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The rush to find a replacement in District 4

Is The Council’s District 4 Replacement Plan The Best Solution?

February 15, 2021/in Newsletters/by VREG Editors

“We are weary of politicians’ politicians. We want ours.”

—Gerald Stanley Lee, American author

On Saturday, February 20, 2021, the Ventura City Council will have the opportunity to select a new City Councilmember to join them for the next two years. This situation gives four of six City Councilmembers the power to choose a new Councilmember for the 15,000 residents living in District 4. Of course, none of the six remaining Councilmembers lives in District 4.

An Appointment Disenfranchises Voters

Several citizens emailed the Council claiming that appointing a replacement ‘disenfranchises’ the voters in District 4. If six members living outside District 4 appoint someone, District 4 is disenfranchised according to Webster’s definition, whether the Council believes it or not. Residents and Councilmembers should remember that the Ventura City Council can still function with six members and often does because of illnesses and vacations.

How We Got Here

Erik Nasarenko resigned his post as District 4 Councilmember because he was appointed Ventura County District Attorney. Mr. Nasarenko acknowledged his new role would not give him enough time to represent his district. It’s the first time since 1976 that a Ventura City Councilmember has resigned. Handling Mr. Nasarenko’s resignation has become a challenge, but the options are simple.

The Options To Fill The Vacant City Council Seat

On February 1st, the Councilmembers debated the various options open to them:

Appoint a replacement to serve until November 2022. That individual could run as an incumbent in the next general election in November 2022.
Leave the District 4 seat vacant until a special election in November 2021.
Leave the District 4 seat empty and wait until the next general election in November 2022.

March and November are the only months the law allows special elections in 2021. Because the law mandates 88 days between calling for an election and voting, a March election was not an option because it was less than the 88 days.

After deliberating, the Council voted 4-2 to try and appoint District 4’s replacement. Councilmembers Jim Friedman and Doug Halter dissented.

The Argument To Not Appoint A Replacment

The resistance to fill the vacant seat with an appointment was mainly over two issues.

There are concerns that the appointment will be a rushed process, influenced by political motivations.
Any appointee will now have an advantage in the next general election by being anointed as an incumbent.

The Argument To Appoint Someone By February 25th

If the Council cannot appoint someone to replace Erik Nasarenko by February 25, 2021, the law requires the city to hold a special election.

Concern over leaving the District 4 seat vacant for ten months centers upon two other issues.

Leaving the seat open may create a split 3-3 vote, causing a motion to fail.
There is a concern that not having a representative for District 4 will leave those residences without a voice on the City Council.

Being Fast Versus Being Thorough With A Replacement

The most practical option available to the Council was to appoint a replacement. Four of the Councilmembers didn’t want to wait for a special election in November 2021. Nobody wanted to wait until November 2022 to fill the vacancy because of the concern about not having a seventh vote to break any tie vote.
Deputy Mayor Joe Schroeder summarized his choice this way. “I thought the best solution on the District 4 issue was an immediate special election; however, that wasn’t an option. I did not have issues with the associated expenses of a special election. I do have issues with running a City Council with an even number of seats. I believe it is a bad model of governance.”

If the Council cannot appoint a replacement by February 25, 2021, the law requires the city to hold a special election. The Registrar’s Office estimates a special election would cost $89,000 plus legal publication costs.

The Shortcomings Of Appointing A Replacement

There are three inadequacies of appointing a successor in District 4. Moving to district voting created the first and most significant of these shortcomings. Six Councilmembers—none of whom live in or have campaigned in the district—will decide who represents D4 for the next two years. These Councilmembers will say they understand the city’s needs at large, even though they represent specific districts. Yet, none of them can confidently say they know District 4’s particular issues or understand the wishes of D4 voters.

Second, the appointment will be based upon a 20-minute interview as opposed to a three-month campaign. All serving Councilmembers endured a lengthy campaigning process, which included appearing at Community Councils, candidate forums and campaign fundraisers. The appointee will do none of these things.

Third, the appointee will have the incumbency advantage in 2022 when he or she runs for re-election. Incumbent candidates are almost impossible to defeat in general elections.

