SHASTAX
Shasta County Taxpayers' Association
News & Views
SHASTAX UPDATE
May 8, 2008

Dear Dad,
 
I wanted to tell you first - I'm buying a brand-new $228 bicycle with my own money!  I knew you would be proud.
 
On another note, I'm wondering if you could increase my allowance by $300?
 
Thanks,
City of Redding
 
 
In essence, that's the conversation held Tuesday night at the Redding City Council meeting as councilors approved giving a pension increase to a third of its employees from 2.5% at 55 to 2.7% at 55 (or after 30 years of service, retiring with 81% of your final salary versus 75% and a sizable raise.  Let's not forget only 4 years ago the pension was raised 25%, this one makes it 35% in 4 years!
 
Oh but don't worry, you the taxpayers are not paying for this spike in pension, the employees are paying for it- they're only taking a .72% raise this year in order to offset the increased cost of this pension! 
 
Add to that, employees will also get a 4% raise next year, a 3% raise each of the next 2 years, and a 3 1/2% raise the year after that! 
 
Nice work if you can get it.  Being assured of not only a job with benefits, but knowing you will see a 15% raise over the next 5 years even though you know revenue projections are down, the state is looking to balance their books with your help and the same night you get a raise, you read of another city in the state voting to file bankruptcy because of high salaries and pension obligations.
 
We know most of the city employees are just good people trying to make a living and will gladly accept the raise in the best interests of themselves and their families, but we also need to consider the interests of the other families in town.
 
What's the trade-off for the taxpayer?  Future employees will not have half their medical benefits paid by the city and current employees will have to share 10% of their insurance costs instead of having it paid 100% by the city.  (Which will start next year.  Employees will receive a $1512 credit this year for benefits.)  While these future changes are good things that are hints of good fiscal policy, the elephant in the room is that the economy isn't the greatest right now, tax revenues are down, and the city is still giving raises.  A good trade off? 

A well-deserved Kudos to Councilman Patrick Jones who was the sole no vote.  In his comments, he recognized the good steps that this agreement had taken on the long term obligations for retiree benefits, but felt it would be inconsistent of him to support a raise in this lean economy.  Councilman Rick Bosetti agreed with Jones' opposition to the raises, but supported the new agreement as an overall step in the right direction and a fair compromise.

Councilman Ken Murray stated he thought the agreement was a major victory for taxpayers in that it addressed long term health benefit obligations, but believed since the raises are less than the rise of inflation, he thought the raises still left employees going backward and that the since the pension increases are being paid for by the employees, its a non-issue.  Councilman Dick Dickerson echoed Murray's statements stating this agreement would ease some of the burden to the taxpayers by addressing the high costs of employee retirement benefits.

Mayor Mary Stegall added that she believed the City of Redding needed to stay competitive in order to attract and keep good employees, a sentiment Dickerson seconded.

Considering the Caltrans area chief just left his previous job for a new one in City Hall for more pay, only a fraction of the budget, employees and responsibility, and a higher pension, it might be tough for either to use the competitiveness argument with a straight face too many more times.

I wonder how the Vallejo employees will find the competitive job market after their employer just went belly-up?



SHASTAX UPDATE
April 6, 2008
 
As the State Budget debate heats up and our local governments sound the alarm bells notifying everyone about the budget cuts to come, its important to put this panicked discussion in context with several Shasta area proposals coming down the line to raise "impact fees," also known as taxes imposed on people who are not yet voters in the area. 
 
The growing trend is for the State to divert more responsibilities to the local government, and for our locals to be pressured into raising taxes on you and I.
 
The County/City impact fee proposal is one of these ideas that covers several areas of the budget.  Fix Five is another "impact fee" that proposes to shift a portion of the State's responsibilities to our local governments.  And when the taxpayer asks how will we have affordable housing, the government replies, "With another Government program, of course."  
 
Don't forget the shift of state prison inmates back to the counties is a major shift of responsibility, especially for those of us counties with severely impacted jails.  We're even hearing about "9-1-1 fees that some cities are considering to charge people calling 9-1-1! 
 
Shastax and another local organization, Shasta Voices, have joined together to bring the taxpayer's viewpoint to the dais of our local governments.  The public is watching closely.  Some elected officials are listening more intently.  But will the majority of the board hear the majority of the voters?
 
The following article is excerpted from the League of California Cities website and gives us taxpayers an insight about what solutions the State and Locals are thinking about.  One hint: it doesn't involve reducing spending!  Their idea - make it easier to raise taxes.  Have you asked your City Councilmember and County Supervisor where they stand of new taxes and fees?
 
