Oliverio for Supervisor 2018

Independent - Transparent - Fiscally Responsible

Punting the RDA Budget

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The Council punted the Redevelopment Agency (RDA) budget last week to February 2010. As has already been highlighted in the news, the state is taking $75 million away from San Jose’s RDA. We need to pay the State off in May and identify where the money is coming from in March (no negotiation or payment plans on this matter are allowed by the State). The legislature, recognizing that this payment would be difficult for all RDA agencies, allowed for borrowing from affordable housing money which is 100-percent funded from RDA. Twenty percent of all RDA money goes off the top to the Housing Department in San Jose. The payroll for the housing department alone is $9.7 million a year for 83 employees for an average salary of $117,000.

The Mayor’s Budget message was pragmatic in that it said let’s not spend any money ‘til we work out borrowing the money from the housing department to pay the State; let’s determine whether or not RDA is able to issue bonds to pay for a capital program—which would include matching the hotel owners’ share and expanding the convention center; and let’s continue negotiating with the County of Santa Clara (which by the way in the last decade has been paid $270 million by the RDA).

The Mayor had a very good public meeting with stakeholders from all sides prior to writing the budget message. Everyone who attended realized the choices are difficult and few options exist. Everyone at the meeting got the same information—that San Jose has already built 18,000 units of affordable housing by spending hundreds of millions of RDA dollars making San Jose the number-one provider of affordable housing in the state of California. Everyone left the meeting understanding that there is no pixie dust to magically fix things. A majority at the Mayor’s meeting felt that economic development should be the priority now.

However, when it came to voting on the budget, another option was voted upon at the last minute that asked for a $25 million reduction in how much would be borrowed from the Housing Dept., and instead look at borrowing from other sources. This option was well liked by the audience (which was made up by mostly paid affordable housing lobbyists and people who work for affordable housing entities in some capacity—the Housing Director is campaigning against the Mayor and is ensuring that she has her supporters at the meetings). This “option” would take money by borrowing monies from the following: Commercial Paper backed by the General Fund, Sewage Treatment Plant Connection Fee, Library Parcel Tax, Sewer Service and Use Charge, Integrated Waste Management, Ice Centre Revenue Fund and HNVF-Anti-Tobacco Funds. This “option”—taking from all of these other resources—was approved on a 7-3 vote with Mayor Reed, Pete Constant and myself voting no.

We have borrowed money from some of these funds before, but that was to balance our general fund so we could fund core services like public safety and not more affordable housing. If we borrow this money now to create more affordable housing, then we will have one less arrow in our quiver to balance the general fund budget in June.

My question to you is: Should we use money that is supposed to go towards core services like sewers and water treatment plant so that we can build more affordable housing that does not pay fees for parks or road paving?

How do you feel as a voter that may have supported the library parcel tax to let that money be borrowed for more affordable housing that does not pay property taxes (property taxes is the number one revenue source to pay for city services) versus what you intended that money to be spent on…libraries.

I remember months back Councilmember Constant and I were criticized because we wanted to use the Healthy Neighborhood Venture Fund (HNVF)/Anti Tobacco money to pay for school crossing guards, a public safety service the City has had in place since the 1940’s. It’s okay to use these funds for affordable housing but not for crossing guards? Hmm…sounds like maybe a vote of the people should be had on how these funds should be spent. With a $75 million deficit just for RDA and another $96-plus million deficit for the City’s General Fund, I am all for the residents sharing their votes via the ballot. If we can ask residents to raise their taxes then we can ask them for direction on spending their money.

I now have a Facebook page for my tenure on the city council. Here is the link.

Feedback From RDA Survey is Beneficial

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A couple of weeks ago I put together my own web based Redevelopment Budget survey. I shared financial information in bullet point form in the introduction and then gave information throughout the survey. In some cases I would state the dollar amount given to a particular program and then ask a question. More than 600 people completed the survey, which required that each question be answered. The survey could not be taken twice.

As with most issues that involve money, the feedback to my survey was mixed.  I had a person who refused to even participate because they didn’t like how I set up the survey. Others lauded my courage to share data and seek their input. They felt I was taking a risk to allow residents to share their concerns.

Web surveys are not necessarily scientific surveys, since web surveys allow anyone to participate. As we know, a true scientific survey controls and limits who is surveyed by gender, age, race, income level, voter registration and geographic location of the respondent.  Scientific surveys can cost about $40,000 for 1,000 people.