The Process To Appoint District 4’s Replacement

As long as there will be an attempt to appoint a replacement for Mr. Nasarenko, the city wanted civic involvement in the selection process. Citizens were encouraged to submit questions for the candidates by February 8, 2021. Councilmembers proposed one question each. The final list of questions will include four questions from the public and six questions from the Council. The candidates to replace Erik Nasarenko will receive the questions in advance.

Selecting an appointee will take place on one grueling day. The Council will interview fifteen residents of District 4. Each will answer three questions from the City Council. The meeting day for choosing an appointee will be Saturday, February 20, 2021, beginning at 9 o’clock. The meetings will last twelve to fourteen hours.

The question-and-answer process will be virtual. The applicants will not be at City Hall, yet the interviews will be public. You’ll be able to see the proceedings over WebEx. (click here to watch on the day of the meeting). So will the candidates.

On that day, the first order of business will be for the City Councilmembers to select three questions to ask each candidate from the list of ten. Councilmembers will rank the candidates, deliberate and select the replacement.

Editors Comments

Because of the rush to interview and appoint, the process to find a successor in District 4 is possibly going to be little more than a beauty contest. An entire three-month election process gets reduced to a 20-minute Q&A session with the remaining Councilmembers.

The logistics of the procedure are grueling for both the applicants and the City Council. Interviewing all fifteen candidates in one sitting will be wearisome. It’s hard to imagine that the Councilmember’s attention will be as sharp at the end of the day as it was in the beginning.

Selecting three questions on the day of the interviews leaves little time for the Council to reflect on what “good” answers from the applicants should be. And, since there will be no objective way of grading or evaluating the responses, it will be hard for the Council to debate one candidate’s relative merits over another.

The process to appoint favors the candidates whose interview is later in the day. All candidates will be able to watch the proceedings via WebEx. After the first interviewee, the remaining candidates will know exactly which of the ten questions the Council will ask. They’ll be able to practice their responses. They’ll see the other candidates’ answers and see how the Council reacts to those answers.

Those who are concerned about a 3-3 split vote should keep this in mind. The consensus is that if you can’t convince one more person to support your position, it was probably not a solid idea from the start.

In the end, the selection will come down to whom the Council likes best based on a 20-minute performance, and it may not be who will best serve District 4.

District Voting Complicates Matters

A lawsuit filed against the city forced Ventura to move to District Voting in the name of “fairness.” We’ve been through one complete cycle of district voting, and we have a Council with a different makeup than we had before.

Then came the opening in District 4. The Council has the opportunity to appoint someone to fill the spot—someone to their liking. They say they will, yet it’s unlikely since none of them live there or know the voters. Instead, they’ll appoint someone “like-minded” that lives in District 4. Now, they’re perpetuating a Council in their likeness.

Have all we’ve done is move from one good ol’ boy network to another?

Tell Your City Councilmember Who You Think The Replacement Should Be

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program ready to write directly to that Councilmember.

For more information like this, subscribe to our newsletter, Res Publica. Click here to enter your name and email address.

Ventura’s Imperfect Evaluation On Step And Merit Increases

January 25, 2021/in Newsletters/by VREG Editors

“The man who asks a question is a fool for a minute, the man who does not ask is a fool for life.”

—Confucius

No one makes a lifetime commitment based on a single moment in time. Yet, the Ventura City Council made just such a commitment. In November 2020, they awarded step and merit increases to city employees based on revised sales tax figures. This decision is disturbing on several levels:

The city staff led the Council to believe financial conditions were improving based on very short-term statistics.
The people benefiting from the salary increases were the ones making the recommendation.
Our elected officials failed to question the rosy picture the staff presented during the pandemic economic shutdown.

How Did We Get Here?

In the city’s fiscal year 2020-2021, the Ventura City Council faced a $12.0 million budget deficit due to California’s coronavirus shutdown. The city staff recommended a dozen possible solutions to the problem. Among them was the option to ‘defer’ $1 million in employee salary increases for step and merit increases until financial conditions improved.

As a provision of the FY2020-21 budget, former-Mayor Matt LaVere, the City Council and all the bargaining units agreed to freeze employee step and merit increases as a down payment on the massive reductions necessary in the year ahead.