 
LEAGUE OF CALIFORNIA CITIES
Senate Budget Committee Holds Second Hearing on State-Local Fiscal Relationship

On Thursday, April 3, the Senate Committee on Budget and Fiscal Review held its second hearing on the history of the state-local fiscal relationship. In the previous hearing, the Legislative Analyst's Office (LAO) reviewed its perspective on the past 35 years of this relationship. Local government representatives were invited to provide their perspective at the second hearing.

Ontario City Manager Greg Devereaux and League Deputy Executive Director Dwight Stenbakken represented cities. They provided suggestions for improving the fiscal relationship between the state and city government in California. These include:

Infrastructure Funding: This is a critical area of concern for cities when focusing on the urban development of local communities. Without proper financial tools to support infrastructure for urban development, cities will not be able to properly meet density and transit-oriented development goals under green house gas reduction legislation. The following was recommended:

  • The two-thirds voting threshold for local government general obligation bonds should be lowered to a majority vote, the same threshold for state general obligation bonds, or, if unachievable, a 55 percent voter approval threshold, the same threshold now in law for school capital bonds; and
  • Lower the two-thirds voting threshold for countywide transportation votes. A number of such county votes have considerable voter support, but fail with voter support in the low 60th percentiles.

Re-examine the Sales Tax Base: The state and local government tax base for sales taxes should be broadened. The sales tax base has been considerably narrowed over the years with legislatively enacted sales tax exemptions or erosion through decisions made by the Board of Equalization (BOE). As a result, the narrow base makes the sales tax more vulnerable than it has to be and it is a tax that is growing in disparity from the economic realities of a 21st century economy. Expanding the base of the sales tax would begin to meet these problems.

To read the entire story, click the link above.

SHASTAX Update
February 17, 2008
 
After successfully obtaining the property appraisal for the City of Redding/Redding Redevelopment Agency's purchase of the current Lithia Motors site on Cypress Avenue, Shastax and others in town have discovered what was assumed before, the city is preparing to purchase land for more than it is worth to them.
 
The appraisal pegs the value of the current dealership at $9.8 million, if it were to be used as a new car dealership.  Included in that value is the land, buildings and location value. 
 
The problem with using that estimate is that city councilmember Ken Murray alluded in the last council meeting there is no intention of keeping it as a car dealership.  One of the reasons the city had been involved with the location was to eventually remove auto dealers from Cypress avenue, the visiting public's gateway to City Hall.  Since the property currently has special and unique improvements, any other usage would require a razing of the current site and a demolition of a good portion of the site's stated value.  The bare land value of the site is less than $6 million, minus any demolition and environmental cleanup costs.  Given the stated purchase price of $7.9 million, that's a loss of over $2 million to Joe Public!
 
Recognizing this loss of value, the city has begun to back away from its early lofty redevelopment goals of high-rises and mixed-use commercial buildings and broadened its horizons to maybe offering the property on the open market, even to other auto dealers.
 
While that hypothetical might offer the city the chance to recoup its investment and offer another local dealer the potential of relocating to a better site, the questions remain:
 
Why is the city in the Real Estate deal game to begin with?  And if another dealer decides to purchase the Lithia site from the city, then are they going to ask the city to make the same deal with them and have the city purchase their old site?
 
Once the city opens this door, who's coming through it next?  Will taxpayers' be purchasing the entire Dana Drive area as those retailers expand to a potential shopping center off Oasis Road?  Will the city purchase the property of every business in town that wants to expand in another area of the city?  I thought that was the business of real estate brokers, not city hall staffers.
 
No one is really challenging the city's wilingness to work with Lithia to locate at the 44 and Airport Road site.  Infrastructure improvements would need to be made at that interchange regardless of who would be building there.  The city is only helping to make them happen sooner rather than later.  Further, it is better than hearing more horror stories about having to contend with the stereotypical brick-wall reception other businesses receive.
 
But the property at Cypress is not a public works project.  It is privately owned and will be privately owned eventually, with or without the city's involvement in this deal.  Having the taxpayers purchase this property goes beyond the notion of "facilitating" or working with a business.  It's City Hall playing interloper in a series of transactions that have historically, and should remain, in the private sector.  If this precedent setting purchase is approved, councilmembers (and taxpayers) will undoubtedly be seeing more of these deals made in the future.



SHASTAX Update
January 28, 2008
 
Redding Delays Lithia Purchase
 
Redding City Councilmembers convened tonight as their "alter-egos", the Redding Redevelopment Agency, to take action on the proposed purchase of the 2 current Lithia dealership locations on Cypress for a price tag of $7,934,000.  After hearing from nine speakers including several Shastax members, the council was pressured into delaying any action for at least another month while they hear from those in the community.
 
