Measure N presentation lays out numbers, needs

The city of Susanville’s currently adopted budget has a deficit of $568,911, and if the city’s current projections are correct, by 2025 Susanville is looking at a general fund negative cash balance of almost $3.8 million.

Broken down projections shared by city staff show the fire department looking at a 2025 budget with a $407,792 deficit, and the city’s 2025 police budget with an almost million dollar deficit. The projections are based on maintaining the current level of services — with no increases to anything, including employee bargaining groups.

The beginning of the Nov. 20 Susanville City Council’s meeting was designated to a presentation of Measure N, the city’s proposed 1 percent special public safety tax, which will be on the March 3 ballot. This tax measure is projected to assist with a great deal of the city’s future financial woes, especially when it comes to public safety.

The current percentage of sales tax currently collected within the city of Susanville is at 7.25 percent. If the measure passes, those purchasing goods within the city will pay 8.25 percent sales tax, whereas the cities of Placerville, Sacramento, Eureka and Grass Valley are all at 8.25 percent. The city of Reno collects 8.26 percent, San Jose collects 9.25 percent and the city of Los Angeles, 9.5 percent.

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Public presentation

At the Nov. 20 meeting, staff held the presentation of the measure at the Lassen County Fairgrounds’ Jensen Hall where it was unfortunately not well attended.

This circumstance, however, did not take away from the presentation’s importance, nor did it take away the attendance of local law enforcement and other public safety personnel — many of whom are not only in favor, but are actively advocating for the measure.

Susanville Finance Manager Deborah Savage and City Administrator Mike Wilson broke down the proposed tax measure. Throughout the presentation they shared the estimated projections of Susanville’s future budgets with and without the tax measure’s passage.

Savage broke down the city’s revenue sources, expenditure allowances for the general fund opposed to the restricted funds, how the funds are all used and where it all goes. She included the portions of the budget police and fire department account for as well as the city’s portion of retirement it pays to retirees.

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“We have two kinds of funds. The general fund and restricted funds,” said Savage. “Most of what we have coming in are restricted funds, and restricted means it can only be spent on the purpose for what it was selected.”

Savage mentioned comments the city continues to receive on social media, such as why the city chooses to embark on its Southeast Gateway Project. She explained that projects like those are grant-funded (the Gateway project is a specific Caltrans grant-funded project) and do not require general funds.

Within the last 10 years the general fund revenues have only had an annual growth of around 1.4 percent. To compare, the city’s expenditures have increased an average of 4.14 percent per year.

This will take the general fund’s cash balance from almost a $2.43 million surplus in 2019/2020 to almost $3.8 million deficit in 2025/2026. This is a huge and drastic shift.

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Out of the city’s general fund come the costs of three different departments: administrative services, public safety police and public safety fire.

The administrative services comprise 27.3 percent of the general fund budget or $154,744; the police department takes 50.6 percent or $287,869 of this year’s general fund budget and the fire department is 22.2 percent of the general fund’s annual budget, or $126,298.

The proposed tax measure would move police and fire out of the general fund and into their own separate public safety funds.

Savage also shared the unfortunate news that city’s general fund portion of CalPERS, which includes normal payroll, side fund loan, and unfunded accrued liability — and its public safety portion for CalPERS — are slated to increase through 2026.

This end to the increase, however, does not mean a short or drastic decrease afterward. In fact, it is due to slightly increase again from 2029 through 2031. Things are not projected to return to 2019 levels until potentially 2036 or later.

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None of these the city itself can change.

“CalPERS is expected to lower their rate-return interest rate — which makes what employers owe compound and get larger each year,” said Savage. “So not only do we have the regular PERS that we pay each pay period, but we also have a lump sum, unfunded liability payment.”

Out of the city’s general fund portion of the public safety unfunded liabilities, both police and fire are around 75 percent of the city’s overall annual employer’s costs for all funds. The annual employer cost includes the regular payroll for every two weeks, the lump sum unfunded liability payment and the PERS side fund payment.

For instance, in 2026 the police department’s portion is projected to pay almost $967,000, and fire could pay more than $434,000 for its contribution.

To put that in perspective, Fire Chief James Moore told those in attendance that his operational budget for the department this year was only $228,000.

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With the city’s projections they are also looking to increase the employee share of health insurance for fire to $100, a $7,000 annual savings for fire and $14,500 for police. They also shared the possibility of increasing the employee share of CalPERS to include half of the employer’s normal cost, potentially saving another $45,000 for fire and $110,000 for police.