Mid-Course Correction

The City Council receives regular updates on sales tax revenue collected. These reports include recent figures and may also include projections based on current trends. The updates are very short-term, especially in the early part of the fiscal year. Predictions made from these limited data may seem overly optimistic. Any upward trend tempts city staff and the Council to overreact. Past City Councils have been guilty of spending money from these projections because they seemed ‘good.’ The tendency is to see these projections through rose-colored glasses.

What Was The New Projection That Justified The Step And Merit Increases?

To everyone’s surprise, the September sales tax report update was higher than anticipated. The city staff projected that General Fund would be $1.657 million higher than forecasted. The City Council seized this as the ‘green light’ to reinstate the employee step and merit increases.

At the November 9, 2020 meeting, the Council rescinded the suspended step and merit salary increases for city employees. The suspension lasted only eight months, from March to November 2020.

Was The Decision To Grant Step And Merit Increases Logical?

The Council made its November decision based on data presented on September 23, 2020, a month and a half earlier. The Council received no updated data on which to decide. If they had, the decision might have been different.

In a report prepared by Michael Coon, the Director of Finance & Technology, after the Council’s November 9th decision, the $1.657 million surplus became a $483K deficit.

By the January 2021 Budget Workshop presentation to the new Council, the General Fund was positive again by $264,000. Mr. Coon admitted that $264,000 is a slim margin on a $116 million budget (0.2%).

What’s Happening With The General Fund?

The $1.657 million General Fund surplus presented in September 2020 was misleading. Yes, sales tax revenue was higher, but that didn’t account for the excess. Two unique, one-time events inflated the figures.

The General Fund received $2.0 million from the CARES Act funding. The city also received a donation from the Marion Schwab Trust.

Without these two rare revenue infusions, the city would have had $2.4 million less revenue than the city staff led the Council to believe when deciding to award the step and merit increases.

What’s more, on September 24, 2020, the city staff failed to mention the City Council’s risks to the General Fund. Player’s Casino Card Room sales taxes, parking violations, and Parks & Recreation programming were below budget. Mr. Coon’s November 2020 report shows revenue fell more than $5.2 million below budget in those three areas.

The Result Of Their Actions On Raises

In June, Councilmember Jim Friedman warned of an “absolute financial disaster” in the coming years if the city doesn’t continue to cut spending. Yet, the City Council reversed their earlier spending restraint and awarded over $719,000 in pay increases to city employees.

In June 2020, City Manager Alex McIntyre spoke of “shared sacrifice” when announcing the step and merit increases. Today, thousands of Ventura residents are not working. And those private-sector workers that remain employed may experience outright cuts in their pay and hours. Scores of businesses are closed by the pandemic and face bankruptcy. At City Hall, where jobs and salaries are guaranteed, things look very different, however.

What Can We Do?

Every budget cycle, the city goes through the same experience. The budget process begins in January and ends in June for the following year’s budget. Each year, the city staff presents their best estimate of what next year will bring. Often, those estimates are optimistic. “We believe we’re conservative not to paint too bleak a picture,” Mr. Coon told the City Council on January 11, 2021. And, our City Council makes long-term decisions based on the short-term data they receive.

Staff isn’t always right. No one has examined the budgeting process for a long time. Periodically, it would be a good idea to have independent, outside consultants provide an unbiased analysis of Ventura’s budgeting. This evaluation should be different from the accountant’s review of the Comprehensive Annual Financial Report (CAFR), which is always 18 months in arrears.

Editors Comments

We believe the City Council made the November decision to award the step and merit increases on flawed forecasts from staff. The City Council accepted the General Fund revenue would be $1.657 million higher in the middle of a pandemic. The Council decided based on a September bump in the sales tax revenue for the first four months of the fiscal year 2020-21. And, the data didn’t include the all-important Christmas season sales tax revenue. The Council made long-term decisions based primarily on short-term data.

It seems clear that city staff provided fluid, optimistic data to the Council for their decision. Mr. Coon explained the projections, saying, “We are feeling alright with the additional projection of $1.5 million in Sales Tax for the current fiscal year. It is something that we definitely want to keep an eye on, especially if we start to see more businesses close.

“Currently, we are basically projecting that we will receive the same amount of Sales Tax this fiscal year that we received last fiscal year…the city would have received about $30 million in sales tax for FY 20-21 without the pandemic. So, the projections do factor in about a 10% decline from the activity that was seen in Jul-Dec 2019. This decline isn’t on the higher end because online sales tax collection is doing so well and offsetting the losses of some of the brick and mortar stores that are experiencing losses at the higher end of the spectrum.”

