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HomeMy WebLinkAbout05/16/03 CITY MANAGER'S OFFICE MEMORANDUM May 16, 2003 TO: Honorable Mayor and City Council Tandy, City Manager /~'T'~,7,/-'~.,~. FROM: Alan SUBJECT: General Information 1. The Governor's revised budget is less harmful to cities than his first submittal. Since the Legislature did not take to the first proposal, we do not want to get our hopes too high on this one yet! 2. Based on the May revise, John Stinson has prepared the enclosed summary on the budget impacts to the City. This information will continue to change as the State budget is further refined by the Governor and the Legislature. 3. We are still awaiting technical information on the variable depth bottom pools. We are trying to expedite it, but it depends on manufacturer cooperation. On a related matter, the cost to lengthen the "warm up" lane area of the play pool is $33,000. We are asking the fundraising group if they will pay that, as the request is one of their issues. 4. On Monday of this week, I conducted the hearing on the Certificate of Necessity requested by Liberty Ambulance. In part, because there were substantive documents submitted at the hearing, without copies available, I postponed the rebuttal part of the hearing to next Tuesday, May 20th at 9:00 a.m. It will give all parties the oPportunity to review the materials for each side to provide rebuttal testimony before a decision. Of course, the issue may be appealed to the City Council after I render an opinion. The City code says the applicant can appeal; the City Attorney says that due process requires equal appeal opportunities, so there is a chance, either way, that it will wind up with the Council. 5. Media items regarding the Governor's budget revisions are enclosed: Recent articles from the Sacramento Bee and Los Angeles Times that summarize the key revisions and several that focus on 1) the reaction of the two major political parties to the revised budget; 2) the risk of dealing with the budget problems through deficit financing; and 3) the effect the latest revisions will have on local government. Honorable Mayor and City Council May 16, 2003 Page 2 6. A May 10'h article from the San Diego Union-Tribune is attached regarding the substantial deficit in their pension fund caused by underfunding it over the last decade to balance their operating budget as benefit increases have taken place. 7. When you are in the downtown area, you may notice the absence of a long-time local landmark. The rocket on top of the Padre Hotel has been removed ! 8. Mayor Hall and Councilmembers Carson, Maggard and Sullivan will be among the featured speakers at a "State of Our City" event sponsored by a local faith-based organization. It will be held on Tuesday, June 3~ at Centennial Garden, beginning at 7:00 p.m. This event has a similar name to the annual "State of the City" presentation made by Mayor and staff for the Chamber. The June event, however, is purely private, without official City participation, even though some of our elected officials are involved. 9. Responses to Councilmember requests are enclosed: Councilmember Carson · Results of traffic monitoring in the alley at 834 R Street for speeding; Councilmember Maggard · Status report on exploratory efforts regarding the possibility of using CDBG funds for community gardens in the area of 38th and M Streets and vacant lots backing up to North Chester between Columbus and 34~ Street; · Related to the recent tub grinder bid protest, a report is enclosed with the results of staff research on the possibility of waivers/variances, or payment of mitigation fees to enable the City to accept lowest bids; Councilmember Couch · Preparation of proposed language for policy regarding posting of signs on property for rezoning; AT:rs cc: Department Heads Pam McCarthy, City Clerk Trudy Slater, Administrative Analyst OFFICE OF THE CITY MANAGER MEMORANDUM May 16, 2003 TO: Alan Tandy, City Manager/~ / FROM: John W. Stinson, Assistan~ (!ity (Manager SUBJECT: Governor's May Revise - City Budget Impacts After review of the Governor's May revise the following items are still being considered by the Governor in the FY 2002-03 and FY 2003-04 budget process. This information reflects what we know at this time and will continue to evolve as the budget process continues and is further refined by the Legislature and the Governor. · VLF - The Governor's budget assumes continuation of VLF back-fill or offset payments to local governments for 02-03 and assumes an increase in the VLF fees after Ju!y 2003. There is a lack of clarity as to when exactly the increase will occur and concern that since bills are sent to taxpayers in advance of the payment date and.there may be a lag in payments of the increased amounts to local governments that the State has not addressed or funded. The City may have to absorb the reduced revenues associated with this lag, however this is not yet clear. · Redevelopment Funds - The State captured $75,460 of 2002-03 City Redevelopment Funds from the three redevelopment areas which were transferred to the Education Realignment Augmentation Fund (ERAF). The Governor's 2003-04 budget proposes that $250 million in Redevelopment Tax Increment funds statewide be transferred to ERAF. This represents approximately $250,000 in funds to be shifted to the State from the City's three redevelopment areas. Early indications are that this would be an increasing amount over the next fifteen years. The loss of these revenues will impact the City's ability to match grant revenues or contribute to proposed redevelopment projects. · Non-Proposition 98 Mandate Funding - The Governor is proposing to continue the action taken this fiscal year of suspending payments for reimbursable state mandates for FY 2003-04. This revenue varies annually based on state regulations and programs, but the city typically would have received around $50,000 in these reimbursements. It is important to note that the Governor is recommending suspending 34 mandates and the repeal of S:~JOHN~Budget~03-04 Governor's May Revise.doc the mandate related to the Open Meetings Act that requires local entities to post agendas regarding items to be considered at meetings, as well as the time and location of the meetings. They state that this mandate requires local government to perform activities that any responsible public agency should perform without being mandated to do so, and retaining it would continue the State'S obligation to pay the cost. · Booking Fees - The Governor's budget still includes the elimination of the Booking Fee Subvention. This equates to an annual loss of $714,000 for the C ty. · Police Training Costs - The May revise proposes to restore funding to reimburse local law enforcement agencies for costs related to peace officer training. This would mean an increase in $50,000 to the city in revenues if restored. · Deferral of the $550 Million Transportation Loan Payment The Governor continues to propose the deferral of $550 million in loan payments the State General Fund owes transportation funds in 2003-04 as a result of last year's loan from the Traffic Congestion Relief Fund and the State Highway (SHA). This will likely result in a reexamination of capital projects and potential delays or re-prioritization of State Transportation Improvement Projects (STIP) and the 42 capital projects proposed by the Governor in the Traffic Congestion Relief Plan. · Suspend transfer of Sales Tax on gasoline (Proposition 42 funding) to Transportation Infrastructure Fund (TIF) - The Governor originally proposed to eliminate the transfer of the entire Proposition 42 funding from the State's General Fund to transportation. This was estimated to retain $1.046 billion in fiscal year 2003-04 for State General Fund purposes. This meant a further delay in the shift of sales tax on gasoline for transportation purposes. In order to provide sufficient funds to meet the cash requirements of projects that received allocations prior to December 2002, the May revise proposes to tranSfer $207 million in revenues from the General Fund to the TIF. Staff is still obtaining information to determine what if any, impact this action has on the City different from the Governors original proposal to shift these funds. S:~JOHr, ABudget~03-04 Governor's May Revise.doc This story is taken from politics at sacbee.com. Governor's $95.8 billion budget plan features new taxes, borrowing - (Published May 14, 2003) Saying the state's fiscal crisis has deepened in recent months, Gov. Gray Davis unveiled a budget plan Wednesday that would impose new taxes on tobacco, cars, consumer products and the wealthy, while also borrowing more than $10 billion to finance Part of the state deficit. The $95.8 billion spending plan, sent to the Legislature Wednesday, differs greatly from Davis' January