To begin, the purchase was explained by City Manager Kurt Starman as being done for two primary reasons: to "facilitate" the move of Lithia to the new auto mall site at highway 44 and Airport road, and secondly to seize this "opportunity for redevelopment" that will benefit the entire community.  The nebulous answer was not satisfactory for the nine members of the audience that spoke or numerous that came to watch
 
Shastax President Willie Preston rose to ask the "Eight Million Dollar question" which is why is the city getting into this deal?  While the city actually being friendly and helpful to a business wanting to move or expand within the city might be a laudable effort, the proposal to purchase the property being vacated creates an unnecessary liability to the taxpayers.  Noting Lithia's size, a corporation traded publicly, versus some of the local family owned dealerships in town, Preston noted this is hardly a business needing help in facilitating a move across town.  Citing the amount of the leaseback agreement and the interest costs, he noted the total cashflow benefit of the short-term leaseback agreement is approximately $250,000, an amount that does not justify an $8 million purchase and the long-term risk of loss on the resale.
 
To the question posed by Preston, Councilmember Ken Murray answered that the proposal is to address the potential problem created if a used car dealer should move in and the further potential if a "junk car" dealer should move in after that.  To simplify it, he said, the city is buying it to change the zoning to prevent future problems. 
 
Several Realtors questioned the highly speculative nature of the proposal and the true intent of the purchase, noting the city's history with speculative land purchases including the Stratte property, the downtown mall and others.
 
Longtime Redding auto dealer Randy Denham also spoke to the council, contending the city's financial incentives for interchange and roadway improvements at the Airport Road site are already quite generous - the purchase of the soon-to-be vacated land on Cypress steps over the line.  He also noted that the cost being discussed does not factor in the loss of property value and potential sales tax the city will take if it chooses to downzone the property. 
 
After hearing from many speakers raising numerous problems with the purchase and a couple homeowners from nearby the future Lithia site, the council decided to hold over the action for another month by a 4-0 vote.
 
Thanks to the many people who showed up to this meeting to speak and simply to let the council know the public was watching.  Due to your involvement as a concerned public, this council knows that just because they move such an action to a special meeting on a different night, the people will not stand for these suspicious deals.
 
Shastax will continue to monitor this deal as it develops and send out updates when necessary.


SHASTAX Update
January 21, 2008
 
A proposal for plans of a new Police Station was the subject of discussion on the Redding City Council agenda last Tuesday night.  However, the substance of the discussion was not what people were talking about the following day.  Rather, the buzz on the street was the unprecedented exchange between Redding City Councilman Dick Dickerson and community advocate Mary Machado.  The exchange began after Machado, Executive Director of Shasta Voices, went to the podium to ask questions about the City's plans to proceed with drawing up plans for a new 66,000 square foot police facility on Cypress Avenue next to City Hall at a project estimated $35 million. 
 
When Machado approached the podium during the public discussion portion of this agenda item, she began with a series of very generalized questions attempting to come to some understanding of where the city is currently in the planning process and what type of alternatives the city had considered thus far.  After answering the first few questions, Mayor Mary Stegall had asked Machado exactly who it was she represented and after that Dickerson, last year's mayor and a former State Assemblyman and County Supervisor, followed that line into a nasty exchange with the member of the public.
 
While it is normal to sometimes have clarifying questions about the topic being discussed directed back to a member of the public to ensure an accurate answer is given, the line of question Dickerson proceeded with was not about the topic at all, rather it was intended to get at the speaker herself. 
 
What was odd was that the former mayor already knew who Machado was, who she represented and the members of her board of directors.  They had met personally and had a discussion before.  Machado had appearred before the council on numerous occassions before in the same capacity, so why the line of questioning?

Members of the audience grew uncomfortable seeing a public citizen being grilled on the stand not for her questions, but rather for who she represented.
 
In a logic or debate class, its called an "Ad hominen" attack.  An attack against the man.  It's usually considered a loser because that type of attack is not on the substance of the discussion and ignores the truth of the facts.  Rather than answering the question, Dickerson was more interested in discrediting the speaker.  The fact remains, regardless of who the speaker is, the questions she started to ask are legitimate and need answers.
 
Those questions will be asked within the coming days by several people in the community, including Shastax.  With regard to why a councilperson would take the extraordinary step they did Tuesday, we still do not know.  In Sunday's Redding Record Searchlight, a Speak Your Piece column was offered by the former Mayor and offered a weak explanation. 
 
