The current form of government in San Jose is a city manager form of government. I have encountered many residents who find this confusing. Many residents believe that the mayor is the boss, which is not the case in San Jose.

The distinction in a city manager form of government is that a career administrator implements policy from the elected body. However, the specifics on implementation and overseeing the actions of employees sits with the city manager.

Dallas, Texas, is a city that has a city manager form of government, while many other iconic cities have a strong mayor form of government, like New York, Chicago, San Diego etc….

Some have talked about changing our government structure to a strong mayor, so that the mayor would hire and fire department heads. However, for some this may seem too bold, and in San Jose it seems we are used to incremental change. Any change to the power of a mayor would require amending the city charter, which requires voter approval from San Jose residents.

I would propose an incremental step where the city manager form of government stays intact but allows the mayor to be granted new authority. The new authority should be to hire and fire the director of the planning department. This discussion/proposal has zero to do with the current mayor, city manager or planning director and everything to do with accountability.

The way it works now is that the mayor, who is the only person elected by the entire city, is only one vote out of 11 on the City Council. That seems odd, and in many cases it does not allow for the best long-term interests of the city to be implemented. If a future mayor is not meeting expectations of the electorate when it comes to economic development—that may pertain to the rapid permitting of commercial development, for example—then that mayor could be held accountable since he/she oversees the planning department.

With the way things are now, it is hard to point a finger at anyone since there is no direct line of authority. And, again, the mayor is only one vote of eleven.

For some, this may not be bold enough and for others it may be moving too fast. However, I believe residents want San to be the best it can be and part of that is building a strong economic base. Outside of a major recession, residents should be able to evaluate their mayor on the success of growing the pie among other criteria.

There is a cost to putting this on a future ballot. However, there is also a potential opportunity cost, because future development would get a direct answer instead of a splintered one. The result would be a likelihood of faster time periods to market for new commercial buildings.

It is clear that the budget deficit this year and in future years cannot be solved only by pension reform. Even if the city stopped matching the employee contributions at the current rate of 250 percent to the average employer match on a 401K of 3-6 percent, taxpayers would still have a multi-billion dollar unfunded liability from commitments to current and future retirees already vested.

At some point, the Council will put forward to the voters a tax increase that will be labeled to pay for essential services but inevitably will be allocated to pay the annual required contribution to the pension fund laid out by the independent retirement boards. (A general tax can be allocated to anything, which is why I prefer a utility tax dedicated to police. This way the tax revenue can only be spent on police and nothing else. Why? Again, only police enforce the social contract. A utility tax increase treats property owners and renters the same and it induces consumer conservation of electricity, gas and water, which is a positive externality.)

Why beat around the bush when we know taxes will have to be raised to afford the pension obligations and maintain bare minimum services laid out in the city charter?

Some residents tell me they are willing to pay more in taxes to solve the fiscal issues the city is facing. But these residents currently must wait until there is a ballot initiative that may or may not pass, most likely in the 2012 November Presidential election. However, the city can take donations at any time from residents. So why wait? Let’s extend a formal invitation for those who are willing to pay more to do so now. In return, these people should get credit on the tax equal to how much they have donated.

For example, if Jane Smith wrote a check now for $1,000, before the council placed on the ballot and the voters approved a future $250 annual parcel tax, then Jane would be exempted from the tax for four years. Or, if it was an increase in the utility tax or sales tax, the city could rebate Jane at the end of the year with her documentation showing she had paid the increased pension tax that year.

The “PhDs” at Stanford have reviewed the San Jose pension system and found the current pension system is fixable. It is only a matter of money. So, if each house, condo and apartment would write a check in the amount of $12,500 to $16,000, the unfunded pension liability could be paid and eventually the city services that have been cut would return. The Stanford dollar figure is based on an up-front payment (the range in the amount is based on what percentage of the unfunded liability to pay off). But, if household payment was instead spread out over 10-20 years, the total amount per household to pay off unfunded liability would be much higher due to the time value of money.

