Monday, October 18, 2010

My Apology to the Tea Party

Many of you will recall that several Tea Party members attended the September 20th City Council meeting to oppose the idea of a ban on single-use plastic bags. Subsequently, quite a few Tea Party members contacted me and chastised me for using the term "teabaggers," which they regard as derisive.

I did not recall using this term, and in fact I referred most of them to my blog on the plastic bag issue, in which I did use the term "Tea Party activists" but not the term "teabaggers". However, I stand corrected. As the video of meeting shows, I did use the term "teabaggers" in noting that we would welcome any further late testimony on the topic. (One Tea Party member had shown up after public comment because we had moved the item up.)

I did use the term in a kind of a flip way (pairing it with a reference to "tree-huggers"), which
I actually hope shows that I did not mean it derisively. That's no excuse for using a term that the Tea Party dislikes, however. I was unaware that Tea Party members dislike the term and did not know that it has a sexual connotation that the Tea Party, understandably, finds offensive.

I am sorry that I used this term in public and I certainly won't use it again. Thanks for understanding.

Thursday, October 14, 2010

At The Library Crossroads

Tonight, the Ventura City Council took an important step toward resolving our longstanding library issues. It's either a baby step toward pulling out of the Ventura County Library system, or a big step toward living with the library service we currently have. I don't know which.

The occasion was a joint meeting with the Library Advisory Commission where we were scheduled to discuss the possibility of embarking on a new strategic plan for the library. But the tenor of the meeting was colored by Camarillo's decision last night to withdraw from the county library system and contract with LSSI, a private company, for library services. (Moorpark made the same jump a couple of years ago.) Some library activists have been unhappy, to say the least, since H.P. Wright Library closed almost a year ago; and they have been agitating for us to withdraw and contract with LSSI as well. A majority of the City Council has stood behind the county library system so far. Would we jump to LSSI? That was the mystery.

In the end, we voted -- uanimously -- to take our first step toward considering the possibility of following suit. If that sounds tentative, it is. Technically, here's what we voted to do, and like I say it's going to sound really tentative:

We voted to agendize an item in the near future the possibility of giving the county the requisite six-month notice for withdrawing from the system this year (meaning July 1, 2011), and we directed the staff to come up with a proposal to put library operations out to bid. The idea is to set up the possibility of withdrawing, seek bids for library operations, and see what we get.

We also directed the Library Advisory Commission to design a strategic planning process that will assist the community in deciding what vision of library service we want to pursue in Ventura in the future. (There was a lot of concern about the overall cost of this effort, so we stipulated that it should be relatively speedy and inexpensive. At the suggestion of Linda Kapala, the library at Foothill High School and a big advocate of reopening Wright, I agreed to see whether graduate students at USC's public policy school, where I teach part-time, could help-out.)

But the main event was the possible withdrawal from the county library system. This was proposed by Councilmember Neal Andrews and seconded by Councilmember Jim Monahan, who opposed closing Wright. Neal in particular has always been in favor of putting more pressure on the county as a way to maintain good library service. My initial instinct was to vote against this motion -- I even said so in the meeting -- but upon reflection I changed my mine, right there in the middle of the meeting. Here's my reasoning.

A lot of people have been wondering whether the county library system can survive without Camarillo. (Presently, it consists of two other larger cities, Ventura and Simi Valley, as well as unincorporated areas and three smaller cities, Fillmore, Ojai, and Port Hueneme.)

As I said tonight, I think that in the short run we will be able to maintain our current level of service. (Although Wright is closed, Avenue Library is open partly thanks to federal funds, and E.P. Foster Library will open Sundays starting this weekend. In fact, there's a big celebration of Foster as part of the ArtWalk this Sunday, starting at 1 p.m.) However, I am not sure we will be able to maintain this same level of service in the coming years -- especially since the county is predicting a 50% increase in pension costs in the next five years.

So I think it makes sense to begin looking at alternatives for operating our libraries. I could wait a year to do this, because as I said I think we're okay for now, but I as happy to go along with the council consensus to move now.