budget proposal, which relied more heavily on program cuts to eliminate California's record shortfall. Although the Legislature has trimmed some spending in recent weeks and tax collections have met expectations, the administration now believes the deficit is closer to $38 billion because of increases in spending. To close the gap, Davis would raise $8.3 billion in new taxes this year, including a hike in the car tax and a half-cent increase in the state sales tax. Davis acknowledged that he is proposing higher taxes in part to win support from fellow Democrats, who control both houses and have been reluctant to make deep cuts in education, public health and other programs. The governor said his plan represents a compromise that can win bipartisan support in the Legislature. The reliance on higher taxes means Davis can put more money in favored programs ' especially education. For instance, the new budget plan continues support for a popular $1.7 billion program to reduce the number of students in each classroom. Community colleges would take a smaller hit than the governor proposed in .January and K-12 schools would receive $700 million more than Davis offered five months ago. Both the University of California and the California State University have also been spared deeper cuts, Davis has scrapped a plan to pass on the costs of major health and welfare programs to cities and counties with little new financial support. Instead the governor wants to shift a smaller number of programs to local governments and support them with $1.8 billion in new money from higher taxes on cigarettes and an increase in income taxes paid by the state's top wage earners. The governor is counting on a hike in taxes paid by car owners, a move anticipated for several months that will bring in about Sa, billion a year. State attorneys have said that the car tax can be raised without a vote of the Legislature if cash reserves fall Iow enough. The new car tax will cost the average driver about $130 a year. While Davis' plans may prove popular among Democrats, lawmakers on the other side of the aisle say they will not support any new taxes. "Punishing taxpayers because liberal Democrats have spent us into bankruptcy does not make sense to us," said Sen. Jim Brulte, R-Rancho Cucamonga. "We're trying to be as flexible as possible and we're willing to negotiate on everything but taxes." B~cause California is one of the few states that require the budget to be approved by a two-thirds majority, Davis and his Democratic colleagues will somehow have to find Republican votes for the proposal. The idea to finance the deficit is based on a model used in New York during the 1970s when that city was forced to fight off insolvency. As proposed, the state would create a separate agency to Issue bonds and manage interest payments for the bonds that would be paid off over five years. California already has one of the highest sales taxes in the nation at 7.25 percent and each county has the right to raise it even higher. San Francisco is already at 8.5 percent. The higher sales tax would last only until the bonds are paid off in five years, Davis said. Davis said the state's deficit is currently around $10 billion, caused in large part by a dramatic drop in tax collections over the past two years. The governor estimated in 3anuary that if the state took no action to trim spending or raise revenues, the shortfall will grow to $35 billion by the end of the 2003-2004 fiscal year. The Legislature has approved about $12 billion in cuts and savings so far this year but the administration believes that spending has grown for some services while other income - such as a sale of tobacco bonds - were not realized. Davis now believes the deficit has Increased about $3 billion over the last few months to about $38.8 billion. -- The Associated Press Go to: S.a_cbee / C.~_nta__ct_U_s~_~_e_e_d~b_a_~k I Prlv~Lcy Polio,_ I Terms of Use News I SDorts I Business I P_QI_i_ II;L~_ I Opinion I Entertainment I Lifestyle I Travel I Women Help I Newsletters I Site I~lap I Subscribe to the Print Edition I Traffic I Weather I Wireless Delivery. About Us I Advertise In The Bee I Advertise Online I Contact Circulation Customer Service I Events [ Sacramento Bee Web sites ] Sacbee.com I SacTIcket.com I Sacramento.com This article is protected by copyright and should not be printed or distributed for anything except personal use. The Sacramento Bee, 2100 (~ St., P.O. Box ~.5779, Sacramento, CA 95852 Phone: (9~.6) 321-1000 Copyright © The Sacramento Bee / ver. 4 This story is taken from politics at sacbee.com. Budget revision has taxes loans By Alexa H. Bluth -- Bee Capitol Bureau - (Published May 14~ 2003) Gov. Gray Davis will release a state budget revision today that would push more than $10 billion.of the deficit into the future, raise taxes for smokers, shoppers and high earners, and all but guarantee a tripling of the vehicle license fee, sources said Tuesday. The carefully reshaped spending plan attempts to placate various political interests by providing some relief to schools and scrapping most of an unpopular plan to ship state services to cities and counties. The revision, designed to close a budget gap once estimated at nearly $35 billion, still relies on similar principles to those set forth in January: deep spending cuts, tax increases and borrowing. Davis"new plan, to be submitted to legislators today for consideration, differs mainly because it heeds Republican lawmakers' calls to engage in long-term borrowing to whittle the deficit, and it assumes that an increase in the yearly car tax will be triggered before or during the fiscal year that begins .July 1. But Republicans,-who must provide some votes for the plan to receive the two-thirds majority required for passage, were not impressed.' "The governor doesn't appear to be prepared to balance this budget without raising taxes, but ! guarantee you there's no one in our caucus who will move in the direction of adding a half-cent sales tax," Assembly Republican leader Dave Cox of Fair Oaks said. Sources close to the budget said: * The cornerstone of the new plan calls for.selling $10.7 billion in deficit bonds to spread the pain over five years and spare schools and colleges from some cuts. * Davis is proposing a half-penny per dollar sales tax increase -- expected to pump $2.3 billion a year into the state treasury -- to repay the bonds. * The new proposal also shrinks a major piece of Davis' "realignment" plan to raise taxes and shift responsibility for some state services to cities and counties. It will call for an increase in the state's cigarette tax and for the creation of two new upper-income tax brackets to collect more from the state's top earners. Local governments would get $1.8 billion from the tax increases to pay for the shifted programs. * The plan assumes that the vehicle license fee will be raised administratively under a 1998 law allowing an increase if the state has budget problems. The inCrease would mean a $124 increase for the average car. AlthOugh the Davis plan still contains severe cuts for health and welfare programs, it eases some of the sting for education. Community colleges would take less of a hit than expected because Davis is calling to increase student fees from $11 to $18 a unit -- Instead of the $24 he proposed in ]anuary. And K-12 schools would receive about $700 million more than earlier slated, sources said. Davis also is protecting some of-his pet programs, Including one to reduce class sizes. Analysts said Davis had little choice but to remold his budget plan. "He had two choices: One, to stay exactly where he was even though he clearly knew there was resistance in the Legislature or to try to tailor a document to lead us closer to compromise," Democratic political consultant Gale Kaufman said. Davis spokesman Steve Maviglio said Tuesday that the Democratic governor's revised plan "reflects largely what the Legislature has asked him to do." Democratic lawmakers had balked at the governor's call to shave long-term costs by shifting responsibilities to local governments without the money to pay for them. Meanwhile, Republicans urged borrowing money to pay off the deficit over two or more years, rather than raise taxes to close the gap in one year. "He's made an honest effort to take the lead thisyear in proposing something that could win bipartisan support," Maviglio said. The governor "has said repeatedly that he wants the Legislature to take the bitter medicine this year and get the job done. There doesn't seem to be an appetite for that from either party." But GOP leaders have said that the Davis concession still might not be enough to sway them from their stance against a tax increase. "Senate Republicans have said that we are willing to negotiate on any and every issue except tax increases," Senate