At a higher level, citizens should be concerned about this process. The same people who prepare the reports used to decide salary increases are the same people who get the raises.

Our concern isn’t with the exact budget numbers. We question using numbers provided by the very people who enjoy the increases. We also have reservations about the Council relying on unseasoned numbers over time.

And, we’re disappointed by the elected officials that failed to question staff’s rosy projections when we’re in the middle of a pandemic. There were variations in the General Fund projections from September 2020 to November 2020 to January 2021. Two different City Councils spanned that period. One would have hoped that at least one Councilmember would have remarked on the General Fund’s changes from positive to negative and back to slightly positive over that time. Yet, no one did.

Only four Councilmembers remain from the group that awarded the increases. They are Lorrie Brown, Jim Friedman, Erik Nasarenko and Sofia Rubalcava. At the January 2021 budget workshop, two Councilmembers (Ms. Brown and newcomer Mike Johnson) expressed concern about the COVID-19 impact on the city’s finances. One wonders why the other five didn’t share the same anxiety. We hope that the new Council will be more rigorous in asking questions when preparing next year’s budget.

Write Directly To Your City Councilmember To Insist They Ask More Insightful Questions During Budgeting

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program ready to write directly to that Councilmember.

For more information like this, subscribe to our newsletter, Res Publica. Click here to enter your name and email address.

unfunded pension liabilities should force pension reform in Ventura

Latest Facts About Unfunded Pension Liabilities You Need to Know

December 28, 2020/in Newsletters/by VREG Editors

“Stand up to your obstacles and do something about them. You’ll find they haven’t half the strength you think they have.”

—Dr. Norman Vincent Peale

Ventura’s unfunded pension liabilities continued to grow in 2019 to $218.6 million. The City of Ventura continues to sink deeper into debt to pay for city employees’ present and future retirement benefits.

Unfortunately, the economic reality of the city’s current public pension liabilities is not receiving the attention it demands. We raised the warning flag about the growing unfunded pension liabilities debt in 2009, 2011, 2013, 2015, 2017, 2018 and 2019, yet the problem continues to grow unabated.

Revised Unfunded Pension Liabilities Figures

The new unfunded pension liabilities figures come from the 2018-2019 Comprehensive Annual Financial Report (CAFR). Ventura added $3.5 million to its unfunded liabilities. Simultaneously, the market value of Ventura’s assets held by CalPERS dropped to 66.7%, a multi-year low.

A Political Hot Topic

Discussions about pensions get emotional because we’re talking about people’s future and security. Let’s be clear. We respect the work city employees do. There is no denying that fire and police perform a vital job that is both dangerous and requires a high level of training and responsibility.

Our concern is not about their work. We’re uneasy about how the city structures, accumulates and pays retirement benefits.

Neglecting Pension Liabilities Doesn’t Make Them Disappear

For ten years, Ventura has done little to remedy its unfunded pension liabilities. During that time, there have been four different City Councils. Yet, they made only a modest effort to solve the problem. Then-Mayor Bill Fulton and City Manager Rick Cole claimed in 2011 that the City of Ventura had tilled new ground by requiring the city employees to pay something toward their retirement – 4 ½%.

Yet, closer scrutiny showed employees pay their 4 ½% retirement contribution toward the employers’ portion (i.e., The taxpayers’ portion) of what Ventura sends to the CALPERS retirement plan. This accounting maneuver explicitly increases the employee’s total compensation, meaning the “contribution” counts as the employee’s income to calculate the employee’s retirement benefit when they retire.

What Ventura Can Do About Its Unfunded Pension Liabilities

The City Council made this one attempt to improve the current system but did not address the problem in a meaningful way. Since there are no proposals from the Council, the League of California Cities and Government Finance Officers Association recommended these actions to confront unsustainable pensions.

Reduce the unfunded liability by making annual catch-up payments even more than CalPERS instructs you to pay—if you can afford to pay more.
Raise taxes
Reduce services
Require voter approval of any pension obligation bond or POB. (Click to learn more about POBs)

These are terrible choices for the public.