The key for me was the idea of issuing an RFP. A lot of Wright advocates around town have simply been saying that we should pull out of the system and contract with LSSI. But I'm concerned about that -- and I became more concerned after I read the contract between Camarillo and LSSI today.

Whenever cities issue big contracts, they almost always go through a competitive bid. But Camarillo did not do that for library services. Instead, Camarillo negotiated privately on what is called a "sole-source" (i.e., non-competitive) basis with LSSI. This is understandable, especially when you consider that LSSI is the only company that provides library services to municipalities and the company is highly motivated to offer a good price in order to break into the Ventura County market.

Yet this unusual private negotiation process has resulted in pros and cons for Camarillo. The pros are obviously. They're going to get the same amount of service (65 hours a week) for less money -- $1.5 million a year for operations, plus about $500,000 a year to buy materials. (This is a net gain of about $700,000 a year for Camarillo.) LSSI is a large company that has buying power with book producers and so can command good prices, so the materials budget may actually stretch farther.

Yet Camarillo also gave up important things in the LSSI deal -- things I am not sure I want to give up. The county library system maintains the library buildings and I saw nothing in the contract that suggests LSSI is going to take over that responsibility, so that's possibly an increased cost to the city. LSSI promises to provide adequate staffing, but the contract stipulates that all staffing decisions ultimately belong to LSSI. That means LSSI could cut the number of librarians and simply inform the City, rather than seek permission to do so. (I have heard that LSSI has done this in some cases, but I do not know whether this is true.) Also, LSSI retains the power to categorize its library management techniques as proprietary and therefore confidential, meaning the City can't reveal or use what it knows about those techniques without LSSI's permission. The bottom line is that LSSI is a private company. You contract for a service and you get it; but you don't get to know much about the ins and outs of how that service gets provided.

I don't think this kind of privately negotiated deal would fly in Ventura. That's why I think the RFP process is a good way to figure out what the possibilities are. We can specify what service we are interested in -- Avenue, Foster, reopening Wright, bookmobiles, book kiosks, etc. -- and see what the prices are. We could even ask for ideas -- give us an innovative way to provide library service to East Ventura and cost it out. We will know what other costs will fall on our shoulders (and clearly the cost of materials and building maintenance will be our responsibility). We can specify in the RFP anything else that's important to us -- a certain number of librarians, for example, or compliance with the city's Living Wage Ordinance, which requires city contractors to pay a certain per-hour wage plus health insurance.

And then anybody can bid on what we want. LSSI can bid and we will see if they can meet our terms if those terms deviate from LSSI's typical contract (living wage, minimum staffing, etc). The county library system will bid and we can see if they can provide a low enough price. (Having existing departments bid against private companies to provide public services is a growing trend.) Other libraries could bid if they wanted to -- Oxnard, Thousand Oaks, Ventura College. And, of course, our city Department of Parks, Recreation, and Community Partnerships could bid as well (maybe in collaboration with laid-off Camarillo librarians? Who knows?)

In the end we might contract with LSSI or some other entity. Or we might not like any of the bids and decide that staying as part of the county system is well worth it. But the point is that we will have tested the market to see what's out there. At this point, I think that's worth it.

Tuesday, October 12, 2010

Back to the Bad Old Days?

Last night, after more than 3 hours of debate, the City Council voted 4-3 to add the floor of the Canada Larga Valley into the North Avenue Community Plan Area. I voted against this proposal, mostly because I think it will make it far more difficult to accomplish the many important community goals on the Westside and in the North Avenue that we all agree on. Frankly, I am afraid that this vote portends the return of the “bad old days” on land use and development in Ventura.

A little background: Back in April, the City Council green-lighted new community plans for the North Avenue and the Westside, as well as initial work to create a combined redevelopment project area for the entire North Avenue/Westside area. At that time, the city attorney concluded that Councilmember Monahan had a conflict because of his property holdings on Ventura Avenue and could not vote. When it came time to decide whether to put the Canada Larga floor into the plan area, the vote was 3-3 with Mr. Monahan sitting out it. Under our rules, the proposal failed, but it was obvious at that time that there were 4 votes on the council to include Canada Larga in the plan.

