Editorials

Why Sacramento can’t go on a spending spree

Mayor Darrell Steinberg jokes with Vice Mayor Rick Jennings during his first City Council meeting on Jan. 5. Steinberg faces a very frugal first budget proposal for 2017-18.
Mayor Darrell Steinberg jokes with Vice Mayor Rick Jennings during his first City Council meeting on Jan. 5. Steinberg faces a very frugal first budget proposal for 2017-18. aseng@sacbee.com

Sacramento City Hall is relatively flush with cash, but the 2017-18 budget proposed Monday by City Manager Howard Chan is playing it safe.

And for a very good reason – with spiraling labor and pension costs, the city can’t afford to add big new programs.

Chan proposes to add only $422,000 in ongoing costs – mostly for pest control and repairs in parks and better upkeep in city cemeteries – in the general fund, which pays for public safety and basic services. The rest of the total $11 million increase in the general fund is mostly for higher salary and benefit costs for existing employees.

The big additional cost coming at the city is its payment to CalPERS – from $67 million in the general fund in 2017-18 to $129 million in 2022-23. Nearly half that increase, a projected $29 million, is due to the California Public Employees’ Retirement System board voting to cut its expected investment return from 7.5 percent to 7 percent.

Plus, labor costs are bound to rise later this year because of new contracts for all the major unions, except for firefighters. It’s a stark fact: Local governments are now as much about paying salaries and retirement benefits as providing services to residents.

While Sacramento’s property and sales tax receipts are rising thanks to economic growth, that windfall isn’t going to be enough in the long term.

It’s already a given that the city will ask voters to renew Measure U, the half-cent sales tax that brings in about $40 million a year; that restored police, fire and parks funding after the Great Recession; and that is set to expire in March 2019.

Chan also raises the possibility of increasing the tax rate on recreational marijuana businesses, from 4 percent to as much as 10 percent. That would also require approval from voters.

The full City Council is scheduled to debate the proposed budget at five meetings, starting May 9, before adopting it on June 13. Mayor Darrell Steinberg and council members have a wish list on transportation, housing and neighborhoods.

Two years ago, the council went on a spending spree, adding $7 million to the budget recommended by then-City Manager John Shirey. While funding worthy causes, that decision has added to the financial burden facing the city.

With the rising pension and labor bill and the perennial possibility of an economic downturn, the council can’t risk repeating that mistake.

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