Republican leader Jim Brulte of Rancho Cucamonga said. Davis in January released a $96 billion state budget for the 2003-04 fiscal year that included tax increases, borrowing and other measures -- including the realignment -- to fill a gap he estimated would grow to $34.6 billion. The Legislature approved spending cuts and other savings that have shaved $12 billion from the shortfall, but finance officials have said the deficit could widen because of higher-than-expected costs and sagging revenues. Several Republican lawmakers have accused the governor of overestimating the size of the deficit to push a tax increase, and to make himself seem a more accomplished leader when the gap was eventually closed. Although Maviglio wouldn't pinpoint the size of the revised deficit, he said Tuesday that it is as bad as if not worse than Davis' prediction: "I think you will hear, if not these words, a message of '! told you so.'" Budget highlights Gov. Gray Davis' revised plan for 2003-04 reportedly seeks to: * Raise the state sales tax by half a percent to repay more than $10 billion in deficit bonds. * Increase the cigarette tax and the tax on top income earners. * Lower some proposed cuts to K-12 schools and community colleges. * It also assumes the vehicle license fee would be raised, costing the average driver about $124 more annually. About the Writer The Bee's Alexa H. Bluth can be reached at (916) 326-5542 or .~.bJuth@.s~tr,_b_e.e..,.c.em. Margaret Talev and Aurelio P, oJas of The Bee Capitol Bureau contributed to this report. The Sacramento Bee -- sacbee.com -- Round 2 for Davis on deficit Page 1 of 4 This story is taken from Budget at sacbee.com. Round 2 for Davis on deficit Both parties spar over revised proposal By John Hill -- Bee Capitol Bureau - (Published May 15~ 2003) Gov. Gray Davis on Wednesday offered a revised plan for coping with a state budget deficit that now tops $38 billion, saying he sought to accommodate all sides to get a spending plan on time and avoid an even greater fiscal calamity. But lawmakers from both parties showed little sign of budging from entrenched positions. Republicans said they continue to oppose new taxes. Davis' revised $100.4 billion budget proposes tax increases to pay off $10.7 billion of the deficit over five years and to fund a shift of some responsibilities to local governments. "We are willing to negotiate on everything except the issue of taxes," said Senate Republican leader Jim Brulte of Rancho Cucamonga. Democrats, sounding their own familiar refrain, accused Republicans of failing to negotiate and said no budget solution is possible without new taxes. "I'm extremely disappointed that after everything we've done, and after everything the governor has done, the Republicans have not moved an inch," said Assembly Speaker Herb Wesson, D-Culver City. !n one small indication of remaining tensions between the parties, Republicans took issue with Davis' contention that he had met with legislative leaders 19 times. Their records indicated 11 such meetings. Still, the Democratic governor adopted a strikingly accommodating tone in presenting his changes. He said that he still preferred the proposal he made in January, which called for erasing the deficit in the coming fiscal year. But "unfortunately, both parties of the Legislature decided they did not like the one-year plan ! proposed," he said. The plan Davis outlined Wednesday bears little resemblance to his January proposal. Gone Is a $8.3 billion shift of responsibilities to local governments, to be funded by an array of tax increases. It's replaced by a more modest $1.8 billion "realignment" proposal. The new version would be paid for by a new 10.3 percent income tax bracket on annual incomes above $150,000 for individuals and $300,000 for married couples, and a 63-cents-a-pack increase on cigarettes, phased in over two years. http://www.sacbee.com/content/politics/ca/budget/v-print/story/6667834p-7619604c.html 5/15/2003 °The Sacramento Bee -- sacbee.com -- Round 2 for Davis on deficit Page 2 of 4 The $10.7 billion deficit in the current fiscal gear would be wiped out by selling bonds, which would be paid off with a new half-cent sales tax over about five years. On top of that, Davis' new budget proposal assumes that the vehicle license fee that Californians pay each year will be tripled under an existing law that calls for recent reductions to be reversed in tough budget times. That would raise $4.2 billion. All told, the revised budget proposal banks on about $8 billion from increased taxes, about the same amount Davis planned in his .lanuary spendincj outline. In another change, Davis backed off from a proposal to raise $2 billion by selling bonds on the strength of the state's year-to-year share of a legal settlement with tobacco companies. With many other states doing the same thing and tobacco companies struggling financially, the deal no longer makes sense, he said. He also scaled back -- from $1.5 billion to $680 million -- the amount he expects to get from renegotiating gambling compacts with Indian tribes. The process is complex and can't be finished in the coming fiscal year, he said. In .lanuary, Davis had proposed overhauling the system of funding school programs with separate pots of money by replacing $854 million of so-called categorical funding with block grants. After lawmakers rejected the idea, Davis gutted the proposal pending further discussion. The governor admits that his revised plan would lead to an $8 billion deficit in the 2004-05 fiscal year. After the Legislature passes a budget this summer, he said, it should spend the rest of the year on "structural reform" to avoid recurring shortfalls. "This is something we must do if we want to right the state's financial ship," he said. Davis' revised proposal also responds to some concerns from lawmakers of his own party by backing off -- in part -- on some cuts he proposed in .lanuary to health care and social services, such as the monthly grants pald to the aged, blind and disabled. It gives $700 million more to K-12 schools, allowing the state to continue funding a class-size reduction program, and $304 million to community colleges. In .lanuary, Davis proposed increasing fees at community colleges from $11 per unit to $24. He is now paring that to $18. Davis and his finance director, Steve Peace, took pains to make the case that the new plan won't work without taxes. Assembly Republicans released a plan last month that called for the deficit to be paid off with existing state revenue, avoiding tax increases. "Their plan doesn!t pencil out," Davis said. Under the GOP plan, he said, "we're basically borrowing from one pocket to pay another pocket," leaving too little money for all the state's obligations. Peace said that using current revenue from the general fund, the state's main bank account, would pose a host of complications. For one, the Legislature each year would have to reappropriate the money, on a two-thirds vote, to pay off the bonds -- a requirement unlikely to assure Wall Street lenders. "Put yourself in the financial community's perspective and you'll understand why nobody in their http://www.sacbee.com/content/politics/ca/budget/v-print/story/6667834p-7619604c.html 5/15/2003 .The Sacramento Bee-- sacbee.com -- Round 2 for Davis on deficit Page 3 of 4 right mind would lend money to this state if it wasn't a new tax" separate from the general fund, he said. But Republicans say experts they've consulted believe differently. "Let Wall Street say what they want," Senate Republican leader Brulte said. "Their job is to maximize profits for their people," not look out for the interests of Californians. Peace said the May budget revision tries to placate all parties so the budget can be passed on time. A late budget, he said, could cause financial markets to slash California's credit-rating or decide not to lend money the state needs in the next several months to avoid running out of cash. "If we don't deal with these things prudently, we're going to have both higher taxes and bigger cuts," he said. "The faster we act, the better we do." In January, Davis proposed cutting the state's share of grants to the aged, blind and disabled to the federal minimum. That would have forced grant recipients, most of whom are disabled, to get by on $49 less each month, said Lupe Diaz, legislative advocate for the Western Center on Law and Poverty. Davis got rid of that plan. But the governor still proposes to suspend cost-of-living adjustments, which would have added $34 to the monthly grants in the next year. CalWORKS recipients would also not get cost-of-living adjustments, while avoiding an earlier proposal to cut grants. "It's better, but certainly not what we would have envisioned," Diaz said. Davis reversed some cuts he had proposed in health care, such as denying