Viewpoints are subjective. Whereas one person may view a question as biased another may view it as objective. However, the most important part of a survey question is that the data be factual. In my survey, there were approximately 10 comments out of over 600 people who completed the survey who felt that particular survey questions were biased.  For example, one person told me that I was “leading” the survey because I said that San Jose RDA has spent hundreds of millions of dollars on 18,000 units of affordable housing. I shared that this is information is factual and not leading.

My survey shared, in synopsis form, how much money has been spent on various issues.  Many people did not realize that San Jose is the leader in affordable housing.  Some respondents shared that they are very pleased with the Strong Neighborhood Initiative (SNI).  While others, agreeing with affordable housing and SNI, felt that that we should spend money on economic development this next fiscal year. My survey allowed those who chose to participate an outlet to share concerns, recommendations and rank their priorities for RDA monies.

As I have said, there were a few participants who felt the survey was biased; however, when I did a cross tabulation all but one of them chose Affordable Housing or SNI as more important then Economic Development. Cross tabulation also showed most of these specific participants felt that we should not borrow money from the Housing Department to spend on Economic Development this year. In addition, most of these participants shared that it was okay to spend money on a small fraction of neighborhoods in San Jose even though there are neighborhood infrastructure needs citywide.

After reading comments and speaking with survey respondents, I would add more choices to future surveys. For example, when it comes to ranking priorities I would add two more options; “Save Money”—since some people would rather not spend—and “None of the Above.”

The survey required that beach question to be answered, identical to how a councilmember “must” vote. Many times the Council votes on an ordinance or budget that individual councilmembers may not agree with 100 percent, so sometimes council votes for a package of things that are a bit uncomfortable. It’s the same feeling that some of the respondents felt when asked to make decisions regarding the survey.

Another item I would add in the future is a web link if available for additional information. For example, respondents did not necessarily know what specific improvements were proposed at St. James Park, Japantown, Civic Auditorium, etc. The RDA budget is available online, however specific information on the proposed improvements is not easily found.

Thank you to those of you who participated in the survey.  I know it was not easy and may have caused you to feel conflicted.  I appreciate your time to engage and share your viewpoints with me.

Some of the results:

• 69.5% out of 787 respondents felt that borrowing from the Housing Dept. this year for Economic Development was okay.

• 70.8% out of 763 respondents disagreed with spending RDA money for a small fraction of neighborhoods in San Jose versus overall.

• 79.4% out of 709 respondents felt that Economic Development should be number one priority of RDA money.

• 59.7% out of 709 respondents approved of the Convention Center expansion.

• 52.8% out of 709 respondents did not approve of RDA land banking for a Downtown Baseball stadium.

• Here is a link to all the results, including 268 comments.

Finally here is a table from Mayor Reed’s RDA Budget message that shows how economic development is better for city tax revenues and ongoing jobs then affordable housing.

Small Decisions Can Result in More Layoffs

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Last week, at the city council meeting, I removed an item from the consent calendar on the agenda for discussion. As you may remember from my blog about San Jose’s million-dollar golf nets, consent calendar items do not have individual discussion, but rather are voted on all at the same time. If one wants to discuss a consent item, you have to “remove” it for discussion.

The item I removed was asking $993,876 for the library to spend over the course of seven years on an online tutoring service for kids. Nearly a million dollars is a significant amount of money. The $993,876 was not restricted funds and could have been spent on librarians instead. My comment/question to the council was: If we know we are going to have to do layoffs of library staff on July 1, 2010 to balance the budget, then maybe we should hold off on discretionary spending so we can retain staff to keep our libraries open. This expenditure is approximately two librarians salary each year for seven years. My comment fell on deaf ears and the council voted to spend this money; I voted against this expenditure.

When it comes to the libraries, the core deliverable to me is that libraries are open as many hours a week as we can afford, so users can access information and have a place to study. Any and all other programming should be funded after libraries are open seven days a week. If we have funds left over after libraries are open seven days a week then we can start evaluating the option of adding different programs. Until then, the City’s money should be used to keep libraries open with staff.

The online tutoring service could be canceled from year to year; however, good luck ever canceling a program/service once it starts.

