Candidates discuss city budget crisis

(Editor?s note: This is the third and final of a series of stories about issues in the Petaluma City Council race. Comments by candidates are taken from their responses to an Argus-Courier questionnaire.)

In the third and final part of an Argus-Courier questionnaire, the six candidates for Petaluma City Council responded to questions about the city budget shortfall, how Petaluma can increase revenues and Measure K on the November ballot.

The candidates are Spence F. Burton, Samantha Freitas, David Glass, Mike Healy, Karen Nau and Tiffany Ren?.

What would you do to address the city?s current budget crisis?

Glass: There are two challenges that are paramount in this endeavor. We must bring the budget into line in the short term without doing harm to our revenue prospects in the long term.

Therefore I would want the best available information from the city manager, department heads, community input, and a carefully crafted Community Impact Report, which would identify beneficial projects to bring to town.

This approach would help us make sure we don?t hurt ourselves in the long term while meeting the short-term challenge.

In the short term, we simply can?t afford business as usual. We are going to have to go line by line through the budget and ask a fundamental question: Is the expenditure the best possible expenditure? Can the expenditure be postponed or eliminated without hurting our long term growth prospects?

If it can be postponed it needs to be considered for a postponement.

Fortunately, we have reserves that tide us over for a little time and will allow us to make prudent decisions that are not made out of panic.

Wherever we cut expenditures, we should first analyze the benefits of the expenditure in the past and what we will lose with the cutback. If the long-term loss outgains the short-term savings, perhaps we find a different route to our goal.

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Healy: Unlike either Washington, which happily runs massive deficits, or Sacramento, which relies heavily on gimmicks such as borrowing future revenues, the city needs to have an honest budget with revenue and spending in balance.

With the economy slowing, there is little alternative in the near term but to reduce spending levels to match revenues. This is particularly true in the near term, before any of the methods by which the city could grow its revenue base can be effective.

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Nau: Budget reductions including staff and cost reductions where needed. Apply for grants that can improve our city? s infrastructure. Ensure we do not spend more than we take in.

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Ren?: I would encourage our city unions and our city manager to work through the numbers to address how the city can weather this crisis with the least impact of services for the community and for the quick recovery of those services when revenues are stable again. Early retirement offers may help achieve a fair outcome.

The city must also collect on any uncollected development bonds or liens or place them in collection. We must pick the low-hanging fruit of what is owed to the city while addressing how to increase revenue.

Where possible, we should see where starting capital improvement projects will allow billing of intergovernmental charges for city services. We do not want to reduce city jobs to the point that we cannot move forward on our capital improvements.

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Burton: As I write this response, our representatives in Washington are debating spending $700 billion to ?bail out? Wall Street.

If we spent that same amount of money bolstering Social Security, Social Security would be able to provide full benefits to everyone well into the 22nd century.

Just like in Washington, we must get our priorities right. It won? t be easy with our state trying to take away as much funding from local governments as they can, and an anticipated reduction in federal funding for potential local projects.

We have to face reality, as expressed by most economists, and that is we will have to deal with a major reduction in many local services for a period of one to three years.

While I am normally opposed to most increases in the local sales tax because it is normally a very regressive way to tax, if the people of Petaluma wish to continue the level of services that we currently have and/or to reduce the impact of the necessary and temporary severe cuts in services, I would support a reasonable and temporary increase in the sales tax to tide us over.

Any such tax must have an automatic end date of one to three years.

If, at the end of that period, the economy is still in the horrible condition it is in today, then a whole new vote would have to be taken to extend the tax beyond the authorized period. If no new vote is taken, it would end automatically.

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Freitas: First and foremost, the city needs to curtail its spending. The city needs to bring expenses in line with revenues.

I support being fiscally conservative and want to have the City Council adopt financial policies that will ensure the economic health of the city for generations to come.

How should the city grow its revenue base?

Glass: The first goal in protecting our local economy is to protect our current jobs.

The city, through the redevelopment agency, can create construction jobs that improve our tax receipts in many ways.

