Public in Favor of Proposed District Assessments for City Libraries, Parks and Fire Services… Oh Really!
In June 2013, the City of Glendale hired an outside company, the Rose Institute of State and Local Government, to conduct a Citizen’s Satisfaction Phone survey. (1)
During the City Council meeting on December 17, 2012, while discussing the survey, our infamous DUI mayor said that anyone who is very dissatisfied with city services can put their house up for sale and move out of the City. Apparently, Weaver couldn’t help himself and put his foot in his mouth again. He prefers that the community be apathetic and uninformed, incapable of giving constructive criticism. Rather, he wants the community to give the council carte blanche and applaud with total satisfaction every policy decision coming from the Dais. Again, Weaver is (PUI) presiding under the influence. It was apparent when he denied Harry Zavos the right to speak, before the council vote to rescind the water rate increases on April 27, 2011, who was instrumental in pointing out the flawed Cost Service Analysis Report by Willdan, an outside consultant, prior to the Council adopting it. Again, the Council did not give Harry Zavos, any respect or consideration of his written analysis detailing errors in Willdan’s work product that violated Prop. 218, before they adopted the ordinance and after they rescinding it on December 17, 2013.
The scientific survey appeared to have a bias towards supporting a tax increase, i.e.
· What do you like Best and least about living in Glendale
· Is the City headed in the right or wrong direction?
· How do you feel generally about the services provided by the City?
· What would be your suggestion to improve Glendale?
· How do you feel about the Police, Fire, Community Services and Parks, Library Arts & Culture Department, Public Works, GWP, etc…
Then the discussed “several major priorities that the council needs to address” in the near future, asking respondents to classify as : 1.. Very important, 2…Somewhat Important; 3…Not Important; 4…Don’t Know, i.e. Managing new development and growth; Enhancing Recreation and/or education offerings for residents through the Parks & Library; Managing the city’s financial affairs in a responsible manner; Providing a rich variety of arts and cultural experiences, are you satisfied with the level of maintenance on city streets, sidewalks, and city parks, etc…
Of course, the City wants respondents to answer all the above as “very important”. Why not? But at what cost? The preceding questions were just a primer, a warm-up, for the most important questions to the council members; i.e.
· How likely would you be to support the creation of a library assessment district to preserve & enhance library services; a Parks assessment district to preserve & enhance Park services, and a fire assessment district to preserve & enhance fire services?
· Would you be comfortable with voting for the creation of a parks/library/public safety assessment district?
· Do you always, mostly, or rarely vote in city elections?
The GNP reported that per the survey, residents are open to new taxes to pay for parks, libraries, and public safety services. Yet, the GNP said that there were only 400 respondents. half of the respondents were Armenian, with 46% earning less than $50,000. How could they claim that the survey was a cross section of the residents when half was Armenian, the city’s largest minority group? The most frequently suggested items for improvement were affordable housing 42%. This is indicative that a significant number of respondents were not homeowners. When I went to the report at tinyurl.com/glendalesurvey, on page 22 (26/181) it reported that 38% owned their home and 62% were renters. So when the question asks, “would you support”, or “feel comfortable voting for”, “the creation of a “assessment district”, the majority of the respondents most likely had no idea what it meant! This begs the question, how can Rose Institute conclude that these respondents, 62% who are renters, are open to new taxes, when they didn’t use the word “tax” in the survey. You cannot conclude that the word assessment can equate to a “parcel tax” or that they are interchangeable when 168 (42%) of the respondents needed to have the survey translated into their native language, either Armenian, Korean, and Spanish, and when 47% of the respondents rarely or never vote in an election.
The City of Glendale incorporated in 1906, and has never had the need for an assessment district for librarys, parks, and public safety. What the council is saying is that the annual $20.5 million transfer to the General fund from GWP Electric revenues and the $26.5 million in Utility Users Taxes to the General fund for general appropriations to pay for libraries, parks, and safety officers overtime and salary perks is not enough. They need more revenue to have to pay for the unsustainable salaries, overtime, salary perks, pensions and benefits.
What they are not telling you is that the worst possible scenario ….. “chickens has come home to roost scenario for the Glendale City Council”, due to their cavalier attitude in giving away other people’s (taxpayers) money in the form of substantial employee raises and cost of living increases, step increases, overtime, salary perks, early retirement bonuses, then hiring back these same employees as annuitants, etc prior to and during the recession. Now, it’s payback time i.e.