Medi-Cal coverage to working parents who made more than 61 percent of the federal poverty level. But "most other health cuts remain, and would indirectly deny coverage to literally millions of Californians," said Anthony Wright, executive director of Health Access, a statewide health-care consumer coalition of 200 organizations. Overall, the revised budget calls for $18.8 billion in cuts and other savings, compared to $20.7 billion in his January proposal. The state's deficit through the next fiscal year is projected to be $38.2 billion, up from the $34.6 billion in January. The state's general fund this year is about $78 billion. The Legislature, in two rounds of budget cuts, has already trimmed $6.9 billion. Lawmakers face a June 15 constitutional deadline for approving a budget for the fiscal year that begins July 1. The budget must win two-thirds majorities in each house. That means that slx Republicans in the Assembly and two in the Senate would have to join majority Democrats to approve the spending plan. About the Writer The Bee's John Hill can be reached at (916) 326-5543 or _ihillt~sacbee.com. Alexa Bluth and ]im Sanders of The Bee Capitol Bureau contributed to this report. . http://www.sacbee.com/contenffpolitics/ca/budget/v-print/story/6667834p-7619604c.html 5/15/2003 41 Sponsored by careahuildm http://www.latimes.corn/news/local/la-me-budget 14mayl4,1,1653277.story?coll=la%2Dhome%2Dheadlines advertisement New Davis Budget Seeks to Cut Less, Borrow More His revised Plan aims to win consensus among lawmakers and placate critics. The sales tax would increase by half a cent instead of one cent. By Gregg Jones Times Staff Writer May 1'4, 2003 SACRAMENTO -- Battered by months of criticism over his budget choices and facing a campaign aimed at recalling him from office, Gov. Gray Davis will today unveil a revised plan that sharply reduces tax increases he proposed in January and restores about $2 billion in spending to education, health and public safety services, senior administration officials said. The governor's revised 2003-04 budget will cut in half proposed increases in the cigarette tax and the state income tax on top earners and eliminate a proposed 1-cent increase in the state sales tax, said the officials who spoke on condition they not be identified. But Davis will separately propose a half-cent increase in the state sales tax to pay off the projected $10.7-billion deficit that California will face when the fiscal year ends June 30, the officials said. Republican legislative leaders first proposed the plan to borrow money to cover part of the budget shortfall, projected at up to $35 billion over the next 13 months. But they opposed creating new taxes to pay for it. careed~uilde~ The revised budget assumes an increase in the vehicle license fee that California drivers annually lira smadar way pay, raising about $4 billion m an increase that administration officials and Democratic legislators to lind a hetta'jR. said will be triggered automatically by the state's dire financial condition.' Republicans, . however, have said they would contest any increase in court. : In another significant departure from his January budget, Davis will scrap much of his proposed plan to shift $8 billion in state services to local governments. Instead, he will propose the "realignment" of about $1.8 billion in programs to local governments, to be paid for by an increase in the cigarette and income tax on top earners-- about half the size of the increase in those taxes the governor initially sought. Until now, Davis' budget had advocated a single-year solution to the enormous gap between state tax collections and spending. But Democrats and key constituencies criticized the $20 billion in program cuts and savings it proposed and Republicans condemned its $8.3 billion in tax increases. In the revised budget, 'Davis has conceded ground on both fronts in the interest of compromise, aides said. "He was trying to put .together a consensus document," one senior official involved in the discussions said. "This is [Davis] trying to get a workable budget and get the Legislature to a point of passing a budget on time. This isn't about cur~ng~volitical favor with people." But political concerns factored in the governor's thinking, some people familiar with the discussions said. Aides said Davis hopes.that adopting the rollover of the deficit and reducing the size of his proposed tax hikes will generate Republican support for the budget and that reducing the size of cuts in certain programs, including education, will draw Democratic backing. Despite rolling back some of the cuts deemed most onerous by lawmakers and interest groups, Davis' proposal still urges spending cuts as half the solution to the state shortfall, aides said. One senior official said the choices in the governor's revised budget reflect "a sense of the values he's trying to communicate in terms of what's important. Education and public safety really receive star treatment in this budget." Davis will restore hundreds of millions of dollars in health-care cuts he proposed in January, including a recommendation to slash eligibility in the Medi-Cal health program for the poor and disabled. Davis had recommended in January restricting eligibility to peoPle with incomes equal to 60% of the federal poverty level, but his revised budget will leave the income eligibility level unchanged at 100% -- $18,400 of annual income for a family of four. Davis also will restore the Medi-Cal prosthetics benefit, one of the 18 optional benefits he had recommended cutting. The govemor, however, will stand by his recommendation to review Medi-Cal eligibility on a quarterly basis~ compared to the current annual review. More frequent reviews will reduce participation in the program, health experts said. Lawmakers recently proposed semiannual reviews as a compromise, but Davis aides said that restoration of income eligibility levels to 100% ofthe federal poverty level will reduce most of the impact of the quarterly reviews. Responding to some of the sharpest criticism of his January budget, Davis will propose restoring $708 million to K-12 education, the administration officials said. In another concession to teachers and school administrators, the remaining cuts to education will target areas "that are farthest away from the classroom" rather than across the board-- the result of reactions from educators and lawmakers, the officials said. The restoration of some education funding will include $180 million for a class-size~reduction program and $60 million for a program to assist under-performing schools. 'Responding to another point of intense criticism, Davis will recommend restoring $304 million to the state community college system, resulting in a fee increase of $18 per unit rather than the $24 per unit his January cuts would have required. The shift also will give community colleges more money for programs for disabled students and general expenses. Davis agreed only reluctantly, a senior administration official said, to roll over part of the deficit, accepting the plan as a "consensus position" among Democrats and Republicans. The governor's proposal calls for the financing for the $10.7 billion in borrowing to be repaid over five or more years, depending on the deal the state can cut with Wall Street bond firms. Other departures from his January plan include reducing the projected amount of revenue from Indian casinos to $700 million from $1.5 billion, although one official conceded that even that number was a best-case-scenario guess. Davis is attempting to renegotiate with the 61 Native American tribes that have gambling agreements with the state and more than two dozen other tribes seeking agreements. The revised budget also assumes that the state will not be able t° sell $2 billion in tobacco settlement bonds, as originally assumed in January. Another Davis concession to supporters will be to restore $25 million to the Peace Officers Training Fund, which trains local law enforcement officers. i; u want'other stories on this topic, search tho Amhivos at latlmes.com/archlves~ lick here for article licensing and reprint options ,Los Angeles Times: Davis Submits His Revised Budget Plan Page 1 of 4 C Sponsored by cme~builde~ http://www.latimes.com/news/local/la-me-budgetl 5mayl 5,1,2243103.story?coll=la%2Dhome% 2Dheadlines advertisement Davis Submits His Revised Budget Plan The governOr's.proposal would spare most state programs, including education, from devastating cuts. But it relies on borrowing and stiff tax hikes. By Evan Halper and Jeffrey Rabin Times Staff Writers May 15, 2003 SACRAMENTO -- Gov. Gray Davis scrapped his original plan to deal with the state's fiscal crisis Wednesday and unveiled a new one that would go easier on the poor and schools but rely on extensive borrowing and steep tax increases to close a budget hole that has grown to $38.2 billion. The revised budget calls for spreading out the current year's $10.7-billion deficit over the next five years -- an approach first raised by Republicans -- but having Californians pay it off with a half-cent sales tax increase. Doing so would cost hundreds of millions of dollars in interest but would spare state programs from potentially devastating cuts. The spending plan represents a major strategy shift for a governor who only months ago vowed he would not sign a budget that failed to substantially reform the state's tax structure to avoid future deficits. Davis said he would now leave that necessary chore until after this year's budget is signed. Without that structural reform, the revised plan closes the budget hole only careerbuilder~ temporarily: An annual shortfall of $7.9 billion would begin to emerge by July 2004. 