Tag Archives: Chico pension deficit

Finance Committee approves builder fee increases, including new fees from the fire department – this is how they tack their salaries to the cost of housing

21 Apr

Yesterday morning I attended a special Finance Committee meeting. “Special” meaning, off-schedule, called for some sort of immediate action. What was this special emergency? They wanted to raise builder fees.

The meeting only lasted about 20 minutes, including the Finance Director’s report. There was very little discussion, no questions from the committee, and only one comment from the public. The committee voted unanimously to accept staff’s (Mark Sorensen’s) suggestion to raise fees across the board, even though, as Sean Morgan observed (check this with notes) “these are some pretty significant changes... “

No kidding – a $9,000 increase in the fee for getting your subdivision past environmental review – about double the old fee. And, the fire department is adding NEW fees – almost $1,000 in permit fees for a fire hydrant – what is this, Gangs of New York?

The lone public comment came from Chico Chamber of Commerce CEO Katy Thoma, who said she was representing the Builder’s Exchange. She correctly pointed out to the committee the relationship between builder fees and home prices. She asked that the committee recommend delaying the increase until a new NEXUS (impact fees) study could been performed.

According to The Turner Center for Housing, “ Impact fee nexus studies should clearly identify the level of service currently provided by a city, and estimate the cost needed to keep that service at the same level after new housing is added.“

Improving Impact Fees in California: Rethinking the Nexus Studies Requirements

Let me have a little laugh here – the Builder’s Exchange fairly well ran the Measure H campaign, and I’m guessing they thought they were going to get a break when it came to the fees, if they helped shoe-horn that measure up our collective patoot. Ha Ha Brandon, I guess you should be more careful who you get in bed with.

City staff do the NEXUS study in their own best interest, despite their hollow claims of providing more “affordable housing”. They look at development as their major cash cow, include all their salaries and benefits, including their pension deficit, as “costs”.

Looking at the finance report provided at the meeting, you see, through March 31, the city “Streets” fund, for example, has received $3,136,848.56 from state gas tax revenues, $2,235,970.49 already spent on salaries and benefits. Only $223,656.96 has gone to “Materials & Supplies” – over $6,000 of which went for “postage/mailing, books/periodicals/software, clothing/uniforms…” Leaving less than $220,000 for materials like aggregate, asphalt, and road crack filler, and other stuff they actually need to fix and maintain our roads. So you see, “impact fees” are largely paying for administrators, including Sorensen – not street maintenance.

Here’s that link: https://chico.ca.us/sites/main/files/file-attachments/4.19.23_finance_committee_agenda_packet_-_special.pdf?1681494097

In this way they add their incredibly generous salaries, benefits, and pension costs (+ interest) to the cost of the average home.

After Thoma sat down, City manager Sorensen responded that these fee increases are based on the “current” study, but didn’t say when that study had been done. The most recent study I could find was from 2018 – http://www.chicobuilders.org/news/nexus-program/

Then the committee quickly dismissed Thoma’s concerns without discussion and unanimously agreed to forward the fee increases to council.

I’ll add here that on the previous night, amid a lot of shouting and bullying and bally-hooing over Valley’s Edge, council quickly and quietly approved an new management salary of $185,000 (a $40,000 increase from management salaries of two years ago) and agreed that this new employee would only pay 9% of his pension cost.

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Chico’s Unfunded Pension Liability – the 8,000 pound gorilla in the room that none of the candidates want to talk about

13 Sep

As Dave reminded us yesterday, “the 8,000 pound gorilla in the room” that nobody will talk about in this election is the Unfunded Pension Liability (UAL).

The UAL has been created and perpetuated by the tiny shares that employees pay toward their own pensions – they pay less than 15% but expect to get 70 – 90% in retirement. That only works if somebody picks up the other 80 – 90%. They expect us to be that somebody, and I’m saying, NO!

And while the city manager claims repeatedly that “staff” has not had raises “for years”, the new police chief just got $21,000 more a year than the old police chief. Chico police officers get automatic raises, they are on a “step increase” plan. They also get to “cash out” unused overtime, sick and vacation days on a formula that actually pays them more not to work. They also use these cash-outs to “spike” their salaries and therefor their pensions.  Look at their contracts here:

https://www.chico.ca.us/post/labor-agreements

Finance manager Dowell told me, in August 2019, that city employees pay between 9.75 and 15% of their pension cost, depending on their union group. See, the city manager negotiates these contracts with each group, and then the council just rubberstamps them. It’s time for council to do some of the negotiating. And that means, we have to hold a candle to their rear-end.

Other towns are actually cutting salaries, Chico is not only raising salaries but creating new positions – the new Public Information Officer and another management position for Public Works. This is like throwing gas on the UAL fire. Another thing that goes up automatically every year is the UAL “catch up” payment.  Finance director Scott Dowell just paid almost $10 million to CalPERS. And next year he says it will be over $11 million.

Here are questions for your district candidate:

  1. What is the UAL?  (answer: Unfunded Actuarial Liability, or pension deficit)
  2. How much is Chico’s current UAL?  (the last figure I have from Scott Dowell is $128 million, I believe it’s now over $130 million)
  3. How much money did Scott Dowell just pay toward the UAL in July of this year? (over $9 million)
  4. What are the various shares paid by different employee groups? (between 9.75 and 15%, depending on employee group)

These are terms any council member or candidate should know and understand, since they agree to all this stuff when they roll over the contracts every year. If they don’t, it’s a deal breaker as far as I’m concerned, they should not be in office.  The main reason we are currently in financial trouble is ignorance of these terms. 

So don’t let the candidates tell us what the issues are in this election – don’t let them distract you with pictures of bum camps and trash piles.  Tell them, the issue is the UAL, and who is going to pay it. 

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