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Task Force Report Advocates Half-Cent Sales Tax Hike

Report goes to City Council Tuesday from Walnut Creek Community Blue Ribbon Task Force on Fiscal Health.

A city task force has taken a hard look at city finances and concluded Walnut Creek should add a half-cent to the sales tax to keep the city afloat.

A 48-page draft report by the 15-member Walnut Creek Community Blue Ribbon Task Force on Fiscal Health goes to the City Council at its next meeting, which starts at 7 p.m. Tuesday at City Hall.

Task Force Chairman Bob Pickett will discuss the report with the council Tuesday. Below is a Q&A with Pickett about the report and the many task force meetings that went into it.

He might get some questions about recommendation 11A: "Even with the efforts to reduce operating costs and accumulate funds for needed capital projects, there will not be sufficient revenue to fund repairs to roads and streets, renovations or replacement of aging facilities and continue arts, recreation and community service programs that are valued and supported by residents. The Task Force investigated numerous options to address anticipated shortfalls and recommends a half-cent sales tax increase to address the City's goals."

The report advises a community survey to reveal the level of community support for a sales tax increase. The task force estimated a half-cent hike would generate $7 million annually, based on the current 1 percent sales tax producing about $15 million.

The report advised the city to pursue a half-cent sales tax increase "only after the implementation of cost reduction measures and other methods for increasing revenue (such as economic development and cost recovery)."

Mayor's initiative

When Cindy Silva was sworn in as mayor in December 2010, she announced two initiatives:

  • the promotion of 2011 as the Year of the Volunteer in Walnut Creek.
  • the formation of a task force to advise the council on spending priorities in a time of economic challenge.

Besides the sales tax, the task force report offers these conclusions (beginning on p. 8):

  • develop an integrated financial management process
  • set aside funds for replacement of aging capital assets such as the Larkey and Clarke swim centers.
  • establish greater cost efficiency "by consolidating uses in fewer facilities and selling or leasing underutilized properties."
  • implement reductions in payroll costs through changes to employee contributions to retirement and health insurance costs, including analysis of managing financial exposure through participation in CalPERS.
  • develop effective strategies to strengthen the city's commercial and retail base.

 

Despite the economic challenges cited, the task force took note of Walnut Creek's advantages (see p. 16), already generating the highest sales tax per capita in the county:

The city of Walnut Creek has long been in an enviable position as the geographic and economic center of Contra Costa County: Walnut Creek is considered to be the automotive shopping, retail, restaurant and cultural hub that serves local residents and non-residents alike. In addition, Walnut Creek is a major professional, financial and real estate employment center. Additional people in the work force boost the daytime population from 65,000 to approximately 85,000. This enhanced population further increases by the number of visitors that come to Walnut Creek on a given day to shop, eat and enjoy its cultural amenities. These components combine to create a strong local economy generating the highest sales tax revenue per capita in Contra Costa County.

The task force operated through subcommittees:

  • Delivery of Services — chaired by Jerry Kaplan
  • Capital Investment Program — chaired by Laura Simpson
  • Revenue Enhancement — chaired by Karen Majors
  • Demographics, Trends and Growth — chaired by Tom Terrill

 

Q&A with Bob Pickett

Walnut Creek Patch posed questions via email to Bob Pickett, who chairs the Walnut Creek Community Blue Ribbon Task Force on Fiscal Health Report. The questions were edited for length. Pickett's answers were edited hardly at all.

Walnut Creek Patch: The task force recommends Walnut Creek add a half-cent sales tax. Can you talk about the task force discussions on that?

Bob Pickett: One important thing to note with regard to the recommendation for a ½-cent sales tax increase is that the Task Force was very sensitive to how this would be received by the public. One result was that we placed a significant emphasis on cost-cutting measures. We also recognized that other methods of increasing City revenue are important, such as economic development.
Note Page 9, item no. 6: “After beginning implementation of further cost reduction measures and other methods of increasing revenue (such as economic development and cost recovery), consider a local ½ cent sales tax increase.”  