11~ waf~ 1~/ to find a hetWjoh. Changes in Medi-Cal eligibility requirements that would have cost hundreds of thousands of poor Californians their health coverage are no longer part of the Davis plan -- although other cuts in health care for the poor remain. Significant cutbacks in aid to the elderly and disabled were also discarded. The governor boosted spending for K-12 education by $403 million over his previous plan, a change that was greeted with enthusiasm by school officials. And Davis proposed giving community colleges a $305-million boost over his January budget, which lowered the $13-per-credit fee increase he had proposed then to $7 now. http://www.latimes.com/templates/misc/printstory.j sp?slug=la%2Dme%2Dbudget 15may 15... 5/15/2003 Los Angeles Times: Davis Submits His Revised Budget Plan Page 2 of 4 While the cuts to the UC and Cal State systems from January remain, Davis spared them from further reductions for which educators had been bracing. Davis also abandoned plans to raise $2 billion by selling bonds that would have been backed with money owed California from tobacco company legal settlements, because the market for such bonds has become too uncertain. And he cut in half his projection of revenue that could be gained through renegotiating compacts with tribal casinos from $ i.5 billion to $680 million. Many lawmakers are skeptical that the state will be able to get any of that. Davis said he made some of the budget changes reluctantly. The initial plan he submitted was resisted by both parties; Democrats vowed to block steep cuts in services and Republicans -- who must provide at least a handful of votes for any budget to pass by the required two-thirds majority -- said tax increases were out of the question. "I proposed a plan [in January] that would balance the budget, erase the entire deficit and entail structural reform," Davis said. "I tried very hard to sell that budget ... but I could not get enough votes from the Republican and Democratic [legislators]. Republicans don't come up here to raise taxes and Democrats don't come up here to cut programs. So, for differing reasons, nobody wanted to get this done in one year." Along with the revised budget, the governor released an updated economic forecast that predicts slightly higher unemployment during the rest of this year and in 2004. State forecasters also see slower growth in the personal income of Californians. That growth is crucial because the income tax is the largest source of state revenue. After rejecting the original Davis plan, lawmakers in both parties began exploring their own proposals that relied on borrowing to spread the pain of cuts over time. Davis picked up on the theme in his' revised budget and included a borrowing plan similar to that used to keep New York City solvent in the 1970s. So far, lawmakers have been able to trim about $6.9 billion from the budget, an amount Finance Director Steve Peace said will likely double when the cuts made this year are factored into next year. While the revised plan was welcomed by Democrats for restoring $2 billion for education, health care and other government programs, its continued reliance on $8 billion in new taxes sparked immediate Republican criticism. Though many of the tax increases included in the earlier Davis plan have been scaled back, new ones were added. About half the revenue from new taxes would now come from an increase in the vehicle license fee, which the administration can enact on its own, at a cost to the average driver of an additional $158 a year. Davis, who faces an effort to recall him from office, earlier resisted the so-called car tax increase, which polls suggest would be highly unpopular with voters. After he threatened to veto a Democratic proposal to raise the fee because it would anger anti-tax Republicans, state lawyers determined that a fee increase could be enacted on administrative order, without a legislative vote. Administration officials say that order will likely be issued soon. http://www.latimes.com/templates/misc/printstory.j sp?slug=la%2Dme%2Dbudget 15may 15... 5/15/2003 Los Angeles Times: Davis Submits His Revised Budget Plan Page 3 of 4 The other taxes Davis would raise all require support from the GOP. They include the half-cent sales tax increase, an income tax hike on high earners, and a new tax on cigarettes. Finance Director Peace warned that the borrowing in the plan is dependent on the sales tax, and without it the entire revised budget would collapse. Wall Street, Peace said, will not lend California money to pay off the deficit without the new Sales tax to' back it up. Republicans were not moved by that argument. Within minutes of Davis' unveiling of his plan in a Capitol conference room, top Republicans were in the hallway denouncing it. Assembly Republican Leader Dave Cox of Fair Oaks called the govemor's revised budget a "nonstarter." Senate Republican Leader Jim Brulte said he was willing to negotiate everything in the plan but the tax increases. Democrats expressed exasperation with the reaction from across the aisle. "After everything that we've done, after everything that the governor has done, the Republicans have not moved an inch," said Assembly Speaker Herb Wesson (D-Culver City). "I think now it's time for us to get real. This isn't about doing what we want to do. This is about governing, and we have jobs that we have to do." "When you hear individuals say.., that we're willing to negotiate on everything other than taxes, then that's not a negotiation," Wesson said. "That's saying no to negotiations." While legislators debated the revised Davis plan, local officials and some interest groups welcomed some aspects of it. The revised budget, for instance, scales back a proposal to shift several major social service programs from the state to the counties, an idea that had alarmed many county officials. In the revised budget, the so-called realignment proposal was scaled back from $8.3 billion to $1.7 billion. Programs that would be shifted to the counties under the latest plan include mental health services for children and the homeless, foster care, abuse-prevention services and welfare programs. Local officials applauded the move. "Most of these programs are ones that would probably make sense to transfer," said David Janssen, Los Angeles County's top administrator. "It's a much better approach for local government." Most of the environmental cuts contained in the original budget remain. The revised plan still eliminates Fish and Game warden jobs, trims regulatory oversight and diverts more than $2 billion from voter- approved water and parks bonds to help pay for conservation programs typically funded from the budget. Conservationists did, however, praise Davis for reversing his decision to cut funding for the Williamson Act, a $40-million program that gives landowners financial incentives to keep land in farming. The move also appeals to Republicans from the Central Valley, who have called for the program to be preserved. Wall Street also has taken an active interest in California's budget debate, with investors urging the state to address the imbalance between taxes and spending. In addition, those same financial institutions have http://www.~atimes.c~m/temp~ates/misc/printst~ry.jsp?s~ug=~a%2Dme%2Dbudget ~ 5may~ 5... 