Suggestions For Addressing Unfunded Pension Liabilities

There are two other choices for our City Council to consider if they have the political will.

Make beneficiaries pay more. With the city covering 100 percent of the unfunded liability, the problem will continue to grow. There will be minimal reforms because the actuarial losses fall on the taxpayer. Capping the employer contribution at a fixed percentage of salary would cut pension costs for the city. As pension costs increase over the years, the employees will pay all the growing costs.
Change when retired city employees may begin collecting pensions. This alternative solution applies to new employees only. What if police and fire could vest their generous pensions in full by age 50 or 55, as they do now, but the payments did not start until age 65? Why would that help? The reason is that even if the city makes no further contributions, the fund will have ten more years to grow. At current official pension growth rates, that would more than double the fund’s value over those ten years. Also, the retirement payment period would be ten years shorter, given the same life expectancy. Such a system would still offer retirement security, but it would start at what most of us consider average retirement age.

Public sector employees may resist the changes but this solution makes sense. Private sector employees don’t get their full social security until 65 or even 67, depending their birth year.

Examining How Much City Employees Make

In 2019, 92 of the top 100 salaries on the city payroll are police officers and firefighters. Every one of the Top 100 earns more than $216,762 in pay and benefits. For perspective, the average family in Ventura earns $66,000 per year with two wage earners.

Raw Political Power Behind Unfunded Pension Liabilities

Ventura’s city employee unions negotiate higher and higher salary increases disregarding any concern that the money may not be available to pay their pensions once they retire. Union negotiators believe a virtually ironclad guarantee exists for the workers to whom the city promised the pension benefits. So, many Councilmembers accepted the same thing, although it’s no longer valid. A Federal Bankruptcy Court ruled otherwise in January 2015.

CALPERS argued that the California Constitution guaranteed the union contracts and thereby pension benefits from cuts. And if the court didn’t agree, they pleaded that they enjoyed sovereign immunity and police powers as an arm of the state. And if the court still disagreed, they argued that they have a lien on municipal assets.

The Federal Bankruptcy Court effectively threw them out of court, saying, “It is doubtful that CALPERS even has standing. In his opinion, Judge Christopher Klein writes “It does not bear the financial risk from reductions by the City in its funding payments because state law requires CALPERS to pass along the reductions to pensioners in the form of reduced pensions.”

Judge Klein further stated, “CALPERS has bullied its way about in this case with an iron fist” and “that their arguments are constitutionally infirm in the face of the exclusive power of Congress to enact uniform laws on the subject of bankruptcy…”.

The impact of this decision is that CALPERS cannot stop cities from modifying pensions. Yet, the Ventura City Council appears unaware of the findings.

Editors Comments

Past retirement pension negotiations were based on union bargaining and raw political power, creating a gap between what politicians promised and what cities can really pay. We offer some solutions, but it will take political will to bring the retirement benefits back to reality. Changing the system is the only way these promised benefits can be sustainable and dependable for retirees. It’s also the only way that taxpayers can afford to pay for them.

Write Directly To Your City Councilmember To Insist They Address Ventura’s Unfunded Pension Liabilities

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program ready to write directly to that Councilmember.

For more information like this, subscribe to our newsletter, Res Publica. Click here to enter your name and email address.

Will governing change with the next City Council?

How Will Governing Be Better With A New City Council?

November 30, 2020/in Newsletters/by VREG Editors

“The election is over. It’s time for the work of governing to begin.”

—Sen. Tom Daschle

The 2020 City Council election marked a new beginning for governing Ventura. The newly elected Councilmembers campaigned to drive change at City Hall. Now, the emphasis for the newcomers will be to shift from campaigning to governing.

Three New Councilmembers

2020 is the first election for Ventura Districts 2, 3 and 7. The city shifted from citywide to district elections in 2018 when voters elected four City Councilmembers.

Doug Halter defeated incumbent Christy Weir in District 2. Mike Johnson won an open seat in District 3 vacated by Mayor Matt LaVere, who voters selected as a County Supervisor. Voters selected Joe Schroeder in District 7 to replace retiring Councilmember Cheryl Heitmann.

Campaign Spending

This year’s candidates raised a record amount of money. Campaigning was in districts instead of citywide. One would think the amount of money needed would be less, but that has not proven to be the case.

