[Solano County] The Tax Watchers: Is Vacaville headed for financial cliff?

Blog note: this opinion piece references a grand jury report.

To the casual observer, all may seem well in the city of Vacaville, but a March 2018 report comparing the financial health of California cities ranked Vacaville in the bottom 10 percent.

How can this be? In a nutshell: High salaries as well as unsustainable pensions and health care benefits. Vacaville’s median pay for full-time employees is $106,691 and its structural debt for employee pension and health care is at least $327 million.

If you need more reason for concern, consider this: The Solano County grand jury determined June 30 that the city’s health care benefit for employees, retirees and their families was “unsustainable.” This means that the city cannot continue to fund health care costs at the current rate without cutting services. The grand jury considered the history of the city’s health care costs and debt, and determined that the city is in arrears on its minimum debt payments for health care by $30 million, that the net health care debt of $82 million was approximately $60 million more than that of Solano County and the city of Vallejo, and that the cost of this benefit is a significant threat that has not been adequately addressed.

The majority of the Vacaville City Council, in spite of this report, approved a firefighter labor agreement Aug. 13, which is only one of several labor agreements currently being negotiated. This firefighter agreement increases their relatively high salaries by 11 percent and increases other benefits for a total impact of $3.7 million in a period covering a little more than three years.

This agreement will raid Measure M sales tax funds that were targeted for other projects and services, and will violate the city’s budget reserve policy within a couple of years. Vacaville’s current budget already relies on deficit spending, and this agreement adds millions not previously considered in that budget plan. Furthermore, increasing payroll costs reduces funds available to pay down health care and pension debt.

We have only to look to Vallejo to see the consequences of promising more than you can deliver.

At the time of its bankruptcy, the city of Vallejo owed $382 million in liabilities to claimants, including city employees. However, it had little money to pay these liabilities, and claimants had to agree to take much less. Vallejo balanced its budget by closing three out of eight fire stations, and consequently increasing the response time for medical emergencies or fires. They laid off fire personnel so that only 42 percent of the employees remained. The Police Department was reduced from 155 to 90 sworn officers.

During this time, Vallejo had far fewer assets to provide police, fire, medical services, garbage service and everything else that a city is responsible for. Maintenance of roads and vehicles were not funded. Thus, roads deteriorated and vehicles aged and were not replaced. Everyone was affected.

This dire condition awaits any city that does not rein in its spending.

The city of Vacaville already has begun to cut services. The aquatic center has cut its pool hours, the city imposes rate hikes for users of services and city staff represented to residents that a new park could not be constructed along with new homes because of insufficient park maintenance funds.

After hearing many citizens express concern Aug. 27 over its financial situation, the Vacaville City Council agreed to consider a citizen advisory committee for its health care debt, which is only part of the city’s structural debt problem. It remains to be seen how effective the committee will be and if the City Council will adopt the committee’s recommendations.

It is imperative that citizens stay informed and engaged with their city government to hold it accountable. Attend meetings in person or via computer, and contact council members. Let your voice be heard.

September 21, 2019

Daily Republic

By Wendy Breckon