This concept is simply an exemption from the future pension tax if donations are received prior to the passage of a tax increase. We should not stand in the way of those willing to contribute more.

A small ceremony was held on Saturday with little fanfare, but it was big on Americana style. An eagle scout was honored for his project that constructed a new sign at the Willow Glen Community Center. A new sign had been planned for awhile, but it was put on the back burner to instead paint over the prior decade-old paint job. The scout and Leigh High school student, Daniel Swanson, chose the project, did the fundraising and built the sign with assistance from other volunteers. There is now a new, large and elegant sign to mark this public facility. The scene on Saturday seemed like a truly American event.

This particular facility is the former Lincoln Glen Elementary School. As the school age population ebbed, many schools in San Jose were closed and the land was put on the market. However, state law allows other government entities to have the first opportunity to buy the property. Fortunately for us, in the 80s, San Jose had put money aside and was able to purchase this property as well as the former Kirk Elementary School on Foxworthy Avenue.

If this same situation happened today, the city of San Jose would be unable to buy a former public school site. Instead, we would have some other type of private development.

This consolidation of schools has meant that the remaining open schools take in a larger number of students. Elementary schools that were built for a few hundred students now are approaching 1,000 students, which creates a larger impact to residential neighborhoods. This is just one reason why lowering speed limits around schools in residential areas is a good idea. It would provide some calm to the residents who live adjacent to schools and have witnessed student population growth.

But back to my main point, which is a big thank you to the many volunteers that produce tangible results. For example: Terry Reilly, Beverly Hopper and Myles Tobin, from the Friends of the San Jose Rose Garden; Mike Cimoli, who organizes the annual Rompacoglioni car show held yesterday to benefit Second Harvest Food Bank; or the many other projects that have been done by service clubs and PTAs. Volunteerism and philanthropy augment a community. They do not replace the basic infrastructure that government provides like sewers and streets, but augments.

And on a final note, the sign donated by the scout, Daniel Swanson, came in under budget, so he donated the balance of $980 to the teen program at the community center.

MEDICAL MARIJUANA

On Tuesday, the council is poised to get past the first chapter (23 months) of medical cannabis. Inevitably, whatever is passed will be subject to change based on new law or lawsuits. There are many underlying issues and topics in regulating medical cannabis. I hope whatever passes on Tuesday has two minor but significant regulations:

First, each collective should have a licensed physician or registered nurse on their board, as this is medical cannabis and not recreational cannabis. It doesn’t matter that many San Jose council districts, including my own, voted yes to legalizing cannabis for recreational use (Prop 19)  in November 2010.

Second, each collective should give the city of San Jose finance department view-only access to their accounting system—not the personal/confidential medical records but the general ledger. The easiest way to do this is for collectives to adopt a cloud-computing accounting system. There are many providers of this service locally, such as Intuit, Intacct and NetSuite.

This would be similar to the suggestion that I made from the dais for Team San Jose, which was implemented last year and is still in place. This method keeps all things honest and does not require time consuming audits.

San Jose residents have been heading south to Family Camp, located not far from Yosemite, for more than 30 years.

Did you go camping over the three-day weekend? Camping is a time to enjoy nature and the adventure of the great outdoors. Last week, I attended a community meeting about San Jose Family Camp. There were approximately 25 residents who all appeared to be Family Camp boosters. They expressed support for Family Camp, recalling fond memories that for some dated back approximately 30 years.

The City of San Jose started providing this campground in 1974 and it is located just outside of Yosemite. Family Camp is not in the City Charter. However, neither are crossing guards for schools, which have been provided since 1944. The city of San Jose does not own the land;  instead it leases the land from the federal government and has built structures for camping—much like some ski resorts that lease land from the federal government and build structures. Of course, if the fees for skiing do not cover the costs to operate and maintain the ski resort than it would cease operations.