More recently the Fair Political Practices Commission and our city attorney determined that Mr. Monahan did not have a conflict and could vote on the matter. Not wanting to hold things up, I scheduled the item for last night.

We heard 40 speakers, but the truth of the matter is that we didn’t really have to. When we took the vote at 11 p.m. it was 4-3. Nobody had changed their mind based on listening to the speakers. To her credit, Councilmember Christy Weir said that, while she is conceptually in favor of executive housing in Canada Larga, she will be open-minded about whether the cost of infrastructure and police and fire service would be too high for the city. While Deputy Mayor Mike Tracy did not make quite the same comment, I think he’s somewhat open-minded too.

I was opposed to including Canada Larga before and I am even more opposed now – not only because I think homes up there are a bad idea, but because I believe the Canada Larga issue will be divisive and a huge distraction over the next couple of years as we move forward with the North Avenue/Westside efforts. Here are a few things that will now happen as a result of last night’s vote:

-- The environmental impact report for the North Avenue plan, which the City is paying for, will become far more time-consuming, complicated, and expensive than before. This will, at the very least, show things down.

-- The inevitable lawsuits from environmental groups will become much harder to defend. I think some environmental groups might sue anyway – they don’t like the tentative inclusion of agricultural land and some other parcels owned by the Bonsall family along the Ventura Avenue – but those lawsuits would be much simpler and easier to resolve if we did not include Canada Larga in the discussion.

-- It will become much harder to get Ventura County to sign off of the whole thing, especially the redevelopment project area. The redevelopment component is important because redevelopment funds from the Brooks/Petrochem project could be used for improvements down on the Avenue. But the County may oppose redevelopment and could even sue us. With Canada Large in, it’s much more likely that the County will hold up the redevelopment effort.

-- I don’t think we’re going to get this annexation past the Local Agency Formation Commission – the county agency that approves boundary changes. If LAFCO doesn’t approve this, then we’ll have to sue them to get it, and I can’t see us winning that lawsuit.

-- I’m pretty sure that our local environmentalists will run a ballot measure to make development of Canada Larga subject to a vote.

There you go: All kinds of costs, delays, lawsuits, and maybe ballot measures that will make it much more difficult – maybe impossible – for us to move forward with all the things we unanimously agree on in revitalizing the Westside and the North Avenue. All those those good things we all agree on are being held hostage in order to try to force through a Canada Larga development that we are deeply divided on and have never in the past allowed to move forward. Not a good idea.

Beyond that, I fear that that the whole Canada Larga thing will take us back to the “bad old days” of the growth wars in Ventura – where developers engage in game-playing to try to get four votes, people on either side of an issue call each other names, and everything comes to a halt because it’s so contentious.

Ventura was riven by this stuff for 30 years. Recently, all of us on the city council have worked hard to put those days behind us. We passed our infill-first General Plan in 2005, we eliminated the dysfunctional Residential Growth Management Program, and we cleaned up the development review process.

This is real progress, and I thank all six of my colleagues for working collaboratively to make that progress happen. Do we really want to go back to the bad old days?

I certainly don’t, but last night I already felt that we were back in the bad old days. Three examples:

-- Landowner Buzz Bonsall and one of his allies withheld their speaker cards for two hours and put them in at the last minute, at 10 o’clock, after all the other 40 speakers had spoken. Buzz discussed his proposed project a little – but only after everybody else had spoken when they had no opportunity to respond. Buzz had the right to do this, but, I’m sorry, that just seems like pointless game-playing to me. If this is any indication of how the relationship between the city and the property owner is going to go here, I’m not optimistic.

-- Councilmembers Monahan and Morehouse got into a heated debate on the dais about why Cal State had not been built here in Ventura on Taylor Ranch -- something that happened, I think, when Ronald Reagan was president. Can we finally get over that one?

-- Councilmember Monahan and former Mayor Richard Francis, who spoke as a member of the public, got into a heated back-and-forth as well, with Mr. Monahan accusing Mr. Francis (semi-jokingly, I think) of having a hand in the earlier decision to rule that he was conflicted out of the vote. (Mr. Francis brought the house down by responding that if it was up to him, Mr. Monahan would never get to vote.)