Since salaries, benefits and PERS make up 81 percent of the fire department’s budget and 77 percent of the police budget, it’s one of the most impactful places staff looked to cut costs.

However, Savage also noted that any of those possibilities would need to be negotiated.

Audience questions

Wilson opened up the presentation up to members of the audience where a handful of residents spoke up.

Gary Bridges told the council that while nobody likes taxes, he’s learned about what local law enforcement go through by working with the local police department through starting the first local neighborhood watch in the city.

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“It’s not like what it was when I was a kid growing up here,” said Bridges. “We didn’t have these problems. We had more money. Things cost less, but things are going up including crime. So take a good look in the mirror and vote your heart.”

Another member of the public asked if the current proposal was the same as last year’s tax measure.

“Not even close,” responded Savage.

Wilson then answered that the primary difference with Measure N was specific to the city rather than 2018’s Measure J — the last measure, which was a joint city and county tax measure.

One of the other differences with the current proposed measure and the 2018 tax measure is that Measure J was a general tax rather than Measure N, which is a special tax, meaning it is designated specifically for public safety. Because of this Measure N has a two-thirds threshold to pass rather than a simple majority.

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The same audience member asked what would happen if the tax measure did not pass.

Wilson responded, “The city has to look at significant reductions, and that may be a variety of things.”

Another resident, Elizabeth Norton suggested if the measure does not pass, then the council should try making the tax unrestricted.

“If they were unrestricted, then some of these funds could be used for your aging infrastructure, replacing the leaks in the city hall … your roads, parks, golf course — you have a lot of needs in the city and a lot of great programs. You need staff in order to maintain those programs,” said Norton.

Wilson responded, “Or we need a lot of volunteers. So I welcome everybody to come on down. Spend some time at city hall and help us out.”

Bridges asked Wilson if these were similar circumstances to what happened to Vallejo. Wilson responded that he would prefer to use Stockton as an example.

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According to the Legislative Analyst’s Office of the California Legislature’s Nonpartisan Fiscal and Policy Advisor, there were several factors contributing to Stockton’s June 2012 bankruptcy, as well as San Bernardino’s in August 2012.

It appears Stockton and San Bernardino’s bankruptcy filings were driven by some similar factors including long-term imbalances in revenues and spending, reduced tax revenues associated with the downturn in the economy, some constraints to reducing expenditures in the short term and increasing costs to provide retiree benefits.

Additionally, substantial borrowing appears to be a factor in Stockton’s filing, and prior budgeting practices, such as borrowing from internal funds appears to be a contributing factor in San Bernardino’s case. By contrast, the bankruptcy filing by Mammoth Lakes appears to be driven by a single significant event — a recent legal judgment that required it to pay an amount more than twice its annual general fund budget.

The LAO further states that fiscally distressed local governments can use Chapter 9 proceedings to gain protection from their creditors while they develop financial recovery plans that dismiss or restructure debts and other obligations. Various parties — bondholders, lenders, vendors, employees and retirees — can be affected by a local government’s use of Chapter 9 to adjust its obligations.

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Another resident, Julie Brown, asked about the effects of residents who already shop in Reno for most of their goods, and if the raise in sales taxes would further drive people to shop there.

Wilson then shared that Reno’s sales tax would still be higher even if Susanville passed its own additional 1 percent.

“Our biggest problem is … a lot of people go to Reno to shop,” said Wilson. “A lot of people go to Redding to shop. Our local dollars don’t get spent here, and we can show that based on research data we’ve already obtained.”

Wilson, referencing the proposed tax measure, said,  “That penny we’re talking about out of every dollar, a majority of it that gets spent in this community, isn’t (from) the folks who live here. It’s those who are driving through going someplace else that stop here for a moment and spend some money — and that helps us.”

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Norton thanked those at the city for putting the presentation together for the community. She also gave a suggestion to the city.

“If that information could be shared with the public on how they are understaffed and there’s an increase in workload associated with both of those services, it could present a very compelling argument,” said Norton.

Wilson politely responded, “I’ve seen you at a couple of council meetings and I wish you would have been to the ones where we actually presented that information. I would love to find the forum to present that where everybody would get it, and we tried. We talked on the radio. (Police Chief) Kevin Jones has been on our local radio station multiple times.”

Wilson continued to mention the city’s efforts to put it on social media and the newspaper.