By direction of the City Council last year, the nightly rates were increased for campers so that the city could get the camp to be revenue neutral, or 100 percent cost recovery. In 2007, Family Camp was 67.4 percent cost recovery and this year the forecast is for 95.7 percent.  On average, 5,000 people partake in Family Camp each year and 70 percent of them are San Jose residents.

Getting to cost recovery is good, because this would remove the subsidy from the general fund. However, the camping structures need to be repaired and modernized. That money could come from the general fund, but it is unlikely since those dollars compete with police and library staffing. The Measure P bond fund—passed by voters to pay for park improvements—can only be used on city-owned land, so that rules out spending the money three hours away from San Jose.

This leaves the Construction and Conveyance Tax (C&C), which is generated from the buying and selling of property in San Jose. These funds are restricted in the City Charter for park equipment, library materials and fire station equipment. A small portion of C&C revenue funds park maintenance, but the bulk is put aside to pay for physical things. Allocating these revenues to Family Camp would remove funds from replacing park equipment, new books or computers for libraries or new equipment for a fire truck. The challenge for Family Camp boosters is to explain to San Jose residents who do not utilize this unique facility on why tax revenue is better spent outside of San Jose instead of within San Jose.

To the credit of the Family Camp boosters, they have volunteered many hours to making improvements at Family Camp by donating material and labor, including doing advanced electrical work. However, there is a limitation to their good deeds. That limitation is an estimated $9-16 million in improvements to physical structures at Family Camp.

The standard alternative (like many other things in San Jose) could be to rely on voluntary contributions from San Jose residents, camp lovers and corporations. However, $9-16 million is a much higher bar than $6,000 for the fountain at the Municipal Rose Garden, or $60,000 city-wide for dog poop bags as examples. From my perspective, it would be fine by me if a company logo was required on each camping tent for monetary donations.

Another alternative would be to partner with other cities in the county to make the improvements, so that we have one joint facility. Yet another option may be charging campers a fee above and beyond the 100 percent cost recovery and committing those funds to the capital improvements, which would take a long time and possibly discourage campers.

Finally, the last option would be to walk away from Family Camp and let it close.  If no other organization wanted to take over the camp, the city of San Jose would be on the hook for dismantling the camp, which is estimated in the millions. If this were to transpire, I would suggest not answering the phone when the Feds call.

Sometimes I am approached with an idea from a person who thinks the city should provide a new service. I think it is best to manage expectations and let people know up front that adding a new service will not happen while the current portfolio of services is being cut.

The San Jose Redevelopment Agency’s financial obligations were discussed and voted on last week. The final chapter of RDA will be decided by the State Supreme court sometime before Jan. 15, 2012. Should RDA ultimately end, the state wants to know all of the enforceable obligations. Everything needs to be listed, from bond to lines of credit to legally binding contracts not yet paid out, including debt for affordable housing.

Rising out of the ashes to manage who gets paid will be a successor agency consisting of seven members that will oversee repayments and allocation of RDA tax increment. Two members will be appointed by Mayor Reed, and one of those two appointees must be a union representative. The county will also appoint two members. And the County Superintendent of Eduction, the Chancellor of California Community Colleges and the Santa Clara Valley Water District will each appoint one member.

This oversight agency will be overseen by the State Department of Finance and supervision from more political folks, like the State Treasurer and State Controller. What a group! If this comes to pass, I hope all these future meetings will be conducted in public.

The debt listed last week is not in any given priority, but just a straight list. However, the Council will be asked to give priorities on a future date. For me, the most important result is that any money left over after paying off bonds or lines of credit goes to the general fund. What we do know from the attorneys is that bond holders are first in line to be paid and the county is last in line.