5/15/2003 L~os Angeles Times: Davis Submits His Revised Budget Plan Page 4 of 4 pressed the state's leaders to cut a deal in time to meet California's constitutional deadline of enacting a budget by July 1. That is partly because the state's cash reserves are shrinking and could run out without a budget. The state must borrow $11 billion in early June to pay off $12.5 billion in earlier loans that are coming due. Additional borrowing is expected this summer or fall, and some bankers are warning that it cannot occur without a spending plan in place. "I am sending out a clear clarion call that if it doesn't get done this summer, the state will be facing budget problems in the future," Davis said. "This is not just something I would like to do. This is something we must do if we want to right the state's financial ship." Times staff writers Carl Ingram, Gregg Jones and Nancy Vogel in Sacramento and Miguel Bustillo, Sue Fox, Peter Hong, Lisa Richardson, Carla Rivera, Stuart Silverstein and Rebecca Trounson in Los Angeles contributed to this report. Ift~u want other stories on this topic, search the Archives at latimes.com/archives. Click here for article licensing and reprint options ' Copyright 2003 Los Angeles Times http://www~~atimes~~~m/temp~ates/misc/p~ntst~ry.jsp?s~ug=~a%2Dme%2Dbudget ~ 5may~ 5... 5/15/2003 The Sacramento Bee -- sacbee.com -- Daniel Weintraub: Davis budget pushes problems intc Page 1 of 3 This story is taken from B_u__c!.ge~t at sacbee.com. Daniel eintraub: Davia budget pushea problems into the future By Daniel Weintraub -- Bee Columnist - (Published May 15~ 2003) The revised budget Gov. Gray Davis proposed Wednesday represents a risky leap into the world of deficit financing, relying on an off-the-books $11 billion loan and a prayer that the economy will revive to bail out the state. It's bad enough that Davis is proposing to pay for our recent consumption of government services over the next five 'years, a move that might be unavoidable now that the hole is too deep to crawl out of without a ladder. But the governor is compounding that problem by declining to offer a plan that rids the state of its multibillion-dollar structural deficit. In lay terms, that means California's government is spending more than it's taking in, and remains on a path to do so again in the near future. If nothing is done to change course, by this time next year the state will be confronting a brand new, $8 billion shortfall. And that's probably the best-case scenario. The governor's deficit plan will find favor with Democrats, who want to avoid making painful cuts to health, education and welfare programs. And it might even attract sufficient votes from Republicans, even though it includes a new, half-cent increase in the sales tax to retire the deficit bonds. But It would be foolhardy without a long-term plan to bring the budget back into balance. That job, Davis says, can wait until August, when he is confident that he and the Legislature will somehow be able to do what they have put off for three years. Davis said he had no choice but to propose a path-of-least-resistance budget because he must have a spending plan in place by the July I start of the fiscal year. Otherwise, the state won't be able to do the borrowing it needs in order to pay its bills this summer. That scenario might sound like business as usual. It's not. The state has had budget deadlocks before, and once paid its bills with IOUs. But the state has never run out of cash and been flat broke, unable to pay and unable to borrow. That's what looms this July if there's no consensus by then. No wonder Davis is worried, in the background is a nascent attempt to recall him from office, an effort that wilt only gain steam with his decision in this budget to increase the vehicle license fee, or car tax, back to 1998 levels without a vote of the Legislature. If the state somehow ends up insolvent this summer, voters are likely to point fingers at the man at the top. Davis is hoping that all the borrowing will buy him time. It certainly allows him to forgo most of the tough budget cuts he proposed in January. Schools will get enough to tread water through difficult times, and most of the reductions in Medi-Cal that Davis asked for in January he has http ://www. sacbee.com/content/politics/ca/budget/v-print/story/6667884p-7619632c.html 5/15/2003 The Sacramento Bee -- saebee.com -- Daniel Weintraub: Davis budget pushes problems in... Page 2 of 3 now taken off the table. Nearly all the cuts to local government are also gone. The governor is claiming that his budget reduces spending by $7.6 billion from this year to next. But that number is highly misleading. In the wacky accounting 'of Sacramento, nearly $7 billion of the governor's spending cuts actually result from tax increases and accounting tricks. About $4 billion of this total comes from raising the car tax. That counts as a budget cut for the state because the tax is a local revenue source and when it was reduced in 1998, Sacramento promised to use its general fund to make up the revenue difference for cities and counties. Raising the tax relieves the state of its need to keep the locals whole, so that's counted as a reduction in spending. Another $1.8 billion in State "cuts" come from shifting a handful of health and welfare programs to local government and raising taxes to pay for them. Finally, Davis takes credit for about $1 billion in spending cuts by shifting accounting for the Medi-Cal program, a trick that appears to reduce spending on paper while changing nothing in the real world. The bottom line is that spending will pretty much remain frozen from this year to next. That's no simple task, given rising school enrollments and other demands on government services. But it's not nearly as dramatic as Davis suggests. The governor's plan still calls for more than $8 billion in new taxes. The car-tax hike represents about half of that amount, or $4 billion, while the sales tax is about $2.4 billion a year. The final piece is a combined $1.9 billion from increasing the cigarette tax and raising income tax levies on the wealthy. But even with those new taxes, the state still wouldn't be able to afford all of the government Davis is proposing. Unllke the federal government, California can't print money. But it can mortgage its future. And that's exactly what's being done here. It's time for the state to acknowledge the true cost of its desires and raise taxes to pay for them, or else bite the bullet and reduce spending. To continue to do neither is both selfish and shortsighted. About the Writer The Bee's Daniel Weintraub can be reached at (916) 321-1914 or at dweintraubt~sacbee.com. C;~r$ I C:!_a~ssifieds I klom.es I 3.phs I ...Y_e!!.~...w.._...R~ges Help I Newsletters I Site Map I Subscribe to the Print Edition I Traffic I Weather I Wireless Delivery. About Us I Advertise in The Bee I Advertise Online I Contact Circulation Customer Service I Events http://www, sacbee.com/Content/politics/caPoudget/v-print/story/6667884p-7619632c.html 5/15/2003 The Sacramento Bee -- sacbee.eom -- Latest proposal gentler on local government Page 1 of 2 This story is taken from Budget at sacbee.com. Latest proposal gentler on local government By Robert D. D~vila -- Bee Staff Writer - (Published I~ay I$~ 2003) Communities wrestling with their own fiscal problems got some welcome news in Gov. Gray Davis' revised state budget proposal Wednesday. The governor dropped plans to eliminate a key funding source for municipal programs and shift major welfare responsibilities to counties. "In general, we're relieved it's not worse," Sacramento County budget analyst Russ Fehr said. The new state plan assumes vehicle license fees will be raised automatically by July if economic woes persist. The action would ensure $4.2 billion would continue to flow next year to cities and counties, which have relied on the state to make up those revenues since the fee was cut by two-thirds in 1998. In addition, Davis wants to transfer $1.7 billion in foster care and child welfare services to counties, significantly less than an $8.2 billion "realignment" he proposed in January. The programs would be funded by raising the cigarette tax and creating a 10.3 percent income-tax bracket for single filers earning more than $150,000 and joint filers more than $300,000. "This realignment proposal ... is a step toward structural reform," Davis said. "It is moving responsibilities now partially administered at the state level to local government, which is closer to the people." The VLF increase -- which is expected to mean an additional $124 to register the average car -- brought a deep sigh of relief from local officials. A plan by Davis in January to halt state reimbursements without raising the fee drew strong opposition from Assembly Democrats, resulting in an impasse that was resolved when officials concluded that a shortage of state money could trigger an automatic increase in the fees. "We're really appreciative that the Legislature and the governor have heard us," said Megan Taylor of the League of California Cities. "From our perspective, this is a vast improvement." The proposal to shift responsibility for fewer welfare services to local governments is "a more workable program," said Pat Leary of the California State Association of Counties. But she said that counties could be left holding the bag in hard economic times, when program costs typically go up at the same time tax revenues go down. "The