Lassen County Supervisor David Teeter, who supported and helped to craft Measure J, kindly declared that attempts had been made to address the problem to the community. While Teeter admitted disagreements prior, he stated his support for Measure N moving forward. He also said that if it didn’t pass, he would be open to another joint city and county tax measure, albeit with a lower percentage.

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Terra Avilla, who works with the SPD, shared her perspective with those in attendance. She repeated the sentiment that no one (including herself) likes taxes; however, “You know what I do like? I like that when I have a problem and the police come. And I like that when I have a problem, the fire (department) comes.”

Avilla said it felt good the city had trained, quality responding within seconds to her own call as a resident — emphasizing their team indeed works hard for the community as well as together.

“We do the best with what we have to get by. But we don’t just want to get by. We want to be able to thrive and support you,” said Avilla. “We need a bigger budget. We need training. We need officers. We need backup. When we’re short-staffed, we are having to fill those positions with either shift-swaps or overtime.”

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Wilson then shared a personal example with the attendees, surrounding his time working for the city of Marysville, “During this time they had their own fire department. People said, ‘You know the fire department is too expensive to keep, so why don’t we go ahead and see what our options are,’ and Cal Fire said, ‘we’ll do it for a million dollars.’ … but what nobody understood or thought about was what happens with Cal Fire.”

Wilson continued to share that those under Cal Fire’s state bargaining unit have built-in negotiated contracts with significant raises. By the third year, the city was paying more than double what it had originally paid for fire services before the change.

Another resident, Gary Felt, gave his positive impression on the city’s presentation. Felt said, “People who know me know I’m not a fan of government and I’m not a fan of taxes, but they’re a necessary evil up to a point, and I see we’re at that point — to keep operating at the level we are at without much increase. I see it as a necessary thing to do. I think 1 percent is no big deal. I was disappointed when we tried the half-percent before.”

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How Measure N developed

At the Aug. 21 city council meeting, the council instructed staff to prepare the proper paperwork to place the tax measure on the March 3 ballot, which would need a supermajority of two-thirds to pass. And on Sept. 4, the first reading of the ordinance for the proposed tax measure was pulled due to the prior mentioned conflicts.

In the Sept. 18 agenda’s summary, it stated that the city of Susanville faced imminent budget shortfalls in all areas including public safety.

Various community members told council members, law enforcement and others that they would have supported Measure J on the June 2019 ballot if it had been a special tax in which the revenue generated from the increased sales taxes would solely fund safety.

Although there’s no certainty in knowing how much revenue the 1 percent increase in sales tax would generate, the city’s staff projected around $1.8 million in revenue. The fire department would receive 40 percent of the tax and the police would receive 60 percent.

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The dire economic crisis Susanville faces in the next three years finally hit an emotional breaking point for many working for the city at the city’s Oct. 2 public hearing.

With the increase of    CalPERS unfunded liabilities on the back of the city budget, some on the council (and even within the city’s own staff) called for, and planned for, cuts and layoffs throughout the city.

The cuts and layoffs could mean the difference between keeping qualified people who protect residents from fire and fraught, and the possibility of even longer wait times for emergency services, due to even further constraints to the city’s budget. Not to mention the constraints to the budgets of those families whose wages, healthcare or future retirement savings could be lost or reduced due to the circumstances.

Before the opening of the Oct. 2 public hearing, staff and council held discussions on the development of the ordinance’s language. Both Jones and Susanville Fire District Chief James Moore provided staff with additional language specific to their                   corresponding departments.

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Both Jones and Moore shared requests pertaining to the public’s desire for utmost transparency, including being very clear as to where the funds would go.

The chiefs also outlined their specific needs including additional staff, vehicles and augmentation of wages.

Moore outlined the overall feedback.

At the same October meeting Moore displayed frustration, telling the council, “You all know I love this city. I don’t want to see cuts. We’re doing what we can. We’re doing the best we can. We’re at capacity. Our folks — every employee of this city is at capacity. We need this to survive … I want this to be solid.”

Both the police and fire department explained each of the departments were currently doing more work with fewer officers and firefighters than they had in the early 2000s, and were struggling to maintain the current level of services to the city.

 

More information

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Readers interested in seeking further information regarding Measure N can contact the city of Susanville at 66 N Lassen St., or call the city during normal business hours at 252-5100.

You can also contact the Susanville Police Officers Association at 257-5603 and ask the receptionist’s desk for the POA line; or call Susanville Fire Department Fire Apparatus Engineer, Leon Myers at 257-5152 ext. 1614.