CaliforniaCityNews.org

TODAY: Governor to Hold Conference Call on Local Issues -- And You're Invited!

Local government officials are invited to participate in a local government and housing stakeholder briefing call to discuss the Governor's May Revise Budget Proposal on Thursday morning.  This is an opportunity to hear from senior officials in the Governor's Administration the day after the budget is released -- don't miss out! 

Here's the details:

Thursday, May 15, 2008
Time: 11:00 AM
Call-In Number: 1-888-399-7388
Pass Code: local

Vallejo Declares Bankruptcy

It appears the long fight is over.  The Vallejo city council voted unanimously last night to file Chapter 9 bankruptcy for the city.  Vallejo would become the largest city to ever declare bankruptcy in the state, and second only to Orange County for the largest public agency to do so. 

"It's time to do something different. I don't like it. I don't want it," said Mayor Osby Davis, who then voted in favor of the bankruptcy.

CCN has been following this story for months, and our heart goes out to the city, its residents and its employees.  What is most disconcerting is that this case may be a harbinger for localities across the state.

The city is facing a shortfall of over $15 million, with no reserves.  Many cities do have the luxury of a cash reserve, but virtually every city is facing down the same issue that sank Vallejo: public safety pensions.  In the LA Times rundown of last night's bankruptcy vote, the issue was framed like this:

"Many officials and residents attribute Vallejo's fiscal troubles to overly generous pay and benefits to the city's police and firefighters. The salaries for police and firefighters currently take up 75 to 80 percent of the city's general fund."

"Representatives from police, fire and electrical workers unions all argued against the Chapter 9 bankruptcy protection, saying that doing so would only make hiring already short-staffed public safety agencies even harder."

This is not an uncharacteristic summary of friction felt in city halls throughout the state, and puts both sides in an awkward position.  Public Safety workers have negotiated their contracts in good faith, while on the other hand city officials have the unenviable task of laying blame for the city's financial challenges at the door of the community's most trusted leaders -- their police and fire workers.

With GASBY 21 and other pension issues coming to a boil, how are cities going to move forward and avoid Vallejo's fate?  Might be a good time to revisit a guest editorial CCN ran last week -- Are Public Employees Retirement Benefits In Crisis?

You can also read all of CCN's stories on the pension reform issue on our Pension Reform category page.

Half Moon Bay Bailout Bill up for Hearing

City of Half Moon Bay leaders will testify Wednesday before the Local Government Committee of the State Assembly, while dozens of Half Moon Bay citizens will head to Sacramento to rally for passage of AB 1991, the special rescue bill that would help the City avoid an $18 million settlement of a $41.1 million court-imposed liability.

Mayor Bonnie McClung and Officer A. J. Johnson of the Half Moon Bay Police Department will testify in support of AB 1991 at the Local Government Committee hearing. The City entered into a settlement agreement early this month to avoid bankruptcy through the passage of special state legislation (AB 1991) that would reinstate the subdivision plans for two properties, Beachwood and Glencree, which were previously approved in 1990. The bill is a narrowly written “one-off” measure permitting development of the two properties according to the pre-approved subdivision plans without setting a precedent that would undermine the California Coastal Act or any other environmental legislation.

Gavin Newsom and Antonio Villaraigosa Find Themselves Making Difficult Budget Choices

California's two most prominent mayors find themselves (along with hundreds of other lesser known mayors) offering up very difficult budget decisions - in some cases targeting constituencies that have long been the most ardent supporters of their campaigns. The San Francisco Chronicle reports that San Francisco Mayor Gavin Newsom is calling on labor unions representing city employees to renegotiate their contracts to help reduce the massive $338 million budget deficit projected for next year.

Newsom sent a letter to labor leaders Tuesday asking for "assistance and cooperation" in reducing the city's total cost of labor contracts by 3 percent. That amounts to a total of $57 million in reductions, according to the city controller.

Los Angeles' money crunch rippled across City Hall on Tuesday as officials began to flip through hundreds of pages of Mayor Antonio Villaraigosa's budget and found major cuts spread across city agencies.

To fill a $406 million shortfall while still hiring police and firefighters, Villaraigosa has proposed cutting analysts and clerical and maintenance workers. Warning of tough choices, he has slashed travel budgets, cut park rangers and plans to stop payment to cable access Channel 36.

And on Tuesday, some city leaders began to fight back.Story in The LA Daily News.

Top City Leaders, Residents Brainstorm On Budget Woes

San Jose officials may be running the 10th largest city in the country, but when it comes to balancing the budget, they are a lot like many Americans.

They spend more money than they take in.

On Monday, top city officials and nearly 30 city residents convened at City Hall to tackle San Jose's ongoing budget woes, with an eye toward eliminating the deficits that they face every year around this time. Complete story here in the San Jose Mercury News.

LA Unveils Budget -- Minus Almost 800 Jobs

LA Mayor Antonio Villaraigosa advanced a $7 billion budget for his city Monday, one that called for the elimination of 767 positions within the city.  This to help the city deal with a budget shortfall in excess of $400 million.  "The choices are difficult and the cuts will be painful," Villaraigosa has been quoted as saying.  Indeed, they always are.  Read more in the Chron or the LA Times.

Facing the Price Tag on Special Events

While the costs of the upcoming Beijing Olympics ($5 billion in logistics alone) stagger the mind, the cost for cities hosting less prominent special events here in California are nothing to sneeze at.  The City of Palo Alto recently disclosed that the costs of hosting the opening of the Tour of California bicycle race earlier this year approached nearly $200,000.  These costs were shared with Stanford University, who provided public safety services and various sprucing-up of the race route. 

The Palo Alto Daily News has coverage of how the city believes hotel tax revenues will help the city cover its costs.  If it holds true, this is a sound example of a city getting some nice, cost neutral, exposure. 

Moratorium on Wireless Taxes?

A national Association devoted to furthering Wireless technology has teamed up with California Congressman Zoe Lofgren (D-CA) to urge Congress to pass legislation requiring a five-year hiatus on new  state and local wireless taxes.  The “Cell Tax Fairness Act” was introduced in the U.S. House of Representatives on Tuesday (tax day, for those of you keeping track).  Read the full press release here.

Can State Lower 2/3 Threshold for Transportation Taxes?

CCN has been following the hearings being held in the Capitol on the state-local fiscal relationship, and one proposal advanced by locals is making news around the state.

The Santa Maria Times is following the countywide transportation tax taking shape in Santa Barbara County, and noted correctly that this measure would have a far greater chance of passing if the legislature would lower the required 2/3 voter threshold for such measures.  That's precisely what city reps requested of the Senate Local Government Committee a couple weeks back.  Now before we go getting all bent out of shape about the constitutionality of such a move, there is a strong argument (forwarded by League of Cities Rep Dave Mullinax) that the statewide Infrastructure Bonds so popular with voters in 2006 weren't popular enough to have passed with 2/3.  Just sayin...

Read up on Santa Barbara transportation efforts here.

Lockyer Keeping Up the Heat on the Street

The LA Times' George Skelton has a great piece on State Trasurer Bill Lockyer's "little-noticed, nerdy but noble crusade" to improve the bond rating system used for cities, counties and the state.  CCn has been following this story for a few weeks, as the Treasurer could save all affected levels of governments millions if he's successful.  Read Skelton's thoughtful piece here.