The Lodi City Council unanimously approved the introduction of an ordinance that would allow a measure for a half-cent sales tax increase to be placed on the November ballot during its meeting held Wednesday. Councilman Bob Johnson participated by phone.
According to City Manager Steve Schwabauer, the city faces a significant financial challenge due to state regulations and growing pension costs. Schwabauer said the city has engaged with the community and the consensus is that all the services the city provides are essential. The only way to maintain the services is to implement a half-cent sales tax increase, he said.
Without the tax increase, expenditures will begin to outweigh revenues by fiscal year 2019-20 and by fiscal year 2023-24 expenditures will outweigh revenues by nearly $6 million, Schwabauer said.
“The cause of this point blank is CalPERS and our pension fund, and I have spent at least two years of my life fighting with CalPERS,” Councilwoman JoAnne Mounce said.
According to Mounce, not only has the city manager served as an advocate for this cause but the League of California Cities has also tried to advocate for pension reform to let the state know that the current system is unsustainable.
“Some cities have the ability to go bankrupt. We don’t have any general fund obligations to that, so that means we have to pay this, and the only way around it is to cut services,” she said.
According to City Councilman Doug Kuehne, he has spoken to congress members in Washington D.C. to get them to put the pressure on the state legislature to do something about the pension crisis and still there has been no traction from CalPERS
“My hand is kind of forced. I didn’t get elected to say ‘Hey lets raise taxes,’ but the reality of the situation is I’m responsible to you to ensure you have a safe city,” Kuehne said.
Several Lodi residents spoke during the public portion of the meeting. While Lodi resident John Slaughterback was convinced there was a need for a sales tax increase, he felt that it would only “water the problem down for another council for another day,” and that there were some issues that needed to be corrected within the city.
Slaughterback complained that city employees have been promoted and then retire shortly after receiving enhanced packages that the city is paying for. According to Slaughterback, some employees end up drawing more money in retirement than when they were working. He proposed requiring employees to stay on for a certain number of years before they retire.
Gary Wiman, a 23-year City of Lodi employee and business owner said that he wants his children and grandchildren to grow up in a safe, clean city with a great sense of community and great neighborhoods.
According to Wiman, the CalPERS issue is real and neither the city employees nor the residents can change it, only the state legislature and the governor can. The city has a bill to pay and the sales tax means anyone who spends money on a taxable item within the city helps pay that bill, Wiman said. With the tax, he said, visitors to Lodi would be able to carry some of the burden of the cost of city services. He recommended that citizens support the tax increase.
Lodi resident Greg Goehring asked why the language of the measure didn’t express that the pension issue was the main reason for the tax increase. He asked if the city could terminate its CalPERS contract like the City of Loyalton. He mentioned that as a result of Loyalton terminating its contract, employee benefits were cut by 60 percent. Goehring proposed that with only 4 percent of fire department calls being for fire and the rest medical, that the city make some cuts there.
According to Schwabauer, Lodi is a much larger city than Loyalton which had only four employees compared to Lodi’s 400 full-time employees. There was no point for CalPERS to take on the city of Loyalton because there was nothing to gain or lose, Schwabauer said.
He also stated that the purpose of the tax increase was not to pay the CalPERS bill.
“The CalPERS bill is going to get paid. It’s not a question of whether or not we’re going to pay the CalPERS bill. CalPERS is going to make us pay that bill,” Schwabauer said. “It’s a question of whether or not those services are going to survive in light of the bill we are being handed.”