devil is In the details, and we need to work this out with the state," Leary said. "If all we're doing is shifting the economic risk to local government, that's not a good thing." The revised budget also brought good news for other local services, including public protection. The plan preserves a total of $232.6 million for juvenile crime prevention and for the Citizens Options for Public Safety program, which supplements funding for local law enforcement http://www.sa~bee.c~m/c~ntent/p~~itics/~a/budget/v-print/st~ry/6667837p-76~96~5c.htm~ 5/15/2003 The Sacramento Bee -- saebee.com -- Latest proposal gentler on local government .Page 2 of 2 a§encies. Davis also restored $40 milli0n to cover losses in local property taxes on agricultural land preserved under the state Willlamson Act. Meanwhile, officials expressed stroh§ concern about a plan by Davis to shift $250 million in city and county redevelopment funds to the state. The amount would increase annually, to $1 billion over 15 years, which critics said would cripple efforts to revitalize older communities and attract economic development. The Sacramento Housin§ and Redevelopment Agency, a joint city-county agency, would lose $2.8 million next year, officials said. Increasing annual transfers to the state could force the city to dip into its general fund to repay bonds issued for major projects, including improvements on K Street Mall and the Sacramento River waterfront, Mayor Heather Fargo said. "People in the Capitol don't understand redevelopment and how it works," Fargo said. "It's such a basic economic tool for cities and counties." City and county advocates called on Davis and state lawmakers to include safeguards on funding for local services among provisions for government and fiscal reform. Constitutional protections are needed to prevent future state raids on local treasuries during tough economic cycles, local officials said. "The key issue for us has to be locking in our revenues, or at least creating rules on state borrowing from local governments," Taylor said. "That's the big lesson we've learned over the past decade." 'About the Writer The Bee's Robert D. D~Svila can be reached at (916) 321-1077 or .b.d.~!¥i.!o@.$acb.ee.,.co.m. Go to: Sacbee / Back to story Contact Us/Feedback I Privacy Policy I Terms of Use News I Sports I Business I Politics I Opinion I Entertainment I Lifestyle I Travel I Women Cars I Classifieds' I Homes I Jobs I Yellow Pages gb_o_u_t_U._s. I .._A..~_y~_~i~e._!_n._.Ibe_B.e~ I A~!y_e._~[se__O_o!L~.e. I _C_o.o_t..a__~_._C..!r~u!atLo_n_C_us_t_o. me..r_$.er_v...[~_e I .Ey_en_t.~ [ Sacramento Bee Web sites ] _S_a_c__be.e_.__c_o_m I SacTicket.com I Sacramento.corn This article is protected by copyright and should not be printed or distributed for anything except personal use. The Sacramento Bee, 2100 Q St., P.O. Box 15779, Sacramento, CA 95852 Phone: (916) 321-1000 Copyright © The Sacramento Bee / ver. 4 http://www.sa~bee.c~m/c~ntent/p~~i~~s/~a/budget/v~print/st~ry/6667837p~76~96~5c.htm~ 5/15/2003 Pension fund could face $2 billion deficit by 2009 Page 1 of 4 Pension fund could face $2 billion deficit by 2009 Report blames city's policy of under-funding for system's problems By Philip J. LaVelle STAFF WRITER May 10, 2003 San Diego's troubled pension system may be in far worse shape than previously thought and could face a deficit of more than $o billion within six years, according to a report prepared for city officials but buried from public view. The report describes a problem more serious than the sobering official assessment presented in mid- February to Mayor Dick Murphy and some members of the City Council. It also marks more bad news for a City Hall that faces $30 million in service cuts - ranging from shorter library hours to neglect of street repairs - and up to lo9 layoffs beginning July 1. The report also shows that much of the $2.3 billion retirement system's troubles will result from the city's policy of deliberately under-funding its contribution to the pension trust. The practice began in the mid-x99os as a way for the City Council to obtain cash to balance the city's operating budget during a time of rising benefit increases. The report, dated Feb. 08, was written by Rick Roeder, the actuary for the San Diego City Employees Retirement System, and was addressed to Lawrence Grissom, the system's administrator, and Paul Barnett, his assistant. The report had not been publicly aired and surfaced only recently through a lawsuit. It evidently was written to give officials the latest data in their study of whether to add to the city's debt load - by issuing "pension obligation" bonds - to reduce the system's deficit. Roeder's job is to analyze the demographic and economic realities facing the system and to recommend the amount of money the city should put into the system to keep it fully funded, an objective not met by City Hall for several years. The system serves about 5,350 retirees and also includes about ~,ooo current city and Port District employees. Earlier this year, pension officials estimated the system's deficit - the difference between the current value of the trust and the system's liabilities - at $700 million. http://sign~nsandieg~.printthis.c~i~kabi~ity.c~m/pt/ept?acti~n=~pt&expire=&ur~D=624953~... 5/12/2003 Pension fund could face $2 billion deficit by 2009 Page 2 of 4 Officials attribute the deficit to three factors: three years of falling financial markets; years of deliberate under-funding by the city; and benefit increases made without accounting for the impact to the pension trust. Roeder's report was obtained by Michael Conger, an attorney representing retired city Workers who allege in a lawsuit that the city's under-funding policy is illegal. Conger provided a copy to rt~o San Diego Union-Tribune yesterday. "Their actuary is telling them that unless you stop this train wreck, our $720 million debt that you have today is going to grow to (more than) $2 billion," Conger said yesterday. Murphy was in meetings yesterday and could not be located to comment on the report, according to his press secretary, Colleen Rudy. Retirement officials declined to discuss the report, citing pending litigation. City officials have said the pension system poses no immediate threat to city finances, because its horizon - unlike the city's annual operating budget - spans decades. They also say worker "vested" benefits are not in danger. 'However, the system's troubles have already led to the suspension of one benefit - the "13th monthly check" - paid to retirees. Conger dismisses city assertions that things are under control; he predicts bankruptcy for the city or massive service cuts and layoffs. Citing.one projection that the city may log more than $400 million in underpayments between now and 2009, he said: "The Padre ballpark costs about $400 million. You could build a whole new stadium with · the amount of money they're shorting the pension system... I'm glad I don't live in the city of San Diego. Taxpayers of the city - brace yourselves. "And they've been hiding this (report) from the public. I've been at the Retirement Board's monthly public meetings and this has never been disclosed. Why? Because they don't want to tell the public how bad the trouble really is." The pension system's woes - including the $720 million deficit and more than $1.1 billion in unfunded retiree health care costs - surfaced in mid-February at a hearing of the council's Rules Committee, whose chairman is Murphy. In an interview the day before the hearing, Murphy said the council needed to find a solution within 30 to 60 days. At the hearing, he directed City Manager Michael Uberuaga to report on potential solutions within 60 days. But the report was pulled from the Rules Committee docket in late April; city attorneys said it was because of the litigation. The mayor's office said yesterday that Murphy will not put the matter on the docket until city attorneys give approval. Policymakers appear to be as left out about the latest retirement system projections as the general public. City Councilwoman Donna Frye, a critic of city pension policy, said yesterday that she is not being kept informed and had not seen the Roeder report. http://sign~nsandieg~.printthis.c~ickabi~ity.c~m/pt/~pt?acti~n=cpt&expire=&ur~D=624953~... 