The unanimous final report of last year’s Municipal Tax Review Committee (MTRC) advised the City Council that “the committee recognizes that passing the current parcel tax without addressing expense commitments is not fiscally prudent.” Four of the nine members of MTRC went further to add preconditions to their support for a parcel tax renewal. This past June, the new Budget Advisory Committee (with some of the same members as MTRC) issued its report, saying “The City’s pay and benefit structure is unsustainable.”
As chair of MTRC and as a retired career budget director in the public sector, I expected the Council to use these findings and the past year to address the city’s critical challenges. So at that time I did not join the four MTRC members who attached preconditions to the parcel tax vote. But when the Council put Measure Y on the ballot without significantly addressing out-of-control expenditures, I had no choice but to join the opposition.
The MTRC report presented alarming discoveries and urgent recommendations. Most important is the problem of exploding benefits, mainly pension and health. Since the last real parcel tax debate in 2004, MTRC found that benefits, already among the richest in the state, were costing about 10% more each year, with little employee cost-sharing. This is contrary to recently enacted state policy goals that can be used to bring down these expenses.
As a former public employee myself, I greatly respect our city workers. But a quarter of the city’s budget goes to support benefit costs, with the average employee receiving $160,000 per year in compensation. Annual salary and benefits costs have increased by almost $6.4 million over the last ten years, which is more than the overall budget has increased, crowding out other essential needs such as sewer replacement.
The attached chart graphically illustrates how your parcel tax money has been used in the past decade.
City salaries are up by over $3 million since 2003 and benefits are up by even more, by almost $3.4 million. All other expenses (such as utilities, supplies, vehicle fuel, contracted services, tools, etc.) have actually gone down by several thousand dollars in these years.
The Budget Advisory Committee determined that Piedmont’s unfunded benefits liability is about $40 million, or $10,000 for every family in town. And more money has been wasted on excess benefits and badly managed construction project overruns combined than has been raised by the parcel tax in its current term.
Yet Piedmont’s budget continues to hemorrhage red ink, threatening our great public services. The Council has instead put two tax measures on the ballot this year, without the budget reforms that MTRC unanimously said were essential. This recognizes only half the story. They want to use the parcel tax to bail out bad decisions, instead of fixing the mistakes.
Thus the Council lost my support for Measure Y. I’ve concluded that the parcel tax is just a short-term tactic enabling the city to avoid hard and necessary decisions. So the only course I see is to vote it down, depriving the Council of its bailout fund. This will force them to confront the worsening problems that have been staring them in the face — unresolved — since 2004.
Supporters of the tax argue that Measure Y’s failure will lead to awful budget cuts, but that is simply a scare tactic. Because as I said, the tax has not been going to services for residents, but instead has mainly gone to excessive benefit costs and construction project overruns. This waste, not the failure of Measure Y, is what will put our essential services at risk.
Thus, I have no doubt that primary programs like the 3-minute ambulance response time are not at risk today. I say this as a 16-year resident, every member of whose family has unfortunately tested the ambulance service. As Council member Garrett Keating said recently, “There has been no projection from the city that failure to renew Measure Y will lead to reductions in public safety services.”
To conclude, I strongly urge a No vote on Measure Y, telling the Council that it is time to deal with the problems that its advisory committees have identified.
Chair, 2011 Municipal Tax Review Committee
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