The candidates raising the most money were Nancy Pedersen, $57,531; Aaron Gaston, $54,195; and Doug Halter, $54,161. Of the three top fundraisers, only Doug Halter won his district. (These numbers will increase. The final campaign finance report is due January 31, 2021)

To put this year’s spending into context, the total amount raised for three districts was 7.9% higher than in 2018 for four districts ($216,684 vs. $200,811).

Voter Turnout

High numbers of voters turned out in each district. All three districts had more people vote than even District 4, with the highest voter in 2018.

The districts were more competitive this year than in 2018. Only one candidate received more than 3,000 votes compared to three out of four winning candidates in 2018.

Platforms For Governing

Each candidate presented his top priorities for the city to the voters. Here’s what each promised.

Doug Halter, District 2

Mike Johnson, District 3

Joe Schroeder, District 7

Priorities In Common

There were some commonalities between the priorities. Yet, the candidates missed the mark on one crucial issue.

All three candidates promised to deliver economic vitality while governing. Improving the economy is the most specious of any City Council candidate’s priorities. Candidates offer this promise during each election cycle. Yet, the Council has little control over Ventura’s economic prospects. Councilmembers can’t control which businesses move to Ventura. Nor can they determine which existing companies should expand. When the Council does meddle in selecting companies, the city has experienced catastrophes. One only needs to remember the Brooks Institute debacle.

There is one area over which the City Council can control the business environment. They can make it easy for businesses to start-up or expand. Easing regulations and reducing approval time can stimulate business. We’ll see if this freshman class of Councilmembers will enact changes in this area. Their predecessors have not.

What All Three Are Missing

All three winners failed to mention one opportunity to reduce regulations and cut bureaucracy. Not one of them prioritized recovering from the Thomas Fire. It’s been three years since the disaster, and the city has not recovered economically. Victims have rebuilt only 190 of the 535 houses destroyed in the fire. That’s 35% of the buildings in three years. The City Council promised quick response and expedited procedures. The city waived some fees and added extra city staff to handle the influx of building plans. Yet, it’s hard to argue that Ventura’s response has been quick.

Another glaring omission is addressing the unfunded pension liability deficit. Retirement pensions are the city’s number one problem. Ventura currently has a $215.1 million obligation. That number continues to grow. CalPERS (the California Public Employees retirement fund) demands rapidly increasing contributions from Ventura. We will have permanent increases of at least $2 million per year for five to six consecutive years.

Issues

Newly-elected Councilmembers now have to shift their focus. The entire campaign focused on convincing district voters their interests came first. Once elected, they must change that focus to represent the whole city.

The top issues facing the City Council continue to be water, homelessness, budget deficits, pensions, economic stability and growth.

Two of the three new Councilmembers list water as a priority, but none of them has a stated water policy. Without alternative thinking, water ratepayers will have no choice but to surrender to Ventura Water’s strategy for VenturaWaterPure. Citizens should balk at this policy for both health & safety reasons and millions in unnecessary cost.

Homelessness is a priority for two new Councilmembers. Homelessness is an intractable problem showing all the signs of a failed paradigm. Ventura continues to spend more money on the homeless, yet the outcomes continue to worsen. What’s more, the COVID-19 recession will make more people unsheltered in the future. Court rulings and voter initiatives have made it increasingly difficult for public safety to help. Ventura needs a collaborated effort and some creative thinking to make any headway against the problem.

The One Issue Plaguing Ventura’s Long-Term Vitality

The incoming City Council will have to sharpen their pencils to impact the budget deficits and pension liabilities. The economic impact of the pandemic makes this challenge even harder. The city will have reduced sale tax revenue from the business shutdowns and diminished disaster support from Sacramento. Together, it will be harder to meet expenses.

The new Councilmembers must acknowledge that growth, jobs and water availability are inseparable. They also need to recognize the opposition to more houses (the NIMBYs) by some in the community. Forward progress on growth means accommodating, integrating and compromise.

Editors Comments

We have been through two election cycles now, and districts have elected all of the City Councilmembers. While it’s still too early to evaluate the impact of moving to district voting entirely, some things are becoming clear.

First, campaign spending is increasing unabatedly. In the last two elections, spending has reached record levels. It used to be that a candidate for City Council had to spend money throughout the city to get voters. Under district voting, candidates spend money to influence their 15,000 potential voters. On the surface, one would think it would take less money to reach a smaller group of people, yet spending is skyrocketing.