This also recognizes that the City has already undertaken cost some cutting measures. See recommendations 11.a and 11.b.

One reason the sale tax was of most interest to the Task Force is that it shares the money-raising burden with people who come from outside of Walnut Creek, but who benefit from Walnut Creek’s services and amenities. It reduces the burden on Walnut Creek residences and will have the greatest potential of generating meaningful revenue. Read Finding 11 and see Table V on page 45.

WCP: The sales tax is the attention-getting item in the report -- do you want to draw my attention to something else in the report?

Bob Pickett:

COST CONTROL
There are 38 recommendations in the report. Of these, over half are related to cost cutting. This signifies the Task Force’s recognition of the importance of controlling costs.  The sales tax, although an important component to the total plan, is not the “silver bullet.” The Task Force looks at this as an integral plan with a variety of components, all of which contribute to mitigating financial stress on the City over the long term.

EMPLOYEE COSTS
Page 5, paragraph 3.  “City Council has implemented a variety of measures to reduce operating costs.” Employee costs are the greatest single cost to the City. City Council has negotiated new labor contracts which begin to address this issue. Further work is needed on this matter.
Also, the employee retirement system costs are difficult to control because of the way CalPERS is structured (Page 5, last paragraph).  Read section II.D (starts on page 30) – Employee Compensation, Benefits and Pension Obligations.  This section provides a good summary of the CalPERS issues.
Employee health insurance costs are escalating as much as four times inflation rates. (Page 6, first paragraph)

WCP: Is there something in the report that you see as an innovation or an important idea that the city can emphasize?

Bob Pickett: The City has undertaken efforts in a number of areas to deal with the current economic situation. The purpose of the Task Force was to develop a sufficient understanding of the of the City’s operations and finances, and from that, make recommendations for “next steps.” The report identifies several key elements, which are summarized as items 1 through 6 of the Executive Summary (Page 9). This lays forth an integrated plan for implementation of the important ideas. The Task Force looks at this as a package. No single element is sufficient to deal with the future City finances. That’s the most important idea.