As the State raided RDA coffers, cities were allowed to loan monies from others funds with the intention of being paid back, including interest by future RDA tax increment. However, eliminating RDA was never contemplated because voters passed Prop 22. These loans put general fund dollars at risk in certain cities, such as San Jose. It is similar to taking out a loan from a bank to improve a rental property. Paying back the loan would have been done from the rent received on the rental property. But, in this case, the rental property was blown up by the same bank and so goes the ability to pay back the loan. It would be terrible governance for the state not to allow cities to pay back loans they used to pay the multiple state raids. Cities had full faith that they would be able to pay back loans, including the interest from future RDA tax increment.

Last week, Stanford University held a discussion examining the San Jose pension system. The Phd’s from Stanford pointed out that the San Jose pension system could be fixed with a one-time tax increase from $12,500 to $16,000 a household. I have obtained the presentation and you maydownload it from the District 6 website.

Finally, although I supported appointing Chris Moore as San Jose’s police chief, I believe that if the Federal government is willing to provide individuals gratis to assist San Jose in suppressing gangs, then those individuals should be encouraged to stay. Personally, I am willing to appoint or support people where we may not always agree. And that is OK.

When I read or hear an economic report about building permits, housing prices, consumer spending, jobless claims, GDP, inflation, stock prices, etc., it always leaves me wondering: What does this data mean to a city?

Well, based on current numbers, San Jose shouldn’t expect any significant increase of our No. 1 revenue source, property tax, for several years. Property values have dropped or are stagnant, and no windfall is waiting in the wings for San Jose.

The Case Shiller index has tracked residential property values nationwide for approximately 10 years. It also tracks specific regions of the country, including our own. San Jose’s breakdown of land is roughly 85 percent residential and 15 percent commercial/industrial. I contacted the County Assessor’s office about the Case Shiller index and asked if Santa Clara County has tracked the index. The answer was yes. Local residential real estate has followed the index, so Case Shiller appears to be an indicator to watch for future property tax revenues in San Jose.

Compared to past quarters, San Jose may see some increase in sales tax revenues in the short term—the state lags in the reporting by several months. However, any increase in sales tax will have to plug the $2.8 million hole that was created by the state after the budget was balanced in San Jose. By not extending vehicle license fees, cities across California lost $130 million in revenue.

Consumer spending is difficult to predict. Will you or your friend purchase anything substantial this week? A car, appliances, expensive jewelry? These purchases are made based on confidence in having a job or moving into a new home. If there is a lack of confidence or not many people moving into new homes, this will result in lower sales tax revenues to cities. The savings rate for Americans has increased greatly over the last year, which is a good thing for the long term since individuals, in addition to government, are over-leveraged.

It seems the last decade of economic growth was based greatly on borrowing. And now, no longer being able to borrow/spend at that same rate will translate to anemic economic growth.  It is a good idea for cities to be conservative with sales tax revenues for budget planning, because an increased savings rate for consumers sustained over time will decrease spending.

As far as an upside in the utility tax, that depends on how many buildings are occupied by employees and the rate of consumption of electricity, water and gas (not gasoline for automobiles). Thus, the more vacant buildings are occupied,the more utility tax will be generated. Consumption also has to be balanced. Government is trying to promote energy efficiency, which is a good thing, however, it could translate to lower utility taxes over time. But you can expect a slight uptick in utility tax revenue from December with all of the holiday lights.

Other indicators at the macro level have an effect on San Jose but are harder to trace to direct revenues, like property tax, sales and utility tax. We will continue to walk a tightrope between tax revenue and services that can be provided for years to come.

On a final note, last week I attended the Rancho del Pueblo Golf course community meeting. One comment made by a staff person for Supervisor George Shirakawa was particularly interesting. The person said the city should sell the San Jose Municipal Rose Garden. Well, certainly the city could propose selling anything, but the first thing to point out is that selling any park in San Jose requires approval by voters. Another point is that there is no mortgage payment on the award-winning Rose Garden. The park land, a former prune orchard in 1928, has no outstanding debt. This is completely different from the golf courses, which the general fund must subsidize by paying back bonds that were issued without voter approval to purchase the land.