The back-and-forth between Monahan and Francis was wonderful political theater 20 years ago, when they served consecutively as mayor, the town was deeply divided over growth, and I used watch the council meetings sitting on my sofa. But we’ve made great progress in the last few years – generally speaking, we’ve left those days behind and moved forward together as a community.

I, for one, don’t want to see the bad old days come back again. It may be good political theater, but it’s only going to tear our town apart.

Sunday, October 10, 2010

Why We Have To Make Tough Choices on Pensions

As you may have noticed, things are not going well between the city and our unions.

We have not reached agreement with our labor unions on new contracts, even though for most of the unions (including the police union and the Service Employees International Union) the contracts ran out last summer. Last week, all of our unions crowded the City Council chambers to speak about the value of their work and their concern about our negotiating position; and on Monday, SEIU plans a march on City Hall before the council meeting.

While I can’t speak publicly to the specifics of the labor negotiations going on right now, I can talk about what is on the public record – the changes in the compensation policy that the City Council approved last spring. I’d also like to take some time in this blog to explain why I supported those changes – and why I think those changes are important in order to actual protect our ability to pay out good wages, benefits and pensions to our city employees in the long run.

I know that our city employees are very unhappy with the City Council’s bargaining position right now. Our city employees feel like they are being asked to bear an unfair portion of the burden of the financial downturn. They don’t feel as though we value them. And they feel we are being inflexible at the bargaining table. Under the circumstances, these are all understandable feelings and I respect those feelings, probably more than our employees know. I am sure that if I were a full-time city employee I would feel the same way.

But I do want to explain publicly why I supported the changes in the Council’s compensation policy. Frankly, I don’t expect that what I say in this blog will change how any our city employees feel about what’s going on. I totally understand that and I respect it. But I would like both our city employees and the rest of our constituents – many city employees are constituents – to understand where I’m coming from. It would be a disservice to all these constituents, city employees included, not to do so.

I am not interested in placing the burden on the employees just because I think they should pay more. Rather, my goal to make sure that our employees’ pensions are not at risk in the long run – and to make sure that we will have the money to pay competitive wages to our current employees even as pension costs go up.

Last spring, the City Council voted to change its official compensation policy to add two components – first, to ask our employees to once again pay their legally defined “share” of pension contributions (9% of salaries for public safety officers, 7% for everybody else); and, second, to seek a second, lower “tier” of pension benefits for future employees.

This move came as something of a surprise to a lot of our employees. Many were more than surprised; they were hurt. Oftentimes this summer and fall, they have sought me out to ask why we have chosen this path. Don’t we value them? Aren’t we worried about falling so far behind “the market” that it will be hard to recruit and retain talented employees? What’s going on?

I do value our employees – and I never say so often enough. Our city employees work hard serving the public, and most of them could make more money working for another city or public agency. Our public safety officers put their lives on the line for us, and most of the rest of our employees work hard during long careers for relatively modest pensions. And yes, I am worried that Ventura – a venerable city that prides itself on providing excellent service to the public – won’t be able to recruit great new employees nor keep talented ones we already have.

But I’m also worried about the long-term future of our City’s ability to pay pensions to our employees. As a member of the City Council, I am one of seven stewards of the employees’ retirement funds. One of my goals is to make sure that when they retire, 10 or 20 or 30 years from now, the money will be there to pay them the pensions they have earned. And that we won’t have to “short” our current employees in order to pay the pension bills.

This is something that is almost never discussed openly by the City Council or our employees. In our day-to-day conversations and our labor negotiations, we all assume that the money will be there when it needs to be. But as we have learned in the auto industry and other “mature” business sectors, this isn’t always the case.

Part of the reason I am worried is that the world of California public pensions used to be very simple, but now it has become very complicated in a way that places our ability to pay pensions at risk in the long run. At the very least, paying the pensions our current and recently retired employees employees have earned will become much more expensive – and that will make it much more difficult for us to pay our current employees competitive wages and, in fact, to provide public services of any kind.

In the old days, cities contributed money to a system such as CalPERS, the California Public Employment Retirement System, on a regular basis. PERS invested the money in safe things like bonds and averaged an investment return of about 4%.