Jason Cooke November 12, 2011 at 12:32 AM
Couldn't you actually read the report instead of making incorrect generalizations about the folks who volunteered their time? Bob was one guy out of 15. Come back and make some intelligent comments about the content.
One more time with feeling November 12, 2011 at 01:16 AM
Triple Canopy and SR, I agree. That said, how can anyone be surprised at this action? The mayor mandated existing services not be touched. The only two options leaves increasing revenue or remaining the same. http://walnutcreek.patch.com/articles/an-eye-on-walnut-creeks-blue-ribbon-task-force-on-fiscal-health As for remaining the same, I guess http://walnutcreek.patch.com/articles/sales-tax-growth-projected-in-walnut-creek-budget was not enough (to cover the pools projects, new and unplanned city staffers, more paid-for propaganda now from WCTV, among others)... This was a sham from the beginning. We now have an exclamation point on it and are having our collective faces smashed into their whim of the week. This is not "building community". This is just another slap in the face to the general population of this once (politically) fair city.
SR November 12, 2011 at 01:41 AM
I read it, and I appreciate your hard work Mr. Cooke. There is some good research and several sound conclusions in there. It however seems to me the few “non-Silva” people on the CBRTF got pushed around or didn’t notice what was going on. As far as content how about the statement, “with the faltering economy, the returns that CalPERS has achieved in recent years have been particularly low, relative to stated rate of return goals”. Really? The last annual statement for CalPERS showed a 20.7% percent return. How about, “the average rate of return that CalPERS achieved in the last ten years was only 5.3%”. Was a 10 year figure included because it included the recession losses? Why not use a more accurate 20 year figure which shows an annual average return of 8.4%. The report’s suggestion that 4.2% may be a better figure to use because unnamed “academics” said so shows either a poor sense of judgment, a lack of objectivity or a plain lack of understanding relating to complex investment funds like CalPERS.
Triple Canopy November 12, 2011 at 02:51 AM
Journalism in this day and age pales in comparison to the real professionals back in the day who used critical thinking skills, asked probative questions, and did REAL investigation. All we get now are reporters who only report, anchors who read teleprompters (oooh, like that knucklehead in the White House), and a public who consume reports as "factual" without doing their own thinking. The public is being spoon-fed information in little bites because the majority cannot deal with reality... their too busy with Dancing with the Stars, checking their Facebook page, or brining Johnny to ballet lessons... Oh, don't get me started on the wussification of this society. The arts programs should be self sufficient. The Lesher Arts center is a fat-a$$ white elephant suckiing on the WC Council's teets.
Jason Cooke November 12, 2011 at 03:06 PM
SR - In regards to CALPERS, we spent a lot of time on this one. W/o rehashing it all here, I would recommend reading the following: http://www.ocregister.com/articles/calpers-314001-pension-rate.html
Jim November 12, 2011 at 04:25 PM
"The City has, in the past, funded other large DCPs with accumulated budget surpluses and significant contributions from project advocates, as was the case with the Lesher Center and the new downtown library." "Ongoing maintenance costs and long-term implications to the City’s operating expenses have not always been evaluated as a factor in considering a DCP project. The replacement of these new assets becomes a significant liability over time if no funding source for replacement is designated." It would have been nice to use some plain language here if you were allowed to. Something like, "These projects were forced through at the behest of council members despite serious implications to the city budget that we are still trying to recover from. The library project ate up all the city's surpluses over a 6-8 year period and the council didn't even consider how much it would cost after it was built." Suggesting some city staff that pushed the project like Lorie Tinfow be let go would also be refreshingly honest. I love the suggestion that all future projects should be approved by the voters. And no more end runs like voting down the library twice but still pushing ahead anyway. Let us never again have a Cindy Silva/Gwen Regalia/Sue Rainey train wreck caused by putting personal and business internets above the financial health of the city.
SR November 12, 2011 at 05:07 PM
