Members of the Sacramento City Council are making big plans to spend the sudden windfall created when voters agreed to raise the sales tax last November. They want to hire dozens of cops, reopen shuttered fire stations and restore youth and senior programs.
But City Manager John Shirey says they're going too far, too fast.
Despite Shirey's warnings, the City Council is poised tonight to adopt a spending plan for the new Measure U tax dollars that budget officials predict will create a $9 million deficit in 2019, the final year of the half-cent sales tax increase.
That gap is just the start. Unless the tax increase is renewed by voters before 2019, the city will also be on the hook for millions more in annual expenses generated by the restored spending. And with the California Public Employees' Retirement System seeking $23 million more from the city in annual contributions by 2020, Shirey has warned the council that Sacramento is staring down what he has described as its own "fiscal cliff."
Shirey initially recommended a more restrained plan for the new tax dollars, but City Council members crafted an alternative that adds more cops, parks programs and fire protection. Nearly all of the council members favor this version, and some have chided Shirey for being too conservative, insisting voters wanted quick action.
"I think the voters spoke loud and clear that they want us to be aggressive in restoring core city services and spend the money as soon as we can to bring back as many programs as we can," said Councilman Kevin McCarty.
Councilman Darrell Fong proposed adding 15 police officers to Shirey's hiring plan. Those officers would be placed in training immediately, and their addition would bring to 140 the number of officers to be funded by the new tax dollars over the next two years. Fong, McCarty and Councilman Steve Cohn led the campaign to pass Measure U, which was approved by 64 percent of voters.
Cohn said that an initial budget proposal by Shirey to add three net positions to the Police Department this year - after some vacant positions were eliminated - was not "what I promised voters."
The council is also seeking to restore a fire rig downtown in January, a year earlier than proposed, and to add $308,000 each year starting in July for senior and youth programs. Parks maintenance, pool hours and library funding will all see bumps as well.
The City Council also wants to redirect $391,500 that had been earmarked for next year's general fund budget - which supports most basic services - into council members' discretionary accounts. Eye on Sacramento, a local watchdog group, has criticized that plan, describing the accounts as "slush funds."
Shirey said he was following council direction by outlining a spending plan that would "reduce our dependence on the Measure U funds" by the time the tax expires. He said he based his plans on realistic revenue projections and the reality that the city's spending is likely to rise in the years ahead, given expected increases in employee medical and retirement costs.
Shirey and budget officials forecast that Measure U spending will outpace revenue starting in 2015 under the plan favored by the council. A funding reserve for the tax dollars will be gone by 2018 and the deficit on the money will reach nearly $9 million in 2019.
Cohn pushed back against Shirey's projections at a council hearing last week, arguing that the council should concentrate on the coming year rather than looking so far down the road.
"I understand we look ahead six years, that's great," he said. "But economists have a hard time forecasting one month in advance, let alone six years."
At least one economist sides with Shirey, however. "This is a situation where conservative budgeting would be recommended," said Jeff Michael of the University of the Pacific.
"When you already have a pretty tight budget, reserves are going to be rail thin," Michael said.
So far, Councilman Steve Hansen is the lone elected official at City Hall seeking caution on the spending plan. He said in an interview that incremental increases in services would be "far more prudent" until the city has received more solid figures on which to base future tax revenue projections.
"It's important to have cops on the streets and increased fire protection, but we also have to be careful not to get carried away before we know what monies we have," Hansen said. "We are adding services. It's just a matter of how much and how fast."