We must make sure our redevelopment tax dollars are invested in infrastructure. This will provide construction jobs that will allow all of us to benefit, rather than rebate the property taxes to developers.

We need to enhance our position as the gateway to the wine country. This can lead to more tourism dollars coming to Petaluma.

We should encourage green technology research. We have an educated workforce, which makes us a highly desirable location for this industry. To court this industry, we need a City Council that is recognized as visionary in environmental policies.

Sound environmental policies will lead to a strong economy in California. Under newly signed legislation, communities that implement transit-oriented development will go to the front of the line for California transportation funding.

In short, we can invest redevelopment dollars into infrastructure (which creates jobs), that will allow for housing and shopping near our train stations (when SMART is approved), that will give us transportation dollars from Sacramento ,that will allow us to build bridges or roads in Petaluma that will create jobs.

In summary, the environment is the business of the future.

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Healy: Given the Rube Goldberg nature of municipal finance in California, the honest answer is that the city has few options.

The voters have sent a pretty clear message over the years that they are not interested in raising taxes to fix the city?s finances, so I would not be looking there.

One of the few significant areas where the city can grow its revenue base is addressing the retail sales tax leakage by carefully adding new shopping opportunities to complement what already exists here.

I think the community would support a Target here because people are already shopping at Targets in Novato and Rohnert Park, and downtown has already evolved to compete with those stores.

However, I don?t support a proposed big-box bookstore because that would seriously damage an important downtown anchor tenant.

I would also like to encourage one or two additional hotels, particularly near the downtown, because the hotel bed tax is a nice and relatively painless source of revenue for the city.

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Nau: It begins with approving high-end retail and commercial opportunities within the city.

Upgrading existing older shopping centers will improve the retail tax revenue within the city.

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Ren?: The city must be proactive in identifying and attracting businesses that will add to the city?s revenue base on a net positive basis.

This means going beyond a retail leakage study and looking more broadly to attract businesses that will provide high-quality jobs and thus spur the economy, all the while protecting the quality of life that makes Petaluma unique and attractive.

If we damage our unique character, we lose the draw for new homeowners and visitors that provide an economic boost.

To that end we must adopt a Fiscal and Economic Impact Analysis, so that the analysis can be done on proposed projects to determine what projects should be prioritized and which could be an economic drain on the local economy.

We need to review what tourist programs and local events drew visitors to Petaluma and capitalize on what Petaluma offers by focusing on what we do best.

We need to help our local farms and fine-food purveyors achieve the national and international recognition they deserve as the gateway to wine and cheese country.

We also have a vibrant arts community that is attracting visitors to our art, music and drama events and shopping in our local art galleries.

If we focus on development that utilizes redevelopment dollars and focuses those dollars in transit-oriented development along our SMART corridor, we can access additional transportation funding to help repair and build roads and bridges.

Implementing our mandatory green-building program will be an impetus for utilizing AB-811 low-cost loan programs to help citizens pay for energy efficiency upgrades, so California and the nation can achieve energy independence.

This helps the environment, creates green jobs and helps the ratepayer lower their monthly bills and improve their indoor quality of life.

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Burton: We should encourage new tax-generating businesses to locate in Petaluma.

We should also use the CIR process (and possibly a updated retail leakage study) to identify the types of retail that our community needs and wants.

Electronics and computer sales and supplies should be a priority. If we are to encourage high-tech firms to locate here, we must be able to provide them with a local source of technology equipment and supplies.

Any ?big box? that wants to set up business in Petaluma must be looked at very carefully to make sure that it would complement other current Petaluma businesses.

For example, a national bookstore chain could put our local Copperfield?s out of business in short order.

Another great local business that we should try to protect is the Early Work Toy Station on Petaluma Boulevard North. It is the local business that others should use as their model.

They sell toys that are actually made in the U.S.A. They also sell toys made in Europe and in non-sweatshop countries.

Amazingly, they do this and pay their employees a ?living wage? and provide health insurance. If only more of our local businesses and chain stores did the same.

We have to protect these kinds of businesses from those who give little or nothing back to our community, and can actually cause extra burdens on our city and health district.