See this is a problem Jason. You aren't writing a letter to the editor here. You guys are the City’s BLUE RIBBON TASK FORCE making official recommendations. The link you sent contains an argument that has already been proven to be flawed. It assumes the rate of return for terminated investment portfolios should be the same as active portfolios (i.e. larger and currently receiving regular contributions and new members). They are fundamentally different and calling them apples and oranges wouldn’t even do it justice. Think of it this way; does a retired 80 year old invest the same way as a 30 year old working stiff? Terminated plans are by design invested extremely conservatively to reduce risk. This means a much lower return. I don’t want to be harsh but this shows you guys clearly didn’t understand how these funds and strategies work. Do you remember something called Primary Source Information in college? This is basically the idea that you can’t cheat when doing research. To get it right you HAVE to go to the source and pick apart the data yourself. You can’t rely on an editorial writer (Mr. Greenhut in this case) whose motives are unknown to do your research and form conclusions for you. Don’t forget there are lots of competing interests at play here fudging the numbers. On one hand there is union money influencing things and on the other side are the right-wing anti-pension groups funded by 2 or 3 billionaires that don’t even live in California.
Jojo Potato November 12, 2011 at 09:04 PM
Where can I start? This group of hand picked yes people said "Yes". I would have preferred "No". No new taxes, and yes to reduced services. A look at the budget shows that the biggest piece of expenditure (at least as they cut) is Arts, recreation and community services. About 3 times the police budget. And what do we get for that? Looking at the big categories, they are: Sports and aquatics at 2.5 mil. Arts education at 1.7mil. and the Lesher center at 5 mill (including center Rep). Take a look here and make up your own mind. What I see is fifedoms being protected. http://www.walnut-creek.org/civica/filebank/blobdload.asp?BlobID=5263 Regards, J
Carole Wynstra November 12, 2011 at 09:47 PM
SR, Mr. Kaplan does not serve on the board of Diablo Theatre Company, nor is he "actively involved" with our company. We do no receive any city tax dollars to operate. We do rent space at the Lesher Center. Carole Wynstra Board President.
SR November 12, 2011 at 10:02 PM
JoJo, Arts is not the biggest expenditure. The Police Department is. Arts are about 21% of the general fund and police funding is around 37%. Having said that Walnut Creek still spends more on Arts than Concord, Pittsburg, Lafayette, Martinez, Antioch, Moraga and Orinda COMBINED. It is a huge number. People will argue we get most of this back in ticket revenue from the LCA. We get SOME back. You still spend around 2 million tax dollars every year on these programs (LCA, Bedford Gallery etc) after ticket sales are added in. There's also a little fuzzy math added in like big bucks from facility rentals that are counted as Arts "revenue". This money would be coming in even if we had no arts programs so it's disingenuous. The argument then goes "well arts bring in money to businesses” based of course on an unknown Chamber of Commerce formula. OK, maybe some. Question is, are Walnut Creek residents willing to sacrifice services (pool, streets, public safety) so businesses downtown can make a little extra money? And no, people aren't coming to Walnut Creek to buy cars or shop at Broadway Plaza because they saw a show at the LCA. Maybe a dinner or a drink but tax income from downtown restaurants is a drop in the bucket.
SR November 12, 2011 at 11:54 PM
Carole, I didn't say he was on the board. He has however been active in the Diablo Theatre Company including acting in some of your plays. And please do not say you don't get any tax dollars. That is a slap in the face to all taxpaying Walnut Creek residents. You get discounts on rentals, practice time and equipment. If you paid the market rate you would cease to exsist. You've told some whoppers in your time Carole so please don't add to the list.
Carole Wynstra November 13, 2011 at 12:09 AM
SR, I don't recall that during my tenure Mr. Kaplan has performed for us, Perhaps in the past, can you provide specifics? If you were not anonymous and I knew who you were I would invite you to our offices and show you our financials and our rental agreement with the city.. We get no "discounts" at the LCA, on rentals or equipment and we don't hold any "practice" ie rehearsals at the LCA. We pay the city over $200,000 a year in rental and fees. I would be happy to share with you the accurate information.
Janice Costella November 13, 2011 at 12:21 AM
Those of us who are in the unincorporated area above the city can't vote for the City Council and can't express an opinion on the Council's decisions yet I live less than a mile from City Hall. What the council decides greatly impacts my life in every way. I will pay a tax without being able to make a positive or negative comment.
Triple Canopy November 13, 2011 at 02:23 AM
WC has a bunch of unincorported islands so step up and convince your neighbors to be annexed to WC then your voice can be heard on fiscal policy. Be aware that it comes with compromises - I see many properties in the unincorporated areas whose maintenance standards ought to be raised... In plain English, some properties look really "junky" thus negatively affecting the nearby property values. However, many in the unincorporated area like what WC offers but would rather not be under the jurisdiction of the city... all of the benefits and none of the "entanglements".
