City’s cash crunch

Discussion of a possible “civil sidewalks” ordinance for downtown Chico took so long Tuesday (May 21) that the most important item on the City Council’s agenda—the parlous condition of the city’s finances, as uncovered by new Administrative Services Director Chris Constantin—wasn’t addressed until the clock was pushing 11 p.m.

In the last five years, Constantin told weary council members, key city funds were overspent by $20.5 million, leading to a cash shortage. By December the city will not have sufficient funds to pay its bills and will need to obtain what’s known as a tax revenue anticipation note, a kind of line of credit, he said.

By January, he said, the city will receive sales and property tax revenues from the state sufficient to alleviate the cash crunch and repay any money borrowed. Long-term, though, the city needs to establish a 10-year plan to restore deficit balances.

The deficit has occurred for several reasons, he said. One is that the city has been taking an average of $2.3 million annually from other funds, such as the private development fund, and adding them to the general fund to balance the budget. Some of the transfers were not “allowable,” he said, and the city is obligated to repay them.

Also, city fees and charges are below the actual costs of the services provided. Taxpayers in effect are subsidizing individuals who use city services.

Third, the City Council’s desire to maintain a high level of services in the face of a deep recession as well as the loss of RDA and vehicle-license-fee funds “compounded the problem.”

“The city had knowledge of this years ago, but they didn’t disclose it to the council,” he said. By “city” he meant former City Manager Dave Burkland and Finance Director Jennifer Hennessy.

Current City Manager Brian Nakamura told the council the city is still running a $4 million deficit and needs to “push harder” both to balance the budget and pay back some of the depleted funds. He recommended implementation of cuts totaling $7 million.

A major problem is that there are labor contracts in effect for the rest of this year. They can’t be changed. But it was clear that when negotiations re-open, the city is going to seek major concessions from its employees.

It doesn’t help that Measure J, the telephone tax, on the November 2012 ballot failed. That will cost the city between $840,000 and $900,000 a year, Constantin said.

Councilman Sean Morgan asked Nakamura to provide the council with “three plausible solutions” to the deficit, “including the possible selling of city assets.” He also insisted that any concessions made by labor groups be matched by senior management.

Two citizens who spoke to the issue, Stephanie Taber and Michael Reilley, lashed out at liberal council members, blaming them for the financial problems and calling on them to resign.

Another tool for the police: After lengthy discussion and listening to nearly 30 people speak on the issue, the council voted 4-2, with Ann Schwab disqualified because she owns a business downtown and Tami Ritter and Randall Stone voting nay, to direct the city attorney to draw up a so-called “sit/lie ordinance” applicable to the downtown.

The ordinance, quickly rebranded as a “civil sidewalks” ordinance by Morgan, would allow police to cite people sitting or lying on public sidewalks and blocking pedestrian traffic.

Morgan, who advocated strongly for the ordinance, said it was targeted at anti-social behavior, not at any particular group of people. But a number of speakers disagreed, saying it would criminalize people who lacked homes for resting on the sidewalks.

Several downtown business owners, as well as Chief Kirk Trostle, asked the council to give the police this additional tool for dealing with anti-social behavior. Graham Hutton, who owns Made in Chico, showed pictures of people camped in front of the public restrooms across from Collier Hardware. “I bet the only ones who use [the restroom] are the ones blocking the door,” he said.

Pastor Ted Sandberg, speaking for the Greater Chico Homeless Task Force, said the group opposed an ordinance. “It doesn’t address the core issues causing homelessness,” he said. A representative of the local chapter of the ACLU, Dan Everhart, said his board would urge the ACLU to sue if an ordinance were adopted.

Ritter said she opposed the ordinance because it would hurt, not help, the homeless by criminalizing their behavior, and Stone said it was pointless to pass an ordinance when there aren’t enough police officers to enforce existing ordinances.