5/12/2003 Pension fund could face $2 billion deficit by 2009 Page 3 of 4 Pension board trustee Diann Shipione, also a critic, said yesterday she does not know what city officials may have in mind for the pension trust. As for Roeder's report, "I haven't seen it, but I'm not surprised" at its findings, she said. "This shows the tremendous penalty the city pays each year for pushing this problem off." Grissom, the system administrator, declined to discuss the report or explain why it was kept secret. He said the system's attorneys have advised him to not discuss the matter because it is part of litigation. He said he, too, is not privy to what city officials may have in mind for the pension trust. The issue "hasn't been dropped," Grissom said. "My understanding is that because of the lawsuit, they (city officials) were going to go back in closed session (of the City Council) rather than into the Rules Committee, and that is the sum total of what I know about it." In February, officials said the pension system's deficit might be cut around $400 million by 2009. But ROeder's report, dated 16 days later, gave a starkly different picture, putting the deficit at more than $2.02 billion. Presumably, this figure includes the current deficit, plus hundreds of millions of dollars in. future under-funding, and interest owed on years of under-funding. It also factors in investment performance for the first half of last year, data not available in his previous assessments. As bad as a $2 billion-plus deficit looks, Roeder's letter said "a different set of numbers would paint a more somber picture." Roeder's report assumes 8 percent annual investment returns - some analysts consider that a rosy scenario - and his calculations do not include "subpar investment performance" in the first eight months of fiscal 2003, which began last July 1. It also does not account for millions the city owes to retirees under a court settlement; that figure alone may soar to $38.5 million by 2009. The report also predicts that in addition to $102 million in underpayments dating to the mid-1990s, the city will underpay an additional $320 million to $446 million by 2009. Roeder's report includes a table showing the likely path of the pension system's deficit as well as the system's funding ratio, which measures the system's assets against its long-term liabilities. Today the system is 77.3 percent funded - critics say the level is lower - and could fall to 65 percent by 2009. In November, Murphy and a council majority voted to increase benefits while putting offheavier contributions to the pension for several years. The annual payment for 2009 alone could soar to $214 million, up from $54 million paid last year. Copyright 2003 Union-Tribune Publishing Co. http://sign~nsandieg~printthis~c~ickabi~ity~c~m/pt~cpt?acti~n=cpt&expire=&ur~D=624953~... 5/12/2003 (~'-.t -,-';\' ' -', 't -,' - 8 200,3 BAKERSFIELD POLICE TO: ALAN TANDY, CITY MANAGER FROM: ERIC W. MATLOCK, CHIEF OF POLICE DATE: May 9, 2003 SUBJECT: Speeding in Alley at 834 "R" Street Council Referral No. 456 (Ward 1) o Council Member Carson requested the police department monitor traffic in the alley at 834 "R" Street for Speeding. Council Member Carson's referral was assigned and handled by members of the Operations Division. Officer Whisenhunt monitored alley traffic in the area of 834 "R" Street for 70 minutes over a three day period, May 7th through May 9th. A total of three vehicles used the alley during this period, and there were no violations observed and no action was taken during this time. Staff will continue to monitor the situation. EWM/vrf EWM/vrf BAKERSFIELD Economic and Community Development Department MEMORANDUM May 9, 2003 ° TO: Alan Tandy, City Manager FROM: George Gonzale munity Development Coordinator SUBJECT: ESTABLISH A COMMUNITY GARDEN Council Referral No. Ref000454 Councilmember Maggard Requested ED/CD Staff assist in exploring the possibility of using CDBG Funds for a community garden in the area of N/E corner of 38th and "M" streets, and on vacant lots backing up to North Chester between Columbus and 34th Street, South of the river. According to the recently released 2000 Census information, the area around the Stella Hills School is a HUD-eligible target area. Under the list of eligible activities for public facilities, parks, playgrounds, community centers, and senior centers are specifically identified. Consequently, a community garden park would fit within HUD's categories. At this point interest from the residents from the neighborhood to participate in a community garden park has not been verified, nor has a sponsor or group expressed an interest in operating the facility. Staff would suggest that the 34th Street Partnership or the management from the apartment complexes in the area be contacted to determine the level of interest for sponsorship and participation by their residents. In June, 2003 staff will begin the annual Request for Proposals (RFP) for CDBG funding for Fiscal Year 2004-05 and the community garden park for the Stella Hills neighborhood could be considered for land acquisition and improvements for that project. Staff will work with the City's Recreation and Parks Department to review how other community garden parks have been organized in other cities. S:\DEBBIE'S\Council Referrals\Council Referral community garden.doc B A K E R S F I E L D MEMORANDUM TO: ALAN TANDY, CITY MANAGER FROM: /~.~.---STANLEY C. GRADY, PLANNING DIRECTOR ; [vifl',{ I 6 2003 DATE: May 15, 2003 SUBJECT: POSTING ON PROPERTY FOR REZONING Council Referral No, REF000460 COUNCILMEMBER COUCH REQUESTED STAFF PREPARE A DRAFT POLICY, REGARDING THE ISSUE OF POSTING A SIGN ON PROPERTY FOR REZONING, FOR REFERRAL TO URBAN DEVELOPMENT COMMITTEE TO BE PLACED ON THE NEXT AGENDA. The suggested language for the referenced policy is as follows: Within 10 days after submittal of an application for any zone change the applicant shall post a sign giving notice of a proposed zone change. The notice shall be posted on each street frontage. One sign shall be posted and evenly spaced for each 300 feet or less of street frontage. The sign shall remain posted until the City has taken final action on the proposed zone change, or the application is withdrawn. The size of each sign shall be 4' x 8' with a minimum of 6 inch letters. The content of each sign shall include at a minimum the following language. NOTICE OF PROPOSED ZONE CHANGE From: To: Questions? Contact: Bakersfield Planning Department (661) 326-3737 Case # SG:djl CC: Rhonda Smiley;~ Office Administrator/Public Relations P:\OCReferral~Ref460.doc I: 2 2003 B A K E R S F I E L D CITY OF BAKERSFIELD MEMORANDUM May 12, 2003 TO: ALAN TANDY, CITY MANAGER FROM: RAUL M. ROJAS, PUBLIC WORKS DIRECTOR/~---~/ SUBJECT: TUB GRINDER PROTEST Council Referral #000458 Councilmember Maggard requested staff investigate ways to improve the bid/specification process for the most efficient use of tax dollars; also explore possible waivers/variances or payment of mitigation fees to enable the City to accept lowest bids. Since technology is constantly changing and improving in all aspects of vehicle and equipment purchases, City staff is continually improving and refining the bid specification process. This process provides the City of Bakersfield with the best quality equipment. In researching the possible waivers/variances or payment of mitigation fees to enable the City to accept lower bids, City staff contacted the San Joaquin Valley Air Pollution Control District (SJVAPCD) and the following information was gathered: · If a permitted engine is replaced with other than the same type of engine, then the City has to reapply for a new permit. This is because the exhaust emission gases; such as VOC (Volatile Organic Compounds), PM (Particulate Matter) and NOX (Nitrogen Oxides) would exceed what the City has in service. · If the emissions are greater on the new engine, the user has to provide some type of offset emission measures such as additional fees, purchase of clean air credits, and/or removal of existing equipment. Staff will also be contacting SJVAPCD in writing asking for clarification on the availability of offsetting emission credits. Based on the regulations in place at the time of applying for a permit, the fee varies according to horsepower which cannot be measured until the unit is in actual operation. Tub Grinder Pmtest May 12,2003 Page 2 Fleet staff could incorporate the requirement that the vendor obtain the permit for the new piece of equipment. However, the process is entailed and complicated. · The piece of equipment would have to be put into actual use and monitored on its VOC, PM, and NOX emissions and a determination would be made as to whether it would meet the emission requirements. If the SJVAPCD denies the permit, the City could not accept the new piece of equipment. · Fleet staff would have to reject this piece of equipment and go to the next lowest bidder. This would be contingent upon the remaining bids being valid. Normally, bids expire after 60 days at which time staff would have to start the acquisition process again. · It would be practical to have Fleet staff research such potential machines as to exhaust emissions requirements before the bid process takes place. This would save staff time and ensure the best piece of equipment for the money. G:\GROUPDAT\Referrals~003\CC Mtg 04-30\458.doc