Triple Canopy November 13, 2011 at 02:23 AM
Pardon my darned typos.
Jim November 13, 2011 at 03:12 AM
Now that one I know is not true. If the LCA were a business DTC would probably pay twice as much. Fact is it is a taxpayer owner enterprise whose goal is to bring in arts programs. The rental rates are way below market and the city pays for all kinds of advertising and promoting. This is why it is always a million or two in the red every year.
Carole Wynstra November 13, 2011 at 03:21 PM
Jim, If you did a rental cost analysis, as we have done, of Bay Area theater venues you would find that rental rates at the LCA are not "way below market." You might start with the relatively new Bankhead for comparison. The city does not pay for any DTC advertising. We pay for our street banners, all signage at the LCA and for our share of the LCA ad in the Contra Costa Times. If you come to see our next production, "White Christmas," we list all donors and sponsors in our program. They pay for our advertising, not the city. We are not a city program.
Jim November 13, 2011 at 04:47 PM
I saw a Christmas Carol last year and it was great. I plan on seeing A White Christmas this year. While DTC does not eat up tax dollars like the city owned theatre company, Center REP, you certainly benefit greatly from free publicity that comes from city employees (Scott Denison talking up your plays in various interviews for example), the city's promotion of the LCA in general which benefits anyone selling tickets for anything, and of course the city subsidized operating costs for the LCA. Does $200,000 and the donations you receive really cover the costs of three full scale productions, the costs of mass advertising, subsidized city parking, all costs and fees associated with putting on the production, paying your employees and the city employees, electricity, cleaning, maintenance costs of the LCA etc etc.? I'm sure it's not even close. "The arts depend on private-public partnerships to not only survive but to thrive. I am pleased to report that the City of Walnut Creek and DRAA have a partnership that is unstoppable because it is based on mutual respect and a shared vision" G. Porkoney (reading between the lines this means tax dollars). Don’t forget, the LCA is not the most transparent of government run entities. “A report by a consultant who reviewed the center's books, policies and operations after some disgruntled employees raised allegations of wrongdoing found that the environment at the Lesher center "is in danger of becoming ripe for fraud to occur."-SFGate
Linday November 13, 2011 at 04:58 PM
I hope the BRTF will correct what seem like significant errors in their analysis of PERS rates. Otherwise I think they have put in some long hard hours on this thing and produced a great document. I have to also agree it would have been nice to see some more plain language. They tried not to step on toes by saying over and over again the community values the arts. That is true but to a reasonable point. There is no information to show during these tough times that the arts are valued to the point where we want to keep spending 1/4 or 1/5 of the total budget on them. This is getting a little ridiculous. The Bedford Gallery is a great example. $400,000 per year AFTER ticket sales are factored in for only 1,700 people! Someone should be losing their job over these kinds of decisions in a recession.
Ethan Friedman November 13, 2011 at 05:03 PM
It's somewhat disheartening that people can sit at home, not attend a single task force meeting to be heard about their concerns, and have the gall to post mean spirited, consipiracy-theorist comments here about 1 of 35+ recommendations in the report. I can assure the 6 people who regularly post on this forum (and frankly, I'm not convinced it isn't really 3 people posting as different personas) that this report is the culmination of 100s of hours of research and writing by a dedicated group of citizens. It is not the result of some pre-ordained political setup. I certainly encourage an careful reading of the report and a public debate about the recommendations, but the knee-jerk accusations does far more harm than good. Believe it or not, public policy is not made on Walnut Creek Patch. For those of you residents who read the Patch, but do not choose to post, I encourage you to read the report and think independently about the City and the path to a vibrant future.
Carole Wynstra November 13, 2011 at 07:18 PM
Jim, It is difficult to have meaningful discourse with someone who is anonymous and makes speculative claims. We pay OUT $200,000 in rental and fees to the LCA, that is not income. Subsidized city parking??? Parking is between our patrons and the city. You are making guesses about donor and ticket revenues and I doubt you have seen our operating budget. I am always available at our office or at "White Christmas" to answer questions about DTC. I am not commenting further on this blog, there is too much misinformation being tossed around. I hope you will come to see "White Christmas" and introduce yourself to me. Three performances are sold out, so I suggest you buy tickets this week.
SR November 13, 2011 at 07:51 PM
