Tag Archive for: Oxnard

Citizen Reformers Set to Transform Oxnard’s Politics

Oxnard has got a problem. The city’s contributions to CalPERS, which totaled $23 million in their fiscal year 2016-17, are going to increase to $45 million by 2024-25.

Where is this money going to come from? As reported last week, the “skyrocketing pension costs” have already led Oxnard’s Mayor to call for “painful cuts.” But if pension payments are set to double in just the next six years, where will all these cuts come from?

Meanwhile, in Oxnard, a small group of local activists, led by Aaron Starr, a local executive with a financial background including a CPA, are working to qualify five reform initiatives. If they gather the signatures required for each initiative, residents of the City of Oxnard will vote on them in November 2020.

The process of filing a citizens initiative is relatively straightforward. One reference is Ballotpedia, which provides a good summary of laws governing the local ballot measures in California.

In Oxnard, for example, there are 82,000 registered voters, and in order to place a local initiative onto the ballot, ten percent of registered voters have to sign a petition. In practice, it is advisable to collect 40-50 percent more signatures than the minimum necessary to qualify. For Oxnard, that would mean 12,000 gross signatures are necessary to qualify each ballot measure.

Citizen sponsored ballot measures to repeal local taxes or implement other reforms are common, but not as common as proposals and counter-proposals initiated by local city councils, school boards, and county boards of supervisors, to increase local taxes or authorize new borrowing.

For example, in November 2018, California’s voters were asked to approve 259 new local taxes, totaling an estimated $1.6 billion in new annual collections. At the same time, they were asked to approve 125 local bonds totaling $18 billion, which would add estimated annual repayments of $1.2 billion. Typically, around 70 percent of local tax increases and around 80 percent of local bond borrowings are approved by voters.

Nonetheless, some of the local initiatives to repeal taxes or implement other reforms have been successful. During this decade, San Jose and San Diego voters both voted to reform pensions, and despite bitter court disputes, much of those reforms have remained intact. In June 2016, local activists and Glendale residents William A. Taliaferro and John M. Voors successfully led a tax repeal effort in that city. And very recently, in April 2018, Sierra Madre residents Earl Richey and David McMonigle successfully led a tax repeal effort in that city.

What is unique about the Oxnard efforts is that five of them are being proposed at once. This is a model that might well be emulated by citizen reformers elsewhere in California. The cost to qualify one local reform initiative, vs. the cost to qualify five local reform initiatives, is not linear. Typically when a signature gatherer succeeds in getting a registered voter to sign one ballot petition, they’ll be willing to sign the rest of them. And when campaigning for reform initiatives, there might be a benefit to having a slate of initiatives. Voters might find it motivating to know that they have a chance to support a coherent package of several mutually reinforcing reforms that offer the potential for dramatic improvements to their local governance.

As summarized in this article in the Ventura County Star on May 4, 2019, the ballot measures that Starr and his colleagues are circulating for signatures are:

Oxnard Fiscal Transparency and Accountability Act, which would make the city treasurer, an elected official, the head of the finance department.

Keeping the Promise for Oxnard Streets Act, which would deny the city certain sales tax revenue if it fails to maintain streets to specific levels.

Oxnard Term Limits Act, which would limit the mayor and council members to no more than two consecutive four-year terms.

Oxnard Open Meetings Act, which would require city meetings to begin no earlier than 5 p.m. and allow public speakers no less than three minutes to comment.

Oxnard Permit Simplicity Act, which would reform the permitting system with training, new guidelines and an auditing process that would lead an applicant to obtain a permit in one business day.

One day? One day? In Sacramento County, there are business owners who have waited several months, and often over a year to get permits. Ditto for Sonoma County. Ditto for a lot of places in sunny California. As if business owners don’t have bank loans to service and employees to pay, while they wait for their permits.

As for pension reform? Perhaps Oxnard’s officials need to urgently explore ways to reduce the city’s obligation to CalPERS, since they may soon be more accountable than ever to the citizens they serve.

Clearly if all of these reform measures are passed by Oxnard’s voters, they will have a comprehensive impact. Imagine the impact of dozens, or hundreds of groups of local activists, applying this same strategy of filing multiple initiatives, in jurisdictions throughout California.

Title and Summary documents for the five proposed ballot measures in Oxnard are already publicly available (by the way, it is the city attorney, and not the initiative proponents, that prepares the Title and Summary). To download the official Title and Summary for each of these ballot propositions, click on the following links:

Oxnard 2020 – Finance – Ballot Title & Summary

Oxnard 2020 – Streets – Ballot Title & Summary

Oxnard 2020 – Term Limits – Ballot Title & Summary

Oxnard 2020 – Meetings – Ballot Title & Summary

Oxnard 2020 – Permits – Ballot Title & Summary

This article originally appeared on the website of the California Policy Center.