On another note, I posted a survey last week regarding the Redevelopment Agency (RDA) budget. The RDA board adopts the final budget on Dec. 8. A person shared with me that the question I posted below (which appears on the survey) was “biased.” I shared that the information I gave was factual, not biased. I thought I would share the question with you here. I have added commentary in bold parenthesis:

The Redevelopment Agency has spent $774 million on housing (true) making San Jose the number-one provider of affordable housing in the state of California (true) by financing 18,000 units (true) of affordable housing while neighboring cities do next to nothing for affordable housing. (Neighboring Cities have not met the Association Bay Area Governments (ABAG) affordable housing targets, while San Jose has exceeded overall ABAG affordable housing targets). With so much given to affordable housing and so many people in need of jobs (12.5 percent unemployment), should the RDA borrow money from affordable housing reserves this year, as allowed by state law (true), to be spent instead on economic development to help create jobs?

The Redevelopment budget survey can be found here. It closes this week.

Happy Thanksgiving San Jose.

Do Things Differently

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Last week, the council had a special meeting to discuss the upcoming $96 million budget shortfall. $96 million is the equivalent of eliminating all library, park and community center positions citywide. My fellow councilmembers and I gave the city manager direction on how best we think the budget gap could be closed.

The first part of the meeting covered the shortfall—which may still grow by either continued lagging revenues from sales taxes and property taxes, or the state legislature grabbing more city funds. It is clear that there are no easy answers. I hear people say “since the stock market is up then the city budget will be ok.” The stock market going up does not provide jobs to unemployed San Jose residents nor does it bring revenues to pay for city services. The only benefit is it might reduce our pension matches slightly next year; however our pension portfolios are invested in more than equities.

We spent time talking about raising taxes on residents, such as a sales tax increase to pay for city services. I said that I would prefer that we increase taxes on card clubs and allow them more tables as allowed by state law, which would bring in as much as $12 million. The card clubs already bring the city approximately $13 million each year.

I also mentioned that taxing medicinal marijuana would help our budget deficit as well.

We then went on to options that would reduce per-employee cost, whether it be pay cuts, increasing medical co-payments or 2nd tier retirement plans for city employees not yet hired. As you would expect none of these options were popular with the council.

Then city management unveiled, its “Approach to Prioritizing City Services” AKA “Core Services.” This concept would be a long stakeholder engagement process that would include scoring and weighing the value of 450 city programs identified so far. However it would not necessarily eliminate programs that scored low. The presentation contained buzz words like «engaging stakeholders,» «peer review,» «finalize a work plan.»

Others said it is not right to prioritize and rank since it puts certain city services against each other. I shared that I am willing to participate, but that the approach presented is meant to give “political cover” in making decisions.

I believe that we can’t make paid interest groups happy all the time and at some point we have to vote to make changes that may be unpopular. The Council was elected to make decisions on behalf of everyone in their district and City, not just a few. This process could take a year, therefore, I immediately offered what my core city services are: Police, Sewers, Fire, Streets, Planning, Emergency Preparedness, Economic Development, Libraries, Parks and Code Enforcement. The presentation left out an obvious city priority: infrastructure. Without sewers and streets life in a city comes to a stop.

At the end of the meeting, the Council voted on my memo titled, “Make Union Negotiations Public.” The memo asked that closed door union negotiation meetings, which take up 75 percent of the city’s budget be public meetings. It did not pass on a 3-8 vote. The majority of the council voted to keep these meetings behind closed doors even though these past meetings are why we have a structural budget deficit.

I have posted the presentation from the meeting on my Council website labeled, 2010-11 Budget Planning – Nov. 5, 2009.

2006-2007: Rest in Peace

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I survived another late night city council meeting. This one was the last of the 2006-2007 fiscal year. The meeting began at 1:30 p.m. but did not end until 11:30 p.m.  I am not quite sure if having a ten hour meeting allows for the time needed to go over important items like Coyote Valley, a hazardous waste facility, and Evergreen, among others.  Members of the community come to the city council meetings and have to wait for hours just to be heard for one or two minutes regarding their particular issue.  And, of course, we had a smorgasbord of last-minute issues that either couldn’t wait until August, or were not planned appropriately to come up at an earlier meeting date.

Here are a few important issues with my opinions.

Surplus city owned property
In an attempt to acquire revenue, the Public Works Department brought forth a proposal to auction off various parcels of city owned land.  A few of those parcels were identified by community leaders in my district for possible parks. I removed this proposal from the consent calendar and asked that it to be deferred to October. As we know, land is a precious commodity; once we sell, it is gone forever.  If the city is serious about saving money, then I think the city should do a better job of managing its everyday expenses—not sell land that will only increase in value.

