosier than now, need to be upended. It would necessitate that pay scales, merit raises, benefits, including pensions, be approved by a body, inclusive of a citizenry board, and not by the likes of City Manager, his staff and/or City Council. To keep the decision making in their hands alone is why these financial problems came about in the first place. Those that pay the salaries should be the ones deciding, not so now. To have city staff analyzing, recommending and being on the receiving end of the decisions made is tantamount to “conflict of interest. 

At the very least a referendum should be devised and agreed to by vote of the electorate on all of the above. The unfunded elephant in the room must be sequestered and controlled. CALPERS should be informed of any changes and any separations be established. The pensions of all covered city employees would need to be renegotiated, with the stipulation that staff would be paying the full load of costs.  Any conflict with current law needs to be assessed and corrected. It is high time that city pay the piper his due!

 Respectfully, Joe Azzarito  

More on the business/rental tax conversation

26 Mar

Well, it was tough trying to follow that March 24 Finance Committee discussion via Zoom – I was afraid to open another page on my computer at first, afraid I’d lose the meeting. I’m no techie. So I tried to take notes by hand. Here’s what I got.

Scott Dowell – “We started this [business tax update] a year and a half ago… to update an old ordinance written in the 1970’s…” After a few more comments assuring us that the ordinance needed to be “updated,” Dowell turned the floor over to the consultant, HdL. According to their website, “The HdL Companies is a pioneer and leader of auditing, operations, and revenue … HdL’s ECONSolutions team provides economic development consulting …”

The consultant’s report begins, “In an effort to identify methods of generating additional local funds and to garner efficiencies of process by modernizing the code, the City commissioned the HdL Companies.” Please note that the first reason for this ordinance overhaul is to raise “additional local funds,” and Honey, wake up, that means TAXES.

Furthermore, “Each of the three options for modifying the tax structure provide increased revenues to the City while striving to create an equitable outcome for the business community by not placing the burden of increased rates solely on any individual category. ” If you read the report you see that’s a lie, they want to “place the burden” on landlords and tenants.

Josh from HdL told the group that currently Chico uses a “tax-based” business license, not a “regulatory” license. A regulatory license would allow the city council to decide which type of businesses, specifically, are allowed to operate in Chico. Of course a good example that we’ve been hearing a lot about is the cannabis industry, which came up later on the agenda. But the type of businesses allowed in town was not the only type of “regulation” the consultant brought up.

Josh the consultant went on to describe Chico revenues as “flat,” which didn’t make sense, given the report delivered at the end of the meeting by Finance Department staffers. I think what Josh really meant was that the revenues are not coming in far enough of expenses. Instead he said, “your business tax is not keeping up … it should follow your sales tax receipts.”

Let’s think about that. He’s saying what we already know from staff reports over the past couple of years – revenue streams like property taxes and sales tax are up, up, way up. At the end of this meeting the finance dept staff said we could expect other upticks in future, since property values in Chico are way higher than the surrounding county, and then there’s the stimulus check money. At the January meeting Dowell reported an “unexpected” $30 million uptick in sales tax revenues.

So the consultant is saying, businesses are making more money, let’s exploit that with a new business tax ordinance. He chastised the committee – Chico has the highest population of nearby cities and town, but the LOWEST per capita business tax revenue – $3.80 per person per year. His chart showed a list of local municipalities, with Chico on the bottom of the dog heap, under Yoooooba City! Disgraceful! Well, I don’t know – that almost sounds Business Friendly. Apparently that’s not what the consultant is shooting for.

Josh also reported that the burden of paying the business tax has fallen on the smaller businesses in town, but did not explain why. But, later, he suggested that the city could take the “burden” off retail businesses by adding rentals to their scheme.

The current business tax schedule is pretty interesting – you can see it on pages 12 and 13 of the consultant’s report. Most businesses are taxed based on the number of employees they have. Employee taxes have never made sense to me – do we not want jobs? Why would you penalize an employer for paying good wages? And besides, that option does not provide enough revenue to cover the salaries and pensions Downtown.

The consulting firm is pushing for a “gross receipts” option – and you heard that right – they want to tax businesses based on how much money they make. An income tax for businesses, that goes to a city that does not provide services, only penalties.

And this, “The City currently excludes residential property rentals where the total units are less than 3. The current ordinance also appears to exclude commercial property rental. Given the make-up of the City, this leaves many potential businesses without being taxed. The City could consider removing the unit exemption entirely requiring even renters of single family homes to pay the tax. Furthermore, the definition could be changed to residential and non-residential property, picking up any property rental within the City.”

Evil never sleeps. They are suggesting penalizing the people who provide housing as well as people who need housing, just because they can. That’s why I’d call it a “tenant tax,” which is a little easier to say than “a tax because you don’t own your own house...”

The three options the consultant laid on the table were

  1. increase the amount of Employee Tax
  2. go to a gross receipts model
  3. go to a gross receipts model and include all rentals in town, including all those backyard units the city was encouraging people to build, under the guise of encouraging more and cheaper housing

The third model included the language about rent control, but the consultant denied any such thing. I hope you will read that section again, very closely, I think you’ll see RENT CONTROL DUMMY! See Attachment A – Business Tax Analysis and Ordinance Review, near the very end of the consultant’s report.

I could talk about the consultant’s report for a week, but I hope you’ll read it too.

https://www.chico.ca.us/sites/main/files/file-attachments/3.24.21_fc_agenda_packet.pdf?1616179820

Instead I’d like to cut to the committee discussion to which you were probably not privvy. Andrew Coolidge recently accused me of taking his words out of context – well, I took notes as fast as I could during that meeting – if he wants to know who said what, maybe he should order the clerk to make a recording available to the public.

Scott Huber took the floor briefly to say that he favored the third option, which would include all rentals in the gross receipts model.

Sean Morgan reminded us that they are just trying to modernize this ordinance and “make it more equitable,” still insinuating that some businesses are not paying their way. He said that was why council made the Waste Hauler Franchise deal – the garbage tax – “because some were paying unfairly…” That remark did not make sense. Who was not paying fairly? The consumers are the ones who got stuck with the increase. And that’s who this burden will fall to – the consumers and the renters.

Coolidge surprised me, saying he did not like the gross receipts model, going so far as to claim, “I have stopped doing business in jurisdictions that use the gross receipts model...” He also said he knew business owners here that “make a lot of money but don’t pay…” He didn’t explain either remark.

The consultant quickly shifted gears to say the Employee Tax was the “most popular” in California jurisdictions, but opined that the gross receipts model is the “most equitable”. Again, I’m hearing, “let’s stick it to the landlords and the tenants!

There were about 23 attendees hanging around on Zoom, I couldn’t see them all on my screen, but one was current Chico Chamber CEO and former CEO of the Jesus Center, Katy Thoma. For once she asked a good question: “Does this tax go to the General Fund?” To which Scott Dowell answered a very brief and almost inaudible “Yes.” Nobody had to explain that the General Fund is an almost unregulated cookie jar out of which Council and staff can withdraw funding for just about any whim.

At this point the audio began to cut out, I was “timed out”, and had to sign back in. From what I could understand, the committee voted to have the consultant make a report to the full council, but I can’t be sure about that. I did get back in time to listen in on the sales tax increase measure conversation, and I’ll report that – Next Time! On “This Old Lady Goes to a Zooooom! Meeting”