I see a lot of factual arguments being made here Ethan. Care to address any of those? Don't forget YOU chose to enter the public arena by serving on this Task Force. Are people not allowed to comment or criticize your conclusions after having read the report? I also don't see any conspiracy theories, just some critical thinking and healthy skepticism. Do you think the fact you work with a sitting councilmember at a law firm that is named after a former councilmember (Miller Starr Regalia) should not be public information? Some people, not all, may want to consider that when they read the conclusions you have prepared for said councilmember.
Paula Miller November 13, 2011 at 10:19 PM
Ethan, "I can assure the 6 people who regularly post on this forum (and frankly, I'm not convinced it isn't really 3 people posting as different personas)"........and you are the same person who writes in the first paragraph of your post that you are galled by "conspiracy-theorist comments"?
michael frederick November 14, 2011 at 08:27 AM
Actually Ethan, Unlike at places like City Hall, where NO (ZERO) Council-appointed commissioner or The Times has endorsed any candidate in well over twenty (20) years that wasn't first promoted by Council -- Patch is a forum for free public discourse. People who've lived here any length of time are pretty familiar with "pre-ordained political setup", given the putrid political climate you and MSR cultivate, per above ... and the commentary naturally reflects that reality. Anyone, including yourself, may jump-in and tackle anything that is said -- even if it is to post trite nonsense, such as your commentary above. People probably choose not to post contrasting arguments on point for the same reason you can't. So, pathetic opposition is left to attacking those who thoughtfully comment, isn't it? You are correct in one thing. Public policy is not made on Patch. Informed public opinion is. Walnut Creek takes in a grotesque level of per capita revenue. The underlying notion here that we have an INCOME problem, instead of a gutless Council-induced SPENDING problem, needs explanation beyond a wave of the Mayor's wand. You and the redevelopmentally dependent need to address this. Go for it. Share with us what you think you know.
michael frederick November 14, 2011 at 08:47 AM
Carole, I think, to some degree, you are right -- sort of. Critics are guessing at the numbers because the accounting is not transparent. However, that is kind of a dumb defense -- we're presumed innocent by VIRTUE of the fact we're inept, conniving, and / or secretive; I can't expound upon this further because the sky is blue... Don't feel inhibited by VIRTUE of the fact you don't know who "Jim" is -- WE'D ALL BE INTERESTED. Instead of addressing this on a ding-bat private level -- pretend like you're in charge of a public organization that depends heavily upon public trust and largesse. If you can do that, you might enjoy some credibility -- maybe even some funding!
Thomas G Dunne November 14, 2011 at 06:45 PM
......the real question's here should be, is the Task Force recommendation, to increase the WC sales tax by 1/2 cent, adequatly supported by information in their report and given today's economic climate, can this City Council build the public confidence and trust enough to give them more money to spend.The second question may prove the larger challange.
obiwan November 14, 2011 at 08:45 PM
Good point Horde Mother. But I guess the question could be rephrased - how do the WC auto dealers feel about losing the business that is now driving here from Dublin (actually all of Alameda County) and Concord to avoid paying the higher sales tax?
Jojo Potato November 15, 2011 at 03:08 AM
I wonder how much of this tax will go to operating expenses of that big building with empty book shelves across from city hall? (yes, I stole that line from another corespondent). As a long term city resident, I don't want your fancy crap. I object to your "galas" to celebrate spending money on Arts, Athletics and other things that should pay for themselves. We all know that this "Blue ribbon" committee was handpicked by Cindy and her buddies. If you cut off the car sales tax money there will not be a lot of money left to pay for your toys. You've tried to kick out Ford and Honda from downtown but thank goodness they are still here. Maybe you should give yourselves a party and stop trying to figure out how to rip us off!
Just a consumer November 17, 2011 at 07:05 PM
Why is it that during hard times for everyone the bureaucrats manage to find a ''legitimate" excuse to raise taxes around their own incompetent management. Austerity or reduced grants, employees, committees (aka task forces) to asses this and/or that, etc. -- what a concept! Nah - makes too much sense. In the end, the consumer is the helpless victim.
Bruce the Bald November 17, 2011 at 08:25 PM
Anonymity is rapidly ripping apart democracy. Wearing masks, hiding behind misleading names -- sort of intellectual graffiti. My hat's off to those who aren't afraid to use their real names. And I'm wondering whether all those years of teaching "critical thinking" have been worthwhile. Bruce Reeves

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