Billion or bust: Critics warn that $1 billion spending plan could be too rich for Sacramento’s future

The Sacramento City Council is preparing to vote on a $1.03 billion spending plan that looks promising—or frightening—depending on the angle from which it’s viewed.

On the Dr. Jekyll side of the equation is a plan that improves police response times, outfits more patrol officers with body cameras, bolsters affordable housing projects, stabilizes park programs, creates paid youth internships and pushes a citywide effort on economic development. But, according to outside experts, Mr. Hyde looms in the heavy reliance on an expiring sales tax and a lack of preparedness for pension costs that are poised to skyrocket.

This could mean elected officials’ recent efforts to draw a line between the Trump administration and their most vulnerable populations could evaporate before they even materialize.

Mayor Darrell Steinberg is proposing $7.2 million in one-time spending on paid youth internships, anti-gang initiatives, bike path improvements and economic development. There are still other initiatives, like a legal defense fund for the city’s undocumented residents and the $5 million of city money that Steinberg is staking in a planned expansion of permanent housing for homeless residents.

This progressive wish list isn’t guaranteed, according to Independent Budget Analyst John Silva. In his high-level review, Silva rated the budget as generally “prudent,” but stressed that $59 million of it relies on Measure U revenue, a 1 cent sales tax increase scheduled to expire in 2019.

Voters approved Measure U five years ago in order to restore police, fire and parks jobs lost during the recession. Members of the city’s Budget and Audit Committee, including Steinberg, made it clear in March that they intended to ask voters to renew the temporary sales tax it in 2018. Measure U still funds more than 100 police and fire positions and most of the parks department’s activities.

City leaders want their budget to tackle multiple public safety concerns, including a desire for increased police transparency and a stronger response to escalating violence. The proposed $136.6 million-budget for the Police Department would allocate $875,000 to purchasing an additional 150 body cameras for patrol officers, the contents of which are generally releasable through the city’s new use of force policy.

Interim Police Chief Brian Louie is also hoping to speed up how quickly his dispatchers pick up 911 calls. Currently, police dispatchers answer 84 percent of emergency calls within five seconds. That’s 11 percent below the state average. According to Louie, this is because Sacramento is the only city in California that can’t directly accept 911 calls from cellphones. Those calls are routed first to the California Highway Patrol, which then relays them back to police. Louie wants to close the gap by budgeting for an additional 10 dispatchers, all of whom would field calls from cellphones.

At the council’s request, Louie’s also crunching numbers to explore expanding the department’s shot-spotter technology—sensors that detect the sounds of gunfire and alert police to the locations—into more areas of south Oak Park.

The Sacramento Fire Department’s proposed budget rings in at $108.7 million, while the Parks and Recreation Department’s is just behind it at $108 million.

Making it rain with Measure U money may not be a problem this year, but it will be soon. According to Silva’s analysis, the city’s expenditures will begin outpacing its income by approximately $4 million next fiscal year.

In an open letter regarding the city’s spending plan, Craig Powell, president of the fiscally conservative group Eye on Sacramento, wrote that it was “a dangerous political strategy” to gamble on Measure U’s renewal.

But Powell is more concerned with the city’s unfunded obligations to its retiring workers, a huge debt that’s expected to grow faster than expected.

Finance Director Leyne Milstein told SN&R that the city has set aside $25.5 million thus far to chisel down a $363 million liability in long-term retiree benefits—figures that contradicted an even worse assessment by Silva. An extra $5 million cushion is all that’s called for this year, though it wouldn’t go into the same trust fund.

On top of that, the California Public Employees’ Retirement System is asking local governments to start kicking in more money to the pension fund due to its underperforming investment portfolio. This is particularly bad timing, as nearly all of the city’s labor contracts are about to expire. Police officials have already been grumbling that their employees are leaving due both to low pay and morale.

Last Tuesday, CalPERS representatives Ted Eliopoulos and Wylie Tollette told the council why all California governments will be getting a three-tiered rate hike over the next eight years, increasing the annual amount paid to support retirees. City officials have been told that the annual bill could demand as much as an additional $20 million a year by 2025. (The payment this year was $36 million.)

District 4 Councilman Steve Hansen expressed apprehension to the CalPERS officials. “I’m making contributions, and I frankly want to know if there’s going to be anything left for my generation,” said Hansen, who, at 37, is the youngest member on the council. “We have younger workers coming in as people retire, and I think it’s a very common concern.”

Reflecting on how the pension development could get in the way of their plans, Councilwoman Angelique Ashby told the CalPERS team, “I think it’s fair for us to push back on you and say we need you to be more aggressive [with your investments], because we can’t shoulder this burden. We can’t.”

Steinberg asked staff if the city’s expected revenues from recreational marijuana could offset the CalPERS conundrum. Joe Devlin, head of the city’s Office of Cannabis Policy Enforcement, responded that he was predicting only $9 million in new marijuana revenues until the industry expands.

The shadow of the CalPERS deficit, and the lack of a backup plan if Measure U expires, were both on the mind of Councilman Jeff Harris when he offered his own thoughts on the budget.

“We have to be realistic about what this means,” Harris observed. “I think it’s very important for our constituents to understand that things don’t look real rosy now.”

Steinberg didn’t like hearing that and scolded Harris for “making an impression” that might cause the public to think all is not right in Kings town.

But numbers don’t spin, and Silva’s budget analysis shows the city plummeting into the red with or without another round of Measure U money by the 2021 fiscal year. With the sales tax, the hole is estimated to be $15 million deep; without it, $70 million.

In short, Sacramento will need much more than marijuana or Measure U to save its future.