Tag Archives: Chico Finance Committee

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

Meet the New Boss – same as the Old Boss

27 Aug

Yesterday I attended the Finance Committee meeting Downtown, and found out the “salary schedule” plan Human Resources had hatched out of Reanette Fillmer’s head is as bad as I thought. I was surprised to hear Ass City Manager Chris Constantin say so. He says it will not only amount to automatic raises without review, but it will tie the city’s hands somewhat in negotiating salaries with new employees. He and Manager Mark Orme are passing along a negative recommendation to council. 

Fillmer’s little gal from Human Resources argued that it would set maximum salaries, but Constantin aptly pointed out – it sets up minimum salaries too, and they’re too generous to be competitive in our favor as employers. 

The committee – Mayor Mark Sorensen, Vice Mayor Sean Morgan, and council member Randall Stone – also rejected the salary schedule, but are recommending other changes to employee policy, regarding severance and other items. I don’t understand all of this stuff, but I hear interesting things. The severance package is important, according to Constantin, because “it’s not just about the employee getting money when they leave, it’s about them signing away their right to sue…” The stuff you hear at these meetings. 

I’ll tell you what I got out of that conversation – and yeah, this is just my best guess – the cops and fire department want automatic pay raises, and Fillmer was going to hand them over through this new salary schedule BS. I knew she was going to be bad news. Her sole purpose on council seems to be backing the public safety unions in their money demands. 

The next item involved the city’s purchasing practices. I remember listening to Constantin when he came here, telling us the various departments were just buying their pencils and paper and other supplies as they wished, some of them had caches of the stuff. At the end of the month they’d just present their bills to ex-Finance Director “Lucy Goosey” Hennessey and she’d pay what she could and turn the rest over to the red column. 

Apparently this is still going on. At one point Administrative Services (Finance) Director Frank Fields said, “we have to get it through to the department heads – you’re out of money, stop spending…” But, he still wants to raise the discretionary spending limit (what they can spend without permission) from $1,000 to $2,500.

And it’s not just about paper and pencils. There’s stuff in there about management being allowed to throw little soirees within certain amounts – and they do. The other day Mark Orme threw a little gala for Comcast. He got to use the big scissors and everything. Apparently Comcast just put some money into their infrastructure for a change, and that’s a reason to cut work and throw a party at the taxpayer’s expense. Maybe if I’d been invited my nose wouldn’t be out.  Maybe if this meant better Comcast service for me, my nose wouldn’t be out. 

This meeting was all about the State Auditor. The State Auditor determined that Chico was at high risk for financial collapse and put us on the red list. They were threatening an AUDIT, which I think they should still do, but will be satisfied  if they see that Frank and the boys  are putting some awesome overtime into talking about the budget. All they need to be doing is manipulating funds to make sure there are no deficits. They talked about that new ordinance at the last meeting I attended – whenever a fund is low they just steal money from another fund. It’s called “allocation.” Fields admitted there were severe  shortages in some funds  – one fund short by $6 million – but those deficits will be “allocated away.” In fact, some of them will be “allocated” to the Finance Committee meeting we just sat in yesterday. All those staffers – including the fire department employee who sat silently behind me through the whole meeting – will have their salaries for yesterday morning paid out of the funds discussed. 

So, yesterday’s meeting wasn’t about solvency, it was about pleasing the State Auditor and avoiding an audit. They sure are afraid to be audited, is what I’m hearing. 

Fields said as much about 100 times, he’s very “frank”. There were four items for recommendation in his report – three had to do with bookkeeping, but the fourth was just fluff – an ordinance stating that the city would use local vendors whenever possible, even  if they couldn’t beat prices from out-of-town vendors. Mark Sorensen said this idea was “ridiculous” because it would mean turning away a vendor who might be located “200  yards” out of the city limit. 

I think it’s counter-efficient. The bid should go to the lowest offer, unless that vendor is known  to be sub-par. But, Sorensen and the team recommended this be “redefined” by the city’s law consultants and brought back. I can’t imagine how much that is going to cost, for an ordinance the mayor has described as “ridiculous.” Then Fields said it didn’t matter – the auditor was only interested in the first three items. The local purchasing ordinance “clearly sends a message that the city desires to do business with local vendors.” That’s the same kind of feel-good crap people like Sorensen and Morgan complained about when the liberals were in charge.

Meet the New Boss – Same as the Old Boss.