In that column, Dickerson stated, "I believe that those questions needed to be asked in a public forum so that all council members and the public could have a better understanding of Shasta Voices." 
 
However, Shasta Voices was not on the agenda - a new police building was.  The membership and organizational structure of this group is not subject to the Brown Act and is not sponsored by tax dollars - a City Council meeting is.  A council meeting is not the time for questions about Shasta Voices, or any other group for that matter, it is the time for issues on the agenda and those of the public concern.   The item on the agenda was concerning the need for additional building space for the Redding Police Department and the potential of spending approximately $35 Million of taxpayers' funds to build a new one.  The public has a right to ask questions in that venue and elected officials have an obligation to listen.  If they don't want to listen now, perhaps they will in November.


To offer your commentary, please email original opinions to info@shastax.org.
Shasta, We Have A Problem...
by Willie Preston, President
Shasta County Taxpayers' Association

Citizens of Shasta County, we have a problem.  Over the next 30 years, this problem will grow to where we may not be able to afford an acceptable solution.  

You may have heard about the much ballyhooed “Fix Five” coalition, organized to raise traffic impact fees (taxes) to eventually pay for widening Interstate 5 from Mountain Gate to Corning.  Composed of every governmental board from Corning to Shasta Lake, the Fix Five partnership sees this problem as inevitable.

I-5 isn’t the big problem though.  Let’s examine the skyrocketing cost of providing government employees with gold-plated retirement benefits.  As more people retire from our growing local bureaucracies, it is just as inevitable that this will eclipse the cost of widening I-5.

Recognizing this problem, the Governmental Accounting Standards Bureau recently added a rule requiring governmental entities of every size, including our states, counties and cities, to analyze the true cost of providing their retirees with the lavish benefits currently offered.  The rule, called GASB 45, has led to numerous studies to determine these costs the same way any pension program analyzes how much their program is liable for or an insurance program actuary determines the necessary premiums to eventually pay out on those policies.

Pensions and life insurance programs invest that money to reduce the need for payments equaling the full value, allowing the investment proceeds to offset part of the eventual benefit.  However, when it comes to taking care of our government retirees, we the taxpayers are paying full retail for the future cost of these premiums -- no investment is made to offset those future costs.

So why mention Fix Five?  Similar to the benefit discussion, governments are discussing reserving cash now to pay for future improvements to I-5.  That should be a good thing- right?  Except, rather than saving money from existing funding sources, they want to raise taxes to do it.  There are many funding options already available. Think of the Federal and State Gasoline Taxes, Sales Taxes we pay on top of the other taxes (which has tripled over the past 15 years with the price of gas) and others including the weight taxes freight haulers pay.  Instead, our local officials want to add another tax to raise $150 Million from Shasta County taxpayers to cover the Federal Government’s responsiblility.

While they’re jumping to raise $150 million in taxes, retiree benefits costs are DOUBLING that amount!  The City of Redding has already completed a study, the county is currently conducting one and the smaller cities haven’t started.   The City of Redding found this liability will exceed $90 million, Shasta County (with almost twice the number of employees) will far exceed that figure totaling liabilities between $250 and $300 million, without addressing our smaller cities!

Since Fix Five planners offered a tax hike on new homes and buildings as their solution for this inevitable cost, the Shasta County Taxpayers’ Association would like to offer some non-taxing solutions for our larger problem, addressing the looming cost of retiree benefits.

First of all, the giveaway cannot continue.  While we don’t need to completely do away with benefits for workers or retirees, the benefit level needs to change.  Lifetime benefits after five years of work is theft.  Private sector employers scaled back years ago recognizing an employer that no longer exists benefits no anyone, especially retirees.  Likewise our local governments must concede the benefit packages should be more comparable with private sector employers.   

Second, government officials need to start this investment fund, using both an employer contribution and a contribution from employees, just as their pensions do.  It is really not too much to ask a government employee to invest in his own future?

Third, increased contributions should not be under the guise of new taxes.  We’ve heard enough already: Fix Five, local impact fees, sales taxes for buildings or a hike in our property taxes.  Since taxpayers were not asked to pay for someone’s big dream ballpark or a glass bridge that cannot help traffic on Cypress Avenue, then please do not ask for a “contribution” now.

Public employees need to recognize that the vast majority of taxpayers paying their wages and benefits have nowhere near their benefit package and do not have much sympathy for their plight.  I’m reminded of that often, because I too am a government employee.  And as a state employee, I know that my benefits will also have to be reduced at some point.  And as a taxpayer -- I expect nothing less.