Second, some of the campaign spending is money spent by Political Action Committees (PACs) to support candidates they favor. The chief PACs are the fire and police unions and the Chamber of Commerce. This year PACs spent over $104,000 to support Aaron Gaston, Doug Halter and Nancy Pedersen.

In 2018, PACs spent over $84,000 to support Kevin Clerici, Jim Friedman and Erik Nasarenko. The year-over-year increase in PAC spending is 30.7%.

What We Learned About PAC Spending

The PACs supported six candidates, only three of whom were elected. What does this tell us?

Voters don’t always vote for the candidate spending the most money— good news in an era of rising campaign expenditures.
The PACs’ record for getting the candidates they want into office is only partially successful. In turn, it may also mean that the PACs’ influence over the City Council may not be as strong as it has in the past.
Candidates are willing to spend large sums of money for the chance at governing. Voters should scrutinize from where their preferred candidates receive their funds.
Citizens United determined that money spent in political campaigns is free speech. The PACs know this and contribute more to campaigns than any individual contributor. Who will the Councilmembers listen to when there is a crucial decision to make?

Third, if diverse representation is the reason for voting by districts, then the 2020 election contradicts that intent. All three elected Councilmembers are old, white males. Two of the three replaced women on the Council. It’s too early to draw any conclusions from two elections, but it appears that voters are electing candidates that revert to the old norm to govern them.

Fourth, voter turnout was unprecedented for the City Council election. The overall numbers, and the percentage of eligible voters in each district, were the highest recorded. Strong voter turnout is good news. Democracy works best when voters engage.

Finally, it’s up to each individual to hold our elected officials accountable. The commitments they make during the campaign must translate into action while they are governing. Otherwise, they’re just empty promises. It’s up to you to make sure the Councilmembers live up to their commitments.

Here’s How You Can Write Directly To Your City Councilmember

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program ready to write directly to that Councilmember.

For more information like this, subscribe to our newsletter, Res Publica. Click here to enter your name and email address.

Watch This Year’s City Council Candidates Battle In A Forum

October 7, 2020/in General News/by VREG Editors

The 2020 Ventura City Council Candidates for Districts 2, 3 and 7 squared off in the East Ventura Community Council’s voter forum.

We’re replaying the video for those voters who missed the virtual event.

Unlike in years past, voters attended the 2020 candidate forums remotely. Covid-19 prevented in-person candidate engagement to woo voters.

Who Are The 2020 City Council Candidates?

In District 2, Doug Halter, Dougie Miche and Christy Weir (the incumbent) answered the moderator’s questions about their platforms.

In District 3, Barbara Brown, Aaron Gaston, William Cornell, and Mike Johnson faced the moderator’s fire. District 3 has no incumbent running for City Council because Matt LaVere won a seat on the County Board of Supervisors.

The District 7 candidates, Heather May Ellinger, Nancy Pedersen, Joe Schroeder and Michael James Nolan, answered the moderator’s questions. District 7 also has no incumbent running because Cheryl Heitmann chose not to seek re-election.

What’s Ahead For The 2020 City Council Candidates

The City of Ventura faces challenges in the coming years. These City Council Candidates must prove they are capable of meeting those challenges.

Ventura hadn’t recovered from the Thomas Fire in 2017, and it now faces recovering from the Covid-19 economic shutdown.

Watch how the candidates present their ideas for economic recovery and vitality. Also, watch how the candidates respond to the moderator’s questions about the city’s most critical issues.

VREG Has Reported On These Issues

For years, VREG has reported on the challenges the city faces. Feel free to review our previous articles on topics ranging from water to city employee pensions to failed economic development attempts. You’ll find some of the most in-depth reporting on these issues available.

We founded Venturans for Responsible and Efficient Government (VREG) in 2007 to assist the citizens of this community in better understanding their city government’s fiscal management and the policy decisions that lead to our tax dollars’ expenditure. We advocate open government, freedom of information, constructive dialog and efficient use of resources.

We’re a watchdog group determined to keep an eye on the city government to ensure it’s working for all. We’re ever mindful of Plato’s warning to the citizens of any representative democracy. He said, “If you do not take an interest in the affairs of your government, then you are doomed to live under the rule of fools.”