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Freitas: The city needs to update the retail leakage study and develop a citywide economic development plan.

These documents will be guiding documents for the City Council, to ensure we are recruiting and developing the best mix of retail and commercial development for our community.

What expenses do you favor cutting?

Glass: It is premature to answer this question; however, suffice it to say we can not continue doing business as usual.

The poster child for an expense that should be transferred to the private sector is the maintenance and security of the Keller Street Garage.

The city spends several hundred thousand dollars of public money per year on this facility. The city has invested millions of dollars in downtown, which the entire community has received benefits from in jobs and tax revenue.

The downtown property owners have seen their land values increase considerably as a result of this investment which I enthusiastically campaigned for.

It is now time for the property owners downtown to chip in and pay for the upkeep of this city-owned amenity that increases the value of their properties.

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Healy: In the near term, the magnitude of the city?s revenue shortfall is such that cutbacks hitting services that citizens care about are simply unavoidable. Over 70 percent of the city?s General Fund budget supports police, fire and parks, so it is unrealistic to think that they can escape unscathed.

That said, my goal would be to focus cutbacks in such a way to minimize the impact on services important to the public.

As one small example, I think we could live without having crews patrolling neighborhoods, taking down illegally posted signs for garage sales, missing pets and the like.

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Nau: City departments need to work together, thus ending duplication and consolidation of support services with this cooperative effort.

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Ren?: I do not favor cutting people who provide essential services and necessary maintenance.

To determine what expenses need to be reduced, we need to go through the budget with a fine-toothed comb.

In this financial crisis we must also examine what existing assets are liabilities, in regard to expensive maintenance, and consider liquefying some of these high-expense assets.

If the overall maintenance is too expensive compared to the value of the property, then the city should examine selling it off rather than cutting necessary infrastructure expenses or essential service expenses.

As a candidate, I asked for this information many weeks ago and look forward to reviewing the information to make suggestions on how we can fair this deficit.

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Burton: Nobody ?favors? cutting services of any kind, but we are facing a budget shortfall this year of at least $4 million. If Measure K passes, that shortfall could rapidly approach $12 million.

Having said that, I don? t think most people like the ?you? re laid off? approach as the only method of reducing our city budget.

We will have to cut back on employees and/or their work hours, but we should do it by involving all of our employees, unions, managers, etc. in a roundtable discussion on how best to save the necessary funds.

I suggest that once a proposed budget is decided upon for each city department, all of the affected people should then meet and come up with a consensus on where exactly the reductions/cost savings will come from in that department.

It could come from a combination of many different ways: Reduction in total weekly work hours; one less day per week of work; temporary pay or benefit reductions; voluntary retirements or, as a last resort, layoffs.

When I served as president of the Letter Carriers Union (San Francisco and North Bay area), I was the only full-time representative (with over a hundred part-time employees) and I managed an annual million-dollar budget without ever exceeding that budget.

While the city of Petaluma budget is much larger, my experience of balancing a million-dollar budget ? while working with diverse groups and goals ? gives me an upper hand over other candidates who have never managed a business with more than a hundred part-time employees and volunteers, as I have done.

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Freitas: The City Council will be discussing the city budget on Oct. 6 at 1 p.m.

As a council member, I do not currently have enough information on what are accurate revenue and expense projections. It begins with a salary and hiring freeze.

Do you support or oppose Measure K?

Glass: Oppose. The measure will bankrupt the city.

The city failed for decades to plan for the inevitable need of a new wastewater treatment plant. That was a huge mistake that is difficult to overcome, but it won?t get easier in the future.

The passage of this measure will not save ratepayers money because we will be in default on a loan through the state that was estimated to save the ratepayers $60 million in debt service.

If we default, we will owe the money immediately to the state, which would force us to refinance.

Money is tough to come by these days for everyone. It is my educated guess (as a municipal securities principal) the $60 million savings in today?s environment is a conservative estimate.

We also need the recycling component to ensure a safe, clean and adequate supply of water. With climate change and droughts, we may need that water sooner rather than later. When it comes to water, I would prefer to have plenty rather than not enough.