Supervisors Take Step on Health Costs
Contra Costa Times, June 27, 2007
By Ryan Huff

MARTINEZ-- Contra Costa supervisors took their first major slice Tuesday at a growing $2.6 billion liability for retired county worker's medical bills, finding a way to painlessly pay nearly a quarter of the bill in the next 16 years.

But the most difficult decisions are yet to come, as the county tries to pay off the rest of the liability.  Indeed, the problem is so tough that the supervisors decided to solve about 40 percent of the remaining obligation.

To do that, County Administrator John Cullen will begin negotiating reduced medical benefits and massive budget reductions -- or a combination of both-- with labor unions.  Options range from making retirees pay substantially more for their medical premiums at one extreme to making cuts that could require laying off more than 1,000 employees at the other.

To continue this article, follow this link to the Contra Costa Times



Price tag for Redding's health care to hit $94 million

Redding Record-Searchlight, May 19, 2007
By Scott Mobley

Redding cannot afford to fix enough streets or build a badly needed police station.  Yet the city will soon grapple with another major expense.

The City Council listened Friday to a Bay Area consultant lay out in cold actuarial detail how the city can expect to pay up to $94 million in health insurance premiums for its retirees over the next three decades.

The city would have to come up with $6 million to $7 million each year to meet that obligation, said John Bartel, a San-Mateo based actuary.  The council was not pleased to hear the news even though a majority get retiree health benefits.

To continue reading this story, follow this link directly to the Redding Record-Searchlight article.

The $3 Trillion Challenge

No one knows much about how public pension funds are governed or who’s governing them. It’s about time we did.

By KATHERINE BARRETT and RICHARD GREENE

Governing.com   October 2007 Issue

Texas pensions have a problem. Four-fifths of the nearly 100 public retirement plans are underfunded — not by a thousand dollars here and a million there. All totaled, they’re in the hole by $22 billion.

To continue reading this article, link to Governing.com here

Fix 5 Tax Hike
Taxpayers in Shasta County and Tehama County will soon be learning about the Fix 5 program, a concerted effort of local governments in Shasta and Tehama County to collect more money to use for I-5 construction.  The catch: its coming from your wallet!  The next time you purchase a new home or piece of commercial property in these counties, be prepared to see an extra cost for the luxury of driving on the freeway, a luxury drivers from anywhere else will not have to pay as they drive the same roads. 

To hear the Fix 5 advocates side of the story, visit the Fix 5 website at: www.fixfive.org

Each of the local governing boards wishing to tax their homebuyers will be voting soon to implement these new fees.  Let your member of the Board of Supervisors and, if appropriate, your City Councilmembers know how you feel about further fees being added to the cost of a home in our county.


Where The Money Goes
By Record Searchlight staff
Redding Record Searchlight, September 2, 2007

It's a weekend when most people are more focused on play than work.  But because Labor Day has, for more than 100 years, been a celebration of the American worker, it's a fitting time to take a look at what the northstate's top public servants are paid for doing their jobs.

For the fourth year, the Record Searchlight presents its local government salary survey.  Reporters Tim Hearden, Scott Mobley and Kimberly Ross have compiled information on the areas they cover: Shasta County, Redding, Anderson and Shasta Lake.

Follow the links below for listings of salaries and other compensation:

Redding: City tops private sector in salary, skill levels

Shasta Lake: Positions filled except for electric lineman

Shasta County: Medical Officials are among highest paid

Anderson: Salary raised to help hire, keep dispatcher



California Taxpayers Association Releases County Study

CalTax just released an informative report providing valuable comparative insights to California's County pensions and employee fringe benefit programs.  To link to their comprehensive study follow this link.

Overall, we see Shasta County's pension and benefits are fairly average.  It remains to be seen how solvent county pension funds are and how much of an unfunded liability exists in retiree benefit obligations.


Taxpayers face $48 Billion in extra expenses
State's retiree health costs growing
by Harrison Sheppard, Sacramento Bureau
Published in the LA Daily News, May 7, 2007

SACRAMENTO - Over the next 30 years, California taxpayers will have to come up with an extra $48 billion to pay health benefits for state government retirees, according to a new study by State Controller John Chiang.

The study, required under new federal accounting rules, found that next year alone, escalating health-care expenses for state retirees will cost taxpayers an extra $3.6 billion.

Still, other officials believe the study underestimates the future burden, which they say will range between $70 billion and $10 billion.

Whatever it is, Chiang said the massive "unfunded pension liability" is pressuring state government to set aside funds in a long-term investment account, just as it does with its pension system.

To Continue reading the article, link to the LA Daiy News story here
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