Coyote Valley
As I have mentioned before, I am not supportive of developing or planning for Coyote Valley at this time. Currently, there are many reasons why this development would be harmful for San Jose, such as the lack of tax base, depletion of city services, sprawl, and depleting open space. The question I have is: Is the city being disingenuous with allowing the planning to continue? For example, if the city as a whole does not want to develop Coyote now, then we should stop planning. Some of our best planners are working on this project which takes them away from other infill developments that deserve expertise.

Evergreen
The discussion of Evergreen reminded me of a mathematics class: a complex formula of merging both Mayor Reed’s and Vice Mayor Cortese’s memos together with a few amendments. In the end, we had something to move forward with and will review each proposed development case by case.

$2 million nets for the Los Lagos Golf course
After spending over $100, 000 on a consultant, it was determined that the city owned golf course, Las Lagos, needed new netting at a cost of $2 million to keep the golf balls from going in the street. Yes, $2 million for nets.  The golf course was “supposed” to be profitable. Instead, the city has spent $24 million on the golf course already since it was opened approximately a decade ago.  Las Lagos has operated at a loss every year—absolutely no profit.

Las Lagos sits on 200 acres of city owned property.  One might think that the investment of $24 million on a golf course isn’t working and the city should cease spending money on it.  Perhaps we could use the 200 acres for organized play.  I believe that San Jose should open a similar business like Twin Creeks in Sunnyvale, which offers organized fee-based team sports for both men and women. Twin Creeks is a private company that makes money offering organized play to our residents.

I am confused as to why a city government would continue spending millions on a golf course. Decisions like these keep me up at night. Rancho Del Pueblo, which is another city owned golf course, has also operated at a loss since it opened.

Hazardous waste site at Las Plumas
After looking at six other sites, the City of San Jose decided to place its hazardous waste site at Las Plumas.  This facility will serve the city well.  Residents will be able to drop off paint, batteries, aerosol cans, etc.  We don’t want residents throwing these items into the ground or gutter.  I must share that the city is feeling the ramifications of the poorly made decisions of converting industrial land to housing.  Fewer and fewer options for industrial uses in San Jose are available. Another example was the difficulty of finding industrial land for CWS, the new garbage hauler in San Jose.  As Mayor Reed, a few other council members and I have stated, we need to stop the conversion of industrial land.

For the month of July (during the council recess) I will be working at my private sector job.  I think it is important that I continue my profession so that I don’t lose perspective of the “real world.”

Passing the Budget

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Whew—just before midnight, we passed the budget!

After many long budget hearings, staff presentations, public testimony and robbing Peter to pay Paul, we have a “balanced” budget.

The City of San Jose cannot borrow funds like the federal government. Therefore, we must balance our books every year. We do have bonds to pay for our capital projects such as new libraries, fire stations and parks; but for the most part, we have to make sure we have funds that match expenses—which is one of the most difficult jobs of a city government.

As hard as it was this year to find funding for much needed projects and to make an attempt to be fair to all people, it will be an even harder task next year to meet the same expectations.

I believe that the city needs to spend money prudently. We should not convert industrial land that will create revenue for the city and not be “lawsuit happy.” The city had to pay over $30 million to settle just two lawsuits. One was to take land away from a small business owner (Tropicana), and the other was to sue the county because we had an issue about who could build an outside theater. Now, neither the city nor county have an amphitheater. What the city council could have paid for with the $30+ million we wasted on lawsuits.

The budget process is tough, even for folks like me who consider themselves penny savers.  For example, I supported allocating $257,000 to EHC for their homeless center rather than funding the “insourcing” of the graveyard shift janitors at $1.2 million a year. There are some that argue that bringing janitors on as fulltime employees is a better use of money than providing for the homeless, but I disagree.

I requested that EHC put their financials on their website.  As I have mentioned before, any non-profit group receiving over $100,000 from the city should have their audited financials posted on their public facing website.  They agreed.  To compare, I supported $257,000 to assist 125 homeless people rather than spend $1.2 million a year for 25 janitors, who are already employed with a living wage and medical benefits, to become city employees.

At the end of the final budget hearing, my request to put aside almost $1 million to help fund public/private partnerships for park maintenance was accepted by the city council. I felt a sense of camaraderie at that moment and I was honored that my fellow council members supported this request. It is an allocation that if used innovatively and appropriately, could be put to good use for all parks in San Jose.

Other choices and questions that we will have to make in the future include funding for “green” (LEED certified) buildings. Are we willing to spend more on one building even though that may mean we sacrifice a new library for another San Jose neighborhood?

What ideas and thoughts do you have regarding the budget?