Fight for city funds is heating up in Sacramento. Where should Measure U money go?

Sacramento Housing Alliance wants funding from Measure U

The Sacramento Housing Alliance and Sacramento Area Congregations Together want funding from Measure U for affordable housing after a 68% reduction in state and federal funding.
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The Sacramento Housing Alliance and Sacramento Area Congregations Together want funding from Measure U for affordable housing after a 68% reduction in state and federal funding.

Sacramento city officials face what you’d think would be a happy task in the coming weeks.

Thanks to November’s voter-approved Measure U sales tax, they now find themselves with $52 million to parcel out to what they deem worthy causes, projects and city services. But where there is money, there are fights. And this year’s city budget process is turning into a buzzsaw of competing interests, with a host of groups competing for funding.

Affordable housing advocates descended on City Hall on Tuesday, noting that homeless people bunk every night on the sidewalk outside, and lamenting a dearth of money in the budget so far for low-income housing or homeless services.

“We are here today to demand the City Council do its duty for the voters,” Cathy Creswell of the Sacramento Housing Alliance said at press conference outside.

Arts advocates showed up as well to lobby the council during an afternoon budget hearing. Firefighters, neighborhood groups, businesses and others are asking for more money too.

Measure U adds a second half-cent to the city’s existing half-cent sales tax surcharge. The money, a general tax, goes into the city’s general fund. The ballot measure language suggests a wide variety of possible ways to spend it, including for policing and public safety, fire protection, homeless services, affordable housing, libraries, parks, job promotion and programs for youths.

The council is expected to vote on a final budget in mid-June that likely will include $52 million of as-yet unassigned funds, to be distributed according to council priority. City Manager Howard Chan noted that the proposed budget already includes $3.5 million for homeless operations and services, as well as a new housing chief position, and a number of new economic development positions. The City Council also allocated $16 million several months ago for homeless services.

An “investment committee” set up by the city manager and a citizens’ Measure U advisory committee appointed by the council would present spending ideas to the council for vote.

“For every dollar, there’s a hand somewhere in the city that’s raised,” Councilman Allen Warren said. “So we need to be as efficient as possible with our budget dollars.”

The council on Tuesday did respond to pleas from arts groups, preliminarily agreeing to increase funding for the Sacramento Metropolitan Arts Commission from $1.3 million to $2.2 million.

But Mayor Darrell Steinberg and several council members are at odds over a proposal by Steinberg to leverage the funds so that the city can spend more money faster on brick and mortar projects rather than wait years for the revenue to flow in.

Steinberg wants to issue bonds in increments annually during the next three to five years, essentially taking out 30-year loans in each of those years, each backed by a chunk of future Measure U revenues. That, he said, could give the city several hundred million dollars in the short-term to invest in social and economic programs beyond basic city services.

“My goal is $40 million per year for economic equity; jobs, housing, and neighborhoods,” Steinberg said Tuesday. “We should empower the community through our Measure U Community Advisory Committee and investment committees to identify key opportunity priorities for our people and our neighborhoods.

“Ultimately, the decisions reside with the City Council. This year, there is room for (council) members to prioritize key one-time district priorities on top of the $40 million. This is a good time to give real hope to all our communities.”

But the mayor’s bonding proposal has led to council dissent. By selling bonds, the city would accrue interest payments it will have to make, paying the bondholders back much more than the city borrowed, similar to how homeowners pay back both principle and interest on mortgages.

Council members Jeff Harris and Angelique Ashby say they fear the bonding plan could put the city at risk of bankruptcy should the economy go south. Harris, in an opinion piece in the Inside Sacramento publication, called the mayor’s idea a “scheme (that) would expose the city to insolvency at the slightest economic downturn.”

Harris also said it is disingenuous because it’s not what voters agreed to last November. “Nowhere in the ballot language was it suggested the tax would be the vehicle to incur massive new debt,” Harris wrote.

Both council members said the city must face the fact that some of the new Measure U money will have to go toward paying city employee wages and fast-escalating costs of retiree pensions.

Councilman Jay Schenirer, a supporter of the mayor’s bonding idea, countered his two council colleagues’ criticisms, saying the bonding plan allows the council to decide each year during those three to five years whether the general fund looks healthy enough to go ahead with another round of bonding.

Schenirer said he believes voters wanted the city to be assertive in investing now in the community. He cited as examples a possible “mercado” on Franklin Boulevard that could include business classes for area residents, and a sports complex in North Sacramento.

“People have been waiting a long time. If we don’t do this now, when?” Schenirer said. The investments will boost the economy, he said, and should cover the loan interest payment costs the public would incur if the city does the bonding.

Steinberg has made homelessness and mental illness two of his cornerstone issues. The Sacramento mayor was named Tuesday by Gov. Gavin Newsom to co-chair a statewide Homeless and Supportive Housing Advisory Task Force to look into best practices and propose solutions for homelessness.

Tony Bizjak has been reporting for The Bee for 30 years. He covers transportation, housing and development and previously was the paper’s City Hall beat reporter.
Theresa Clift covers Sacramento City Hall. Before joining The Bee in 2018, she worked as a local government reporter for the Pittsburgh Tribune-Review, the Daily Press in Virginia and the Wausau Daily Herald in Wisconsin. She grew up in Michigan and graduated from Central Michigan University.