WHAT IS THE REAL REASON BEHIND THE CITY’S NEED TO BOOST REVENUES

In the last two years the City has experienced an unprecedented development boom in Glendale, resulting in roughly 3,800 units in 21 developments to south Glendale.  Since 2012, the city’s residents and businesses have experienced an extraordinary hike in taxes and fees, i.e. in 2012, the City started with the GWP water rate restructure and increase for 2012-2015. The city council originally intended to do it earlier, but postponed it since it would interfere with the reelection of some council members.  The new rate structure and increase went into effect on April 27, 2012, that began with a five tier penalty rate structure for residents that exceed 6.26 hcfs, and a three tier for multi-family units that exceed 5.10 hcfs every two month. One hcf equals one hundred cubic feet with a volume of 748 gallons. Businesses were charged a monthly fixed rate based on the size of their meter, having nothing to do with water usage. 

A year and half later, the city announced on Dec. 17, that the water rate increase was severely flawed, due to the city’s outside consultant’s miscalculations, that caused Glendale to overcharge some commercial customers and undercharge some residential customers, resulting in Glendale Water & Power to lose out on at least $8 million in expected revenue, even though the utility sold more water.

Some resident’s most likely can expect a higher rate in their water rate by July 2014.

  In 2013, the city council passed a 29.1% electrical rate increase over five years.  On December 17, 2013, the city council approved charging new businesses a $198 business license registration fee with a $50 annual renewal charge for all businesses, supposedly so that it can identified the number of businesses operating in the City of Glendale, not home based businesses, so that it can it can supposedly better serve businesses with programs and services that can be created to fit their specific needs.  

In 2014, residents and businesses can expect the City to put on the June 2014 ballot a District Assessment Tax 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 no longer sustainable. 

I have said in previous articles that the driver to these unprecedented increases in taxes and fees in primarily due to unsustainable salaries, overtime and salary perks, pensions and benefits.  The timeline has been accelerated due to 1) CalPERS, in March 2012, changing its discount rate of return from 7.75% to 7.5% (some feel that even a 7.25% rate is still too high). Each rate drop results in higher employer contributions. 2) CalPERS changed the rules for local governments pension contribution that will increase pension contributions among public agencies beginning in 2015-16, a rate hike of roughly 50% over the next six years. 3) The Accounting board, in June 2012, changed pension rules for state and local governments, requiring governments to disclose unfunded pension promises alongside debt on their balance sheets.

The Devil is in the Details. As I have written previously, 595 and city employees, the majority being safety (police and fire fighters) earned between $100,000 and $258,000 in 2012.  With respect to Glendale retirees, there were 153 retirees that earned $100,000 or more as of May 1, 2013 out of 713 employees that earned $40,000 or more.  Out of the 153 retirees, 68 of these retirees or 44%,  retired with a higher percentage, that exceeded the maximum percentage of their final base pay in accordance with their pay group miscellaneous retirement plan of 75% or safety retirement plan of 90% .

Miscellaneous Plan – of Non-Safety employees eligible to retire at age 55 from CalPERS Actuarial Valuation as of June 30, 2012.

Note – 517 employees or (34%) of all Misc. employees are 50 years or older, the majority that will retire in the next 5 to 10 years.  330 employees have 20 to 25+ years of service.  A Misc. employee earns 2.5% a year or 75% after 30 years of service.

Note – 1,037 or 74% presently pertain to regular service retirement, while 143 or 10% pertain to Non-Industrial and Industrial Disability claims.  There have been 200 deaths after retirement on regular service retirements, and 14 deaths on Industrial and Non Industrial retirements.   There is presently 504 active retires or 43% (504/1180) that is 70 years to 85 years old and older.

Note – there are 224 active retirees-  misc. plan, or 19% (224/1180) retired 20 to over 30 years or more that were eligible to retire at age 55. There were a total 77 active retirees, including Industrial and Non Industrial, retired 30 years or more.

Safety Plan – Police & Fire Fighters -Safety employees eligible to retire at age 50 from CalPERS Actuarial Valuation as of June 30, 2012.

Note – 72 employees or (18%) of all Safety employees are 50 years or older, the majority that will retire in the next few years.  129 of the Safety employee or (32%) age 40 to 49 are eligible to retire in 10 years. 120 employees or (30%) have 20 to 25+ years of service.  A Safety employee earns 3.0% a year or 90% after 30 years of service. 