The passage of this measure runs the risk of leaving us short on water, and that is an unacceptable risk.

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Healy: I oppose Measure K because I think it is a simplistic, meat-ax reaction to a complex set of issues, and because it would put the city in breach of its loan agreement with the state of California, with potentially dire results.

At the same time, however, I am committed to re-opening the issue of water and sewer rates to see if there are any ways that the increases can be reduced.

I don?t think the current council did a good job when it approved the package of rate hikes without even considering the issues Mr. Moynihan was trying to raise (But please note that neither of the two incumbents in this race voted for the rate hikes: Karen Nau voted against them, as I would have done, and Samantha Freitas was not yet on the council when that vote was taken).

As one specific example, I would not have required existing ratepayers to finance the first phase of the recycled wastewater distribution system, even though, in theory, they will eventually be repaid out of developer impact fees.

I think that system should be built as fees are collected, not before. I?m willing to re-open this decision to see if it is possible to reverse it at this late date.

I am committed to requiring future development to pay its full fair share for sewer and water hookups.

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Nau: I do not support Measure K; because it could put the city in harm?s way by exposing it to lawsuits and fines by the water quality control board.

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Ren?: I oppose Measure K and have helped the committee working to defeat this measure by creating a Web site (www.pcwfr.org) and graphics for signs and door hangers. I also attend as many committee meetings as my schedule allows.

The passage of this Measure would be a nightmare for Petaluma.

We are facing budget deficits that will reduce our services already. Passage of this Measure could require an accelerated payment schedule as well as an increase in loan interest.

This could end up costing the ratepayer an additional $60 million in interest and could cause the city to file for bankruptcy.

Our bonding capacity would be diminished from a bad credit rating, hurting the city?s ability to implement revenue-generating redevelopment projects.

The city could face such significant cutbacks that impacts to public safety would reduce calls for service and response times.

Our sports leagues would see further reductions in park and ballfield maintenance.

And without completing the facility, we would face increased fines for poor water quality discharge to the river. It is vital to Petaluma?s future that we defeat Measure K.

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Burton: As all candidates in this council election, I am firmly opposed to Measure K.

We have a loan from the state for 2.4 percent interest. If Measure K passes, we may lose that loan and that interest rate, and be forced to refinance at a much higher rate.

We can?t simply stop building the plant. It is scheduled for completion in June 2009.

If we simply stop building the plant, we will be subject to massive fines from the state and possibly the federal government for discharging untreated or only partially treated wastewater into the Petaluma River.

Do we really want to see only partially treated sewage flow into our river?

I do believe, though, that for some reason we didn?t look ?outside the box? enough. While Sebastopol powers their plant with solar power, Petaluma had an opportunity to do the same and failed to act.

While I served on the Technology and Communications Advisory Committee in Petaluma, we had an excellent presentation by a firm who generally proposed to supply reduced or free solar power for our plant.

Rather than delay the plant several more months (we were told), the offer was never fully vetted by the council.

If elected, I will push to have the plant retrofitted with such a system, one that will reduce the bi-monthly water and wastewater treatment bills for everyone.

Once Measure K is defeated and I am elected, I would carefully look for additional ways where we can save the taxpayer, and especially our seniors and those who are on fixed incomes, some money on their bi-monthly water and wastewater bills.

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Freitas: I oppose Measure K. It would be fiscally irresponsible for the city.

The citizens of Petaluma are saving more then $60 million in interest by having the low-interest State Revolving Loan Fund.

If Measure K passes and the city is forced to default on its loan, this will ultimately costs the ratepayers more money ? or lead us down the road to bankruptcy.

The Hopper Street wastewater treatment facility has reached the end of its lifespan. If we do not continue with the construction of the new plant at Ellis Creek, we are risking our environment and clean water supply.

If the city is fined by the feds and the city?s lack of proper controls cause an environmental disaster, it will cost the ratepayers in Petaluma far, far more than they are currently paying in sewer fees.

Building the Ellis Creek facility will, in the long run, save the citizens of Petaluma in the monthly water and sewer bills, their environment.

(Contact Corey Young at corey.young@arguscourier.com)