Virtually all employees received a guaranteed pension, which was pegged to some variation of the 2% formula – you’d get 2% of your annual salary in retirement times the number of years you worked. Most employees retired at 60, though police officers and firefighters tended to retire earlier – at 55 or sometimes even 50 – because you didn’t really want those folks out on the streets at an advanced age. Somehow it all worked out – just like, somehow or other, Social Security always worked out.

But, like Social Security and most other things associated with finance, the world of public pensions has gotten a lot more complicated in the last 30 years.

At cities and other agencies that belong to PERS, salaries have gone up, retirement ages have gone down, retirees are living longer, and, in the case of public safety officers, the old 2% formula has been increased to 3%. Obviously, all these changes have increased the pressure for PERS to deliver greater investment returns – and turned PERS into a very different kind of investor than it used to be.

The whole PERS story is probably best laid out by Ed Mendel, an old friend of mine from my journalist days, who is now a blogger specializing in California pensions. In one recent blog, Ed noted that the world changed dramatically in 1984, when the voters passed Proposition 21, which repealed a law limiting PERS to investing only 25% of its portfolio in stocks. That opened the way for PERS to increase its investment returns by participating in the boom stock market of the ‘80s and ‘90s – which, in turn, increased the pressure to improve retirement benefits for California’s public employees.

As Ed points out in his blog, in 1980 PERS received twice as much revenue from member and employer contributions ($1.6 billion) than from investment returns ($800 million). In 1983, when the stock market started going up, that flipped; PERS got $1.8 billion from contributions and $2 billion from the portfolio.

PERS then rode the exploding stock market all through the ‘80s and ‘90s. By 1998, PERS got $3.7 billion in contributions and $23 billion in investment returns. To reiterate: In 1980, PERS got two-thirds of its funds from member contributations. Less than 20 years later, PERS got 85% of its funds from investment returns.

It was about this time that the state first permitted the 3% formula for public safety officers and also lowered the allowable retirement age for non-public safety personnel from 60 to 55. Most cities in the state quickly adopted both of these options, including Ventura (though Ventura adopted the 3% rule more gradually than most). However, because the stock market continued to skyrocket, cities did not have to pay any “price” at all for these increases – at least not right away. During the Internet boom of the early 2000s, investment returns were so high that PERS actually didn’t require cities to make contributions – at the exact same time that pension benefits were going up and retirement ages were going down.

Then, of course, came the Internet crash and the whole rocky period of the ‘00s, when everybody got caught in the housing bubble. The net result of this is that CalPERS has not been getting the same return it used to – even though costs are now much higher, based mostly on the assumption that returns will remain high.

According to Ed Mendel, CalPERS returns have averaged only 3.1% for the last decade. Yet PERS continues to operate on the assumption that its long-term rate of return will be 7.75%.

Even if investment returns do total 7.75% from now on – extremely unlikely, in my view – our PERS cost is going to go up, because PERS has to cover the cost of investment losses the last couple of years. My best guess for what’s going to happen in the next few years is this: Even if our city revenue starts going up again in a couple of years, those revenue increases will be completely eaten up by increased PERS costs.

Under the circumstances, I think the only responsible position to take is that, whether we like it or not, we will have less money available for salaries and pensions over the next few years – not more, or not even the same amount we have now, but less.

And if investment returns are lower – say, 3% or 4% or 5%? Then the bill from PERS goes way, way up – far more than our revenue. This will affect not only our ability to pay pensions to those who are retired, but also our ability to pay competitive wages to those who still work for us because more and more of our money will go to pay pensions.

If you’re a taxpayer advocate, this is probably a satisfying “I told you so” moment. But even if you believe – as I do – that public employees do important work and deserve a good pension, you’ve got to be really worried.

What happens in, say, 2030, when many of our current employees will be expecting their hard-earned pension checks? When we have 1,000 or 1,200 retirees instead of 600? When we may have to balance the cost of those increased pensions on the backs of people working for the city at that time? And when PERS investment returns have not come anywhere close to 7.75% for years or maybe decades?

