Wednesday, July 22, 2009

The Ventura Compact: A Covenant For Hard Times

The state has decided to balance its budget on the backs of our local taxpayers again, taking some $4 billion from cities and counties around the state as part of a short-term fix.

Since we can no longer count on the state to help us – or even, in some cases, let us keep our own tax money -- it’s time to take control of our own destiny. If we don’t, we will be at the mercy of Sacramento – and we won’t be able to provide our residents with the vital services they need and deserve.

In the City of Ventura, the state budget shenanigans make it all the more important for us to move forward with a whole series of steps – including our proposed sales tax increase but lots of other things as well – in order to protect our quality of life. In the words of my colleague Carl Morehouse, a former mayor of Ventura, we must move forward with what might be called “The Ventura Compact” – or else we face the possibility of down Sacramento rathole.

Over the past six years we in Ventura have worked hard to maintain fiscal solvency and improve our city services. During the good times between 2003 and 2007 we erased a structural budget deficit and added public safety personnel for the first time in almost 20 years.

In the hard times over the last two years, we have made tough decisions. We have implemented mid-year budget cuts in each of the last two years. Last winter and spring we worked through $11 million budget cuts – a 13% decrease – and we did it long before most other cities realized a problem was looming. We eliminated 40 of our 600 staff positions. Our city employees led the way by taking a 5% pay cut – a courageous move for which I am grateful. All these steps allowed us to balance the budget without cutting services much.

Now the state’s budget-balancing act is likely to take another $4-5 million away from us. We may be able to plug the gap temporarily by using reserves, but that’s not likely to last long. We must move forward with a whole fiscal program that will maintain our quality of life and our fiscal solvency in the long run.

Six weeks ago in this blog, I laid out five principles I thought we needed to follow to weather this storm and maintain a sustainable fiscal foundation for our community. Since then, I am proud to say, our City Council has taken action on every single one of these items. These are the five principles I would call “The Ventura Compact” – a compact not just among the seven councilmembers, but a compact between the City Council and our community moving forward. Here are the five principles – along with a brief description of what we have done in each one:

1. Spend additional tax revenue only on vital services

We’ve taken the unusual step of placing a local half-cent sales tax on the ballot in November. It may not seem like the best time to ask voters for more tax revenue, but this is the most important step we can taken in cutting the cord to Sacramento. We currently run our city on $85 million in the General Fund, of which $60 million is tax revenue. A half-cent sales tax would like to add another $10 million to our city treasury. This is money that Sacramento can’t take away from us, and money we can spend on our highest priorities. It’s not a permanent tax; it would last only four years, serving to carry us through to more prosperous times.

In placing the sales tax on the ballot, the City Council has promised to spend the money only on vital public services, as follows:

-- 40% would go to public safety.
-- 35% would go to road paving, infrastructure, and transportation.
-- 15% would go to clean water and clean beaches, especially to improve our system of stormwater runoff.
-- 6% would go to keep Wright Library open
-- 4% would go to other community partnerships, allowing us to partner with community organizations to ensure that our dollars stretch as far as they can.

2. Increase tax revenue without increasing tax rates

In May, the City Council and the Chamber of Commerce sponsored an “Economic Summit”. More than 150 people participated, and the result was a list of actions that should be taken to ensure future prosperity. The City Council will consider – and most likely adopt – all the short-term actions from the Economic Summit at our meeting on August 3.

At the same time, we recognize that must target and aggressively pursue the retailers that can help provide us with lots of new tax revenue. As the Star has reported, we have made electronics stores our highest priority and are negotiating with one major electronics store right now. This would be almost all new tax revenue, since currently Venturans must travel to Oxnard and elsewhere to buy almost all their electronics.

Finally, we know we must clean up our planning process so that the projects we want are approved more quickly – and the ones we don’t want are denied more quickly. Last Monday night, the City Council adopted a set of principles to make the planning process more efficient, including time limits to give developers a “yes” or “no” on projects.

3. Increase revenue from other sources besides taxes

In the budget principles we adopted last winter when the fiscal crisis first loomed, the City Council committed to a careful examination of the fees we charge individuals, developers, and others to determine which services we should seek “full cost recovery” from and which ones the taxpayers should subsidize. We have already made some strides in this area and we will be tackling this issue head-on in next fall and winter.

This can be a controversial exercise. Every time we propose creating or increasing fees for those who benefit, that constituency turns out in opposition to it, so we often back off. But that means we spend more money on those services out of the General Fund – leaving less for police, fire, libraries, potholes, and the rest. We have to decide once and for all which city services the taxpayers should subsidize, and which city services benefit only a small portion of the population and therefore should not be subsidized by the taxpayers.

4. Restrain future cost increases

As I indicated above, we’ve already cut costs by permanently eliminating 40 positions and temporarily reducing compensation for our employees. Now we have agreed to take even bolder steps. Last Monday night, the City Council voted to create a task force to examine our city pension system and make recommendations on how to reduce the future cost of these pensions to our taxpayers. We are the first city in the county – indeed, one of the first in the state – to commit itself to examining pension reform. In addition, our budget principles also commit us to cutting operating costs wherever possible – for example, to switch to more energy-efficient operations that can reduce our electricity bill significantly.

5. Save for a rainy day

We currently have a reserve fund of about $12 million, designed to help tide us over in the event of a natural disaster. But it has become clear that this is not enough. We need a bigger cushion. So the City Council has committed to adding to the reserves with every penny of the sales tax revenue that does not go to vital services. More specifically, we have committed to socking away everything above $8.25 million. Since the sales tax is expected to generate $10 million a year, this means we could augment our reserves by as much as $8 million, giving us a much-needed cushion of $20 million for hard times.

So that’s The Ventura Compact. It’s a commitment to cut the cord to Sacramento, take control of our own future, maintain sustainable fiscal health, and protect our vital public services and quality of life. Fulfilling the promise of The Ventura Compact will require a lot of hard work – passing the sales tax in November and tackling all the other hard issues as well – but if we stick to it we can maintain Ventura as a great place to live and work.

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