1. The Accounting board, in June 2012, voted to change pension rules for state and local governments, requiring State and local governments to disclose unfunded pension promises alongside debt on their balance sheets. The new rules will go into effect for fiscal years beginning June 15, 2014. According to GASB, the new requirements for pension accounting will make financial statements more useful, enhance their “value for assessing accountability and interperiod equity” and increase “consistency and transparency.”
Currently, governments disclose unfunded pension obligations in footnotes to their financial reports. Under the new rules, these debts will be listed alongside money owed to bondholders and other liabilities. “They’ll be reported out in the open instead of being buried in the notes. government pensions “are in the hole for at least $4.4 trillion and the hole is getting deeper every minute. (2)
2. In March 2012, CalPERS changed it discount rate of return from 7.75% to 7.5%,affirming the recommendation made by its Pension and Health Benefits Committee. The discount rate is calculated based on expected price inflation and real rate of return. The discount rate will impact members and employers as follows: Public Agency contributions will increase by 1 to 2 percent for Miscellaneous plans and 2 to 3 percent for Safety plans beginning Fiscal Year 2013-14. (3)
In September 2013, Joe Nation, professor of the practice of public policy for the Stanford Institute for Economic Policy Research said, a 7.5% presumption seems too optimistic, and when a more pessimistic presumed rate is applied to projections, a much more daunting picture emerges. He doesn’t believe CalPERs can sustain the 7.5% rate, which means that “the unfunded liability jumps to at least a couple hundred billion, likely more.” “The short answer is that a 7.25% assumption is still too high,” he says. “I think a range of 5% to 6% is more appropriate given historical returns. [But] if they assume a lower rate of return, their unfunded liability increases.” By how much? Nation believes that could be north of $170 billion — or more. CalPERS current unfunded liabilities is pegged at about $80 billion. “CalPERS typically claims a much lower unfunded liability than actually exists —- precisely because they assume a higher-than-justified investment rate of return,” he says. (4)
3. CalPERS changed the rules for local governments pension contribution that will increase employer contributions among public agencies beginning in 2014-15 (for state and school workers) and 2015-16 (for public agencies). (5)
CalPERS board approved an employer rate hike of roughly 50 percent over the next half dozen years, replacing a policy that kept rates low during the recession with a plan to reach full funding in 30 years.
Board member George Diehr said CalPERS has been “too protective” of employers who raise pension benefits. He said employers should take the responsibility for any sharp increases resulting from higher benefits, whether through reserves or borrowing. CalPERS is considering other changes that could increase rates: Later this year completion of a risk-reduction study that may result in more conservative investments, and next year factoring in longer life spans and a review of the earnings forecast. (6)
Bob Elliott, Director of Finance, while discussing the 2013 CAFR’s, all but acknowledged during the Dec. 17 Council meeting that the City’s 1.6 billion new asset position is expected to substantially go down starting next year based on the based on the preceding.
Based on the foregoing, this is why the City Council is moving forward with a proposal to support the creation of a library/parks/and fire assessment district, because the revenues in the General fund, that used to pay for libraries, parks, and paramedic services is now longer sustainable. The Council is faced with increased costs to fund the (1) fire departments agreed upon cost of living salary increases starting in fiscal year 2014, the city’s healthcare cost increases due to Obamacare, and CalPERS increased employer contribution costs on a lower discount rate, rate of return, and increased pension contributions by 50% over the next six years to reduce the percentage of “unfunded debt”.
The past “citizenship satisfaction survey” compiled on the city’s behalf was all smoke and mirrors. A scientific survey that was flawed with a bias axis to conclude exactly what city officials needed and wanted it to conclude, that Glendale residents are open to new taxes. The council has no choice but to seek new revenues elsewhere due to its failure to seek real pension reform in 2012. San Jose Mayor Chuck Reed’s is considering a statewide proposed ballot measure that would give cities the ability to slash the retirement benefits of existing public employees on all future years of service while preserving all prior years of service benefits earned and accumulated. Let’s hope it makes it onto the June 2014 ballot and passes. This is the only way to rein in excessive salary, pension and benefit costs, other than to layoff and outsource these very same services.