How big will the bill be then? Will we be able to afford to pay that bill – and still also provide police and fire service, and pave the streets, and run the parks, and everything else? And provide good wages and benefits to the dedicated employees who do the work?

I don’t know the answer to that question. The fact that I don’t know the answer to that question worries me a lot. And I believe it should worry our city employees a lot as well.

I know that the current labor negotiation is an extremely emotional issue for everybody. I know that many city employees are worried about how they’re going to pay their mortgages or their rent in the future. I know they do not feel valued and they fear we will lose good employees to other cities. All these things concern me too -- a lot. Our employees do great work and everyone in town needs them to continue doing so. And most of our employees are great citizens of our community and we want to continue that too.

But the one thing, I have noticed, that the employees do not seem to be worried about is whether the money will actually be there to pay their pensions in 2020 or 2030 or 2040. Our employees tend simply to assume that they will receive what they are legally entitled to.

But in my opinion, there is no guarantee the money will be there and there is considerable risk that it won’t be. Furthermore, for younger employees, providing those pension benefits to retirees in the future will mean we probably won't be able to provide wage and benefit increases for those still working. This is something that should concern all of us just as much as taking a pay cut now – maybe more. And as one of the seven stewards of the city’s pension system, I believe we must pay attention to this festering problem.

That’s why I believe it’s necessary to take steps to restrain long-term pension costs now – in order to make sure that our current and future retirees will get their pension checks far into the future and our current city employees will not have to pay the price for increased retirement costs. Yes, there are costs and risks to this approach. In the short run, our employees will have to give something up and it will be that much harder to pay the mortgage or the rent. But I believe it is equally important to make the tough choices now to ensure that our employees actually receive their pensions decades from now. And to make sure that we will be able to pay our current employees good wages and benefits, instead of sacrificing their well-being to pay the PERS pension costs for those who are already retired.

One of the things I hear most often from our employees is why we in Ventura seem to be worried about this when nobody else is. After all, most public employee labor contracts negotiated in the last year have had something between a 0% raise and a 3% giveback. If we cut compensation more than that, they say, we will become less competitive and we will lose good employees. So why are we seeking higher compensation cuts when nobody else is?

This is a good question. My answer, frankly, is that I don’t think the other agencies are looking at these issues straight-up – or they’re not being straight-up with the employees.

At Ventura County (which has its own separate retirement system), most employees agreed to start paying 3% of their retirement cost. That’s great. But the county retirement system’s investment portfolio has lost something like 25% of its value, and with lots of retirements in the offing, county pension costs are estimated to increase 50% in the next five years. Clearly, more givebacks will be necessary.

Another tactic we often see is for a city to promise future increases in salary -- say, 2-3-4% in the "out years" of a five-year contract -- in exchange for zero increase or a giveback in the early years. But this doesn't really solve the problem, because other cities are going to be facing huge increases in PERS costs just as we are. When you ask the elected officials in these cities how they are going to pay for the future salary increases, they'll say: “We don’t know.”

In such a situation, the price of short-term labor peace is to kick the can down the road, assume that somehow or other more money will be available in the future, and ignore the fact that there are looming long-term risks.

I cannot, in good conscience, do the same. Our employees are entitled to these pensions and they deserve them. But they also deserve straight talk about the future from their City Council.

It would be very easy for me to pretend there is no long-term problem and therefore no reason to make tough choices now, just as our neighboring city did. Even though this would make me more popular with the unions, it would be fiscally irresponsible of me – and, frankly, pretty unfair to our hard-working employees. Because, in the end, I won’t pay the price for that fiscal irresponsibility. That cost will be borne by our employees, both current and retired.

Simply put, it would be wrong of me to reap the short-term political benefit of pretending there’s no problem, and then dump the problem on my successors and on our employees themselves in the decades ahead.

As I said, I know our city employees are unhappy with what’s going on and angry at me and my fellow councilmembers. I don’t expect my explanation here to change that. But I do hope both our employees and our other constituents recognize that making tougher choices now will create a more solvent city – and a more stable retirement system – in the future, and that everyone – most of all employees – will benefit from that stability.