Note – 251 or 46% presently pertain to regular service retirement, while 193 or 35% pertain to Industrial and Non-Industrial Disability claims. Notice he disparity between non-safety officers and safety officers (10% vs. 35%).  There have been 92 deaths after retirement and only 7 deaths on Industrial and Non Industrial retirements.   There is presently 141 active retires or 32% (141/444) that is 70 years to 85 years old and older, the majority who have been retired for over 30 years, exceeding their years of active service. What is very troubling, there are 191 Industrial Disabilities or  43% [191/442(191+251=442)] of total active retirees of safety officers.

Note – there are 128 active retirees-  Safety plan, or 29% (128/444) retired 20 to over 30 years or more that were eligible to retire at age 50. There were a total of 65 active retirees, including Industrial and Non Industrial, retired 30 years or more.

The kicker was that fire safety officers only began contributing to their own retirement in 1991 (22 years ago) when the City approved a MOU that gave each employee a 9% salary raise to offset their new 9% pension contribution.  The end result was a wash, no cost to the employee.  The insult to the taxpayer was that the City increased their pensions automatically increased by 75% of the 9% raise when they were earning 2.5% for each year of service that would equal 75% after 30 years of service.   Then in 2001, the City council increased all safety officers pensions from 2.5% to 3.0% for each year of service retroactive for all prior years of service, rather than implementing it for only future years of service.  Was that fair?  Now you know why the City of Glendale has an unfunded debt problem that CalPERS wants to reduce over the next half dozen years, money that the city doesn’t have and their need to seek out new revenue.    

This will not stop and will continue until taxpayers take a stand to unite and send a message to city hall that enough is enough. 

·         Unbeknown to most residents and businesses, is that we pay a 7% utility user tax on our electric, water, and gas utility bill, and a 6.5% on all our telecommunication, land and cell phone bill, and cable bill.  Note – this was by a city council vote before Prop. 26, that required voter approval, with the exception of cell phone charges, when the ballot initiative tricked voters into thinking that they were reducing their land charges from 7% to 6.5%, by slipping in cell phone charges that wasn’t previously required.

·         In 2012, Glendale collected $26.5 million. All of this money went to the general fund, to pay for non appropriation, safety officers’ salaries. None of it went back to GWP that could have substantially reduced the city’s 29.1% electrical rate increase last year.  

·         In 2012, the 595 city employees that earned $100,000 or more, FYI over $15 million represented overtime and salary perks just on these 595 employees. What about overtime and additional pay to the other 1,311 (1,502 + 404 – 595) employees as of June 30, 2012?  Note – this preceded the 134 layoffs and early retirement in Dec. 2012.

The point to all this is, that we can take back control of our city and force city officials to begin living within their means by passing a repeal of the utility users tax.  The Glendale Tax Limitation Committee will have petitions available to be signed by January 10, 2014.  If you are truly interested in bringing solvency back to this city, then you need to get involved, and take a petition to your neighbors to get it signed so that it can be on the June 2014 ballot. For more information, please contact Bill Taliaffero of the Glendale Tax Limitation Committee 818-395-9414 btaliaferro7@gmail.com, or the the Glendale Coalition for Better Government 818-934-1765 www.GlendaleCACoalition.org  and it will be forwarded to the Tax Limitation Committee. Please provide your name, email address and phone number.

I’ll leave you with this parting note.  If we fail in this endeavor, eventually the city will be tittering on the edge of bankruptcy.   Think about it!  Look at the number of city employees about to retire over the next decade and CalPERS mandate requiring local government to shore up their unfunded debt.  Presently, per CalPERS Actuarial Valuation, the city has an unfunded debt liability of $446 ($231 million (Misc. Plan) + $215 million (Safety Plan)  for pensions and benefits.

See the disparity in Glendale’s Contribution rate increases between safety officers and non-safety employees.  This is because Safety employees retire at age 50 (5 years earlier) and earn 3.0% for each year of service (.5% higher) 90% vs. 75% after 30 years of service, and earn substantially more than non-safety employees.

The City will be unable to sustain paying both the pensions and the salaries of newly hired employees, who replace these retirees without a combination of attrition, streaming operations and not rehiring every position, In conjunction with real pension reform that impacts current employees for their remaining years of service.  As I recalled there were over 4,000 applicants for 15 firefighter positions.  Yes, restructuring current employees remaining years of service is doable.  If they don’t like it, then there are other applicants waiting in the wings to replace them.