The mayor’s State of the City address looked toward a brighter economic future and applauded the moves taken to help the city weather a financial storm that is completely sinking some of Tracy’s neighbors.
The warm feelings didn’t last long. A week later, on April 3, he and the rest of the City Council were greeted with a report that suggested Tracy is, indeed, still in danger of foundering.
According to an estimate by Zane Johnston, head of the city’s finance department, Tracy will be out of reserves and will run a $10.2 million general fund deficit in five years if more steps are not taken to reduce expenditures.
A deficit like that would lead to cuts even larger than what the city has already absorbed, seriously imperiling police and fire protection.
A host of assumptions could make that $10.2 million gap smaller (spending less than 100 percent of each year’s budget, for example) or larger (slower-than-anticipated sales tax growth). But it certainly suggests the March 27 State of the City and April 4 economic outlook session were on the rosy side of the spectrum.
And it’s not just the speeches that have been so tinted. It’s been suggested that the city’s general fund could actually run a surplus by 2015, thanks in part to the increased sales tax revenue delivered by Measure E, the half-cent tax hike approved by voters in 2010.
One Measure E oversight meeting earlier in the year even featured a document asking the committee’s five members to consider possible uses for that surplus. Not exactly doom and gloom.
So, where’s the disconnect?
According to Johnston, there isn’t one. The optimistic outlook offered by the mayor and possible surpluses discussed by the Measure E folks will only materialize if the city moves forward with more aggressive expense cuts.
“If we don’t do anything, this could become a reality. We’re a ship, and we’re like this,” Johnston said, tilting his hand to the side, “and we need to right ourselves.”
One of those steps is to have city employees pay into CalPERS, the public employee pension fund.
Right now, the city pays the public safety employee contribution toward CalPERS, in addition to the employer’s share, an arrangement that union employees say was agreed to in lieu of pay increases years ago, when CalPERS payments were cheaper for the city.
But big hits to the stock market have forced the state, counties and cities to put more money into the pension fund — and a decision by the fund’s managers to decrease its estimated rate of return is only making things more expensive.
That millstone, which is likely to get heavier, is why officials say it’s imperative for the city’s long-term health that employees contribute more toward their retirement.
At the April 3 meeting, Ryan Gall, a member of Tracy Firefighters Association, said negotiations regarding a new contract are “all but finalized,” with firefighters agreeing to pay toward CalPERS.
It’s a concession consistent with my conversations with various members of the department, who have made it clear that they’re not just looking for a paycheck.
Firefighters have told me they’re willing to take a hit if there’s a genuine need, a willingness proven in the past.
Staffing at the Banta station was reduced long ago, and fire crews have agreed to furloughs, which lapsed along with the most recent contract in July.
But union members also want a fair shake for doing a job that puts them in danger every day they don a uniform. And there seems to be a feeling that Tracy hasn’t shared the whole story.
Gall publicly challenged the city’s assumptions regarding increasing fire department costs and those costs’ contribution to the large deficits predicted in the April 3 budget exercise.
He said an actuary hired by the fire union to check the city’s numbers suggests the city overestimated how much the fire budget would grow.
“That actuary was done with some fairly conservative numbers,” Gall told the council, saying the actuary found the increase was only .68 percent, compared to the city’s estimate of 4.2 percent, which was apparently calculated before the fire chief added on a list of wanted improvements.
That kind of discrepancy would make the city’s five-year assumptions look less dire. (And make the need for employee concessions less necessary.)
Johnston, who has worked for the finance department 26 years and says it’s his job to accurately provide sound budget information, stood by his work.
“There is something behind each one of these numbers,” Johnston said. “They’re not made up in my office.”
Another set of dueling perspectives.
But whether you take the fire numbers or the city numbers, the April 3 presentation makes it clear that the city must continue to cut expenses. It’s not less true just because it’s a political cudgel the city has wielded and will wield in negotiations with employee groups.
It’s hard to ask concessions from the people on the front line of Tracy’s public safety battles — the guys and gals we count on to protect houses from fire, saved loved ones in emergencies and guard neighborhoods against gangbangers.
It is, however, our reality.
Firefighters, cops and other public employees shouldn’t be left empty-handed in these transactions, though. In exchange for concessions, they should get a promise from city leaders.
That promise should be that the city will not incur unnecessary ongoing costs, that it will maintain staffing of public safety departments, and that it will reward employees for taking cuts if and when the economy bounces back.
It should also come with a corollary to temper optimistic speeches with more reserve and reality.
• Second Thoughts is a personal opinion column by Editor Jon Mendelson.