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City of Oxnard Pension Contributions Set to Double by 2024

As reported by the Ventura County Star, the City of Oxnard faces budget headwinds. Quoted in the article, Mayor Tim Flynn had this to say:

“We’re making decisions that should have been made 10, 20 years ago to put the city on a sustainable path,” Flynn said. “These are very painful cuts, but we have to live within our means. The city historically has not lived within our means.”

City Manager Alex Nguyen was more specific:

“Skyrocketing pension costs and spikes in health care are some of the reasons for the budget shortfall. With projected expenditures approximately $10 million more than anticipated revenue, there is no choice but to recommend programmatic cuts to the City Council.”

Skyrocketing pension costs. You can say that again. Depicted on the chart below is a summary of what’s happening to Oxnard, thanks to “skyrocketing pension costs.” The biggest takeaway from this chart is the fact that Oxnard’s pensions have just begun to “skyrocket.” If you want to skip the details and cut to the chase, view the yellow highlighted figures in the middle and at the bottom of the right column.

The first highlighted numbers show how much Oxnard had to pay CalPERS (not including employee contributions through withholding) back in 2017. Back then, it cost them $23 million. Now look to the bottom of the chart, to see what these pensions are going to cost the city in 2024 – nearly twice as much at over $45 million.

The numbers on this chart were taken directly from CalPERS “Public Agency Valuation Reports,” in this case, for the four participating employee units (miscellaneous, “PEPRA” firefighters, firefighters, and police). The fifth column is merely the sum of the first four. The only numbers which had to be inferred were the payrolls for the two firefighter units, since, inexplicably, CalPERS didn’t provide those numbers. But they were simply escalated at the same moderate rate that CalPERS had used for the miscellaneous and police units.

The numbers on this chart provide a lot of sobering information. Oxnard’s pension costs are going to increase from 27 percent of payroll in 2017 to 44 percent of payroll by 2024. In actual dollars, as noted, the payments will double. It is critical to understand as well that these estimates from CalPERS do not take into account a slowdown in investment returns. If that happens, the increases could be much higher.

Something always important to point out is that most of the increase in Oxnard’s payments is to increase the so-called “unfunded contribution” – these are the catch-up payments pension system clients have to make to reduce their unfunded liability. Note (right column, just above the first set of yellow highlighted numbers) that in 2016-17 the “normal contribution” was $11.8 million and the “unfunded pension contribution” was slightly less, at $11.6 million. Then skip to the numbers just above the lower set of highlighted numbers, to see these amounts projected for 2024-25. The normal contribution is up sharply, increasing 43 percent to $16.9 million, but the unfunded pension contribution is up 150 percent, to $28.7 million. There’s a reason for this.

For years, the unfunded liability of pension funds, everywhere in California, grew faster than they were being paid down. Overly optimistic rates of return and “creative” repayment schemes (remember the negative amortization mortgages?) caused this, and everyone looked the other way. Budget directors and councilmembers accepted creative accounting gimmicks because they didn’t have enough money in their budget to pay any more to CalPERS than they absolutely had to. Union leadership knew that pension reforms only required employees to increase their payments (through payroll withholding) on the normal contribution, and that the unfunded contribution was the sole responsibility of the taxpayer.

Oxnard’s dilemma is not unique. Every city and county in California, with rare exceptions, is coming to terms with this crisis. But will Oxnard renegotiate pensions, that third rail of public employee entitlement? PEPRA, while helpful, only applies to new hires and will take decades to have an impact. Reform via lowering of pension benefit accruals just for future work has been struck down repeatedly in court, even though it was just fine when pension benefits were enhanced retroactively for past work. As for bankruptcy? Why bother? Wherever that’s been tried – Vallejo and Stockton come to mind – the bond investors got tanked and the pensions were untouched.

Oxnard, like every other city and county in California, will continue to raise taxes and cut services to make their pension payments. But have a look at the salaries and benefits that Oxnard’s unionized public employees receive. Have a look at the pensions Oxnard’s retirees are collecting. And on top of that, ask whether or not city’s planned “painful cuts” will include cutting their supplemental retirement plan administered by PARS. This is discussed on page 108 of the city’s most recent financial report. The supplement creates an unusual 3% at 60 benefit formula for miscellaneous (i.e., non-safety) employees. Because the pensions they’re getting, which average more than most Californians in the private sector make while working full time, are not enough.

Where’s the moral outrage?

It is time for a state ballot initiative to revise the state constitution to permit real, lasting, financially sustainable pension reform.

This article originally appeared on the website of the California Policy Center.

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