Hear Mayor Darrell Steinberg talk about what he’ll do with the money that comes from Measure U
When Mayor Darrell Steinberg and the Sacramento City Council convinced voters to raise the sales tax by a half-cent last year, they made a promise: Funds from Measure U’s new tax would not be used for pensions or salaries.
Instead, the new “economic equity” funds would be used to make investments in a more prosperous and just Sacramento. Funds from the extra half-cent, they assured voters, would go to projects aimed at improving lives in disadvantaged neighborhoods, expanding the city’s tax base, boosting small businesses and supporting youth programs.
They framed the vote on Measure U as a vote for a big, visionary investment in Sacramento’s future. The city’s voters bought it, with nearly 57 percent approving the measure in November. They trusted their elected leaders and voted to raise taxes on themselves.
Now, the question is: Will the mayor and the City Council honor their promises?
Only six months after voters approved Measure U, the answer is uncertain. While the city’s upcoming 2019-20 budget will uphold the pledge by using Measure U funds on new programs and initiatives designed for social uplift, the plan gets murky after that.
City Manager Howard Chan’s projected forecast for the following four years indicates Sacramento’s political leaders could break their pledge to voters by using new Measure U funds to plug salary and pension holes. Chan’s forecast shows Measure U funds going “into the general fund, which pays for the most basic city services, salaries and pensions,” according to a story by The Sacramento Bee’s Theresa Clift.
To his credit, Mayor Steinberg is sounding the alarm. Before Chan’s forecast had even been made public, a group of Sacramento business leaders had organized an effort to pressure the city to uphold its promises and put new Measure U funds in a separate pot where they can’t be usurped for pensions and salaries.
In a speech delivered after Chan presented his budget forecast to the City Council on Tuesday, Steinberg made it clear he plans to do everything in his power to keep faith with voters. The mayor’s aggressive public strategy seems designed to preempt any notion that Sacramento’s leaders might burn voters and use Measure U funds to plug other budget holes.
“People would not have voted for Measure U if they thought it was only going to pay for pensions and salaries,” Steinberg said. “This is now a matter of trust with the voters.”
In truth, Measure U was always a question of whether Sacramento could afford to trust its political leaders. This editorial board endorsed the tax increase last year in an editorial headlined “Sacramento tax hike is worth it, but only if city keeps its promises.”
“Sacramento’s decision on Measure U is certainly about taxes and spending. But it’s also about trust,” we wrote. “Can voters count on city officials to use the proceeds on what they are promising? Will residents of struggling neighborhoods put their faith in City Hall after a history of broken promises?”
Getting the tax passed by a bare majority meant Measure U funds had to flow into the city’s general fund. This put the mayor and council on the hook for making sure each year’s allotment went to projects they promised. Mayor Steinberg pitched himself as a leader who could wrangle consensus. Supportive members of the council seemed on board with the plan.
But only five months later, there’s drama over whether they can live up to the commitment.
Undoubtedly, the city manager and councilmembers are under pressure to solve for the rising costs of pensions and salaries. Costs are expected to grow by $39 million per year by 2025. As Chan said in his forecast, “Pension cost increases continue to be unsustainable despite significant revenue growth over the past few fiscal years … Given the current revenue forecast, the City alone cannot absorb the increased costs of providing retirement benefits.”
Pension and salary costs are a big problem, but the challenge can’t be solved betraying the will of the voters. Mayor Steinberg is right to hit the warpath in an effort to keep Measure U on track. In a meeting with the Editorial Board, he projected confidence that the City Council will do the right thing despite what some public employee unions might want.
“I’m not panicked. I’m not negative. I’m not worried,” said Steinberg. “This is exactly what I expected.”
The mayor is proposing that the City Council “securitize” Measure U funding by essentially creating a bond that would serve as a mechanism to protect the money from any future raids.
“The vast majority of the second half-cent needs to go towards economic development and economic equity,” said Steinberg. “Secondly, the money needs to be committed long term.”
The mayor plans to lay out a bond proposal, and potential alternatives, in the coming weeks. While it may be the only way to protect Measure U money, it also requires another leap of faith for the citizens of Sacramento, who would be on the hook for the long-term ramifications and costs.
The contretemps over whether voters can trust their leaders to keep previous promises have cast a shadow over the prospect of further commitments. It’s in the best interests of everyone to rebuild trust by immediately clearing up questions about whether the City Council intends to uphold – or betray – what voters intended when they passed Measure U.