A new tax?! Messages were mixed after a council workshop on
service level priorities, but one message glared through: a new,
local source of revenue that the city can count on.
A new tax?! Messages were mixed after a council workshop on service level priorities, but one message glared through: a new, local source of revenue that the city can count on.
While the Morgan Hill City Council knows that a November ballot measure asking for a new local tax won’t solve the anticipated $775,000 shortfall come July, some members think residents need to be faced with the tough question of whether they want reduced services or a new tax. While city leaders talk taxes and reduced services, the city’s workers are getting annual contracted raises.
“We can’t maintain the current level of service. We’re still vulnerable to outside sources. We’re going to continue to have that vulnerability as long as we don’t have any reliable revenue sources. Which isn’t to say everything would go away (with a new tax) and we would be fine. But I think it’s important to raise that as an issue,” Councilman Greg Sellers said. Sellers said politicians too often avoid discussing taxes “because they’re unpleasant.
“But the reality is we can’t keep pretending that we can maintain the current level of services. We have to be straightforward with folks,” said Sellers, who does not plan to seek a fourth term on the council in November.
In gauging whether the community would be willing to tax themselves more, one may not have to look further than a year ago. The council’s November 2008 attempt to introduce a utility tax to pay for more police officers failed by a two-thirds margin.
Councilwoman Marby Lee said she didn’t think a new tax would pass, but that a special tax would make more sense. A general tax needs a 50 percent plus one majority to pass and would go to the city’s general fund while a special tax needs a two-thirds majority and would go into a special fund to be used for a specific purpose. In 2008, the council’s utility tax was a general tax. Lee, who supported the measure but took a principled vote against it initially, thinks the reason the police tax failed was because it wasn’t a special tax.
Most of the council agreed that a new revenue source should be considered.
“It’s something we definitely need to do. I’m not hopeful about it,” Mayor Steve Tate said of the new revenue idea. “We’ve optimized already. Everything (we) come up with has been optimized already. It’s really frustrating.”
For example, Morgan Hill Police Chief Bruce Cumming, who along with most other city department heads was present for the four-hour workshop Friday, told the council that he’s already moved shifts around to make the most of his 34 officers. Fewer officers work slower times – weekday mornings – to allow for more officers during peak hours, like weekend evenings. Likewise, Public Works Director Jim Ashcraft reported that his street maintenance department has cut back so that weed removal is done for fire prevention only, not aesthetics; and tree trimming is done reactively not proactively, too.
City managers have been unsuccessful in renegotiating with the city’s three labor groups. The groups – the Police Officers Association, the Community Service Officers Association and the American Federation of State, County and Municipal Employees Local – conceded to giving up some of their raises in March for an annual savings of $400,000, but retained a slew of them that will go into effect by 2014, the first of which went into effect in September. Next year’s raises alone amount to $550,000, or more than two-thirds the amount of the shortfall. All told, by 2014, the city will spend roughly $1.23 million more on labor than it does now. Without each unions’ consent, the city can’t change the contracts. Meanwhile, the city’s managers have foregone raises for the past two years, saving another $240,000.
And since the potential long-term solution of a new, local revenue source – which will be discussed at length during the council’s late January goal-setting retreat – wouldn’t go into effect until after November 2010, the council still has a $775,000 problem.
Thus the workshop, where not a single dollar sign was posted anywhere as the council was to focus on services, not the cost to provide them. The council waffled from big-ticket items like police layoffs to small-ticket concerns like the City Connections newsletter. Average police officer salary? $134,000. Annual cost to produce City Connections? $1,500. The council spent several minutes discussing how they themselves could save the city money by going from three meetings a month to two.
“City Connections, meetings – those are all distractions from what we need to be talking about,” Councilman Larry Carr said. With raises still contracted, the council will must seriously consider layoffs, he said. Carr put it this way: if the per unit cost doesn’t go down, then the number of units must go down instead.
The council agreed, and looked to the environmental services division of public works and the school resource officer as potential areas for slimming. They also talked about cutting back on overtime for officers.
Sellers said “we have to make abundantly clear” that raises and layoffs were “an either/or.”
Neither is music to the ears of labor groups that have seen staff shrink by 16 positions, including one layoff – the rest were vacant positions eliminated – over the past two years as the Morgan Hill City Council grappled with ever-dropping revenues.
More than half the $28 million general fund – 55 percent, or $15 million – goes toward salary and benefits for its employees. And more than half of that amount, $9 million, goes to police salary and benefits.
Police Officers Association President Scott Silva said a discussion about raises versus layoffs likely wouldn’t happen until January.
AFSCME representatives could not be reached for comment Monday.