All You Need To Know About Local Campaign Issues 2020

September 22, 2020/in Newsletters/by VREG Editors

“The ignorance of one voter in a democracy impairs the security of all.”

—John F. Kennedy

We should say from the start that VREG does not endorse candidates. Our goal is to keep you informed and to educate wherever possible, but we shouldn’t pass up the opportunity to outline the critical campaign issues facing City Council candidates in 2020.

If you live in District 2, 3 or 7, you have an important decision to make in this election. Your choice for City Councilmember will shape Ventura’s future for decades. How the candidates address the current campaign issues should guide your selection.

Meet Your 2020 City Council Candidates

First, familiarize yourself with the candidates. Campaigning has changed in the COVID-19 environment, so you may not be able to meet your candidates in person. Zoom townhall meetings and campaign videos are replacing in-person, door-to-door campaigning.

Ten of the eleven candidates provided qualification statements. We’ll highlight and summarize each declaration to save you from looking them up.

Here are the City Council candidates with their self-described ballot designations. The candidates are presented in the order as they will appear on the ballot. The Secretary of State randomly drew names to determine the ballot order on 8/13/2020.

District 2

Doug Halter is a local businessman. He a passionate about Ventura and is knowledgeable about how Ventura operates. He is running on changing the status quo. Mr. Halter ran unsuccessfully for City Council in 1999 and 2007 under the open election system. 2020 is his first campaign under the district system.

Dougie Michie is a certified financial planner with a degree in law and a doctorate in urban planning. He is running on his wide range of education and experience, which will enable him to guide the city through the challenges Ventura faces.

Christy Weir has been on the City Council since 2003. Historically, she has proven to be open-minded and approachable.

District 3

Barbara Brown is a business owner and a professor at Laguna College of Art and Design. She serves as a Public Arts Commissioner. Ms. Brown’s family lost their home in the Thomas Fire. Her passions include the Ventura Botanical Gardens, Interface Children Services, and Goodwill Industries.

Aaron Gaston is a realtor and business owner. He graduated from UCSB. For nearly 30 years, Mr. Gaston ran a technology company. He is interested in supporting a healthy business community with affordable housing to be compatible with smart growth.

William Cornell is a small business owner with over 15 years in the construction industry. He is concerned about the city’s ability to sustain itself on its current path. He also wants to improve public safety, community and economic development.

Mike Johnson is a faithful attendee at several city community subcommittee meetings on economic development, housing, water and Measure O. He is thoughtful with his approach to problem-solving. He is ‘ready to lead on day one.’

District 7

Heather May Ellinger is a real estate agent. She is interested in the homeless crisis, crumbling roads, housing and affordability and community development. The city budget is a significant concern, and a need to make the city more business-friendly to attract companies with high paying jobs will improve revenues. Her experience as a mortgage field inspector would assist in ‘navigating the complex issues’ in reconstruction.

Nancy Pedersen is a business owner and is chair of the Ventura Visitors & Convention Bureau Board of Directors. She has professional credentials with 40+ years as a business and legal executive.

Joe Schroeder is a retired CEO of the Ventura County Credit Union. His financial expertise and management experience are what he feels the City Council needs. He has also served on community boards such as Food Share and the Global Women’s Leadership Network. His priorities are supporting public safety, economic growth, natural resources, an updated coastal plan and a short-term rental plan that protects community interest.

Michael James Nolan is a realtor and communications manager, but without a statement of qualifications provided to the City of Ventura and we didn’t find an election website. VREG cannot give any useful information on his candidacy.

Ventura’s Key Campaign Issues In 2020

What campaign issues do you want your candidate to address? Your answer will depend on the district you live in, but there are some citywide issues every candidate must address.

Water Is Among The Top Campaign Issues

Water will be among the costliest issues the City Council will face in the next four years. Ventura Water is asking the Council for over $300 million, making it as expensive to the city as public safety.

Find out from your candidates where they stand on VenturaWaterPure. Are they content to drink recycled wastewater? Do they know that no standards exist yet for purifying wastewater into potable water? Will Ventura ratepayers willingly accept the increases needed to pay for the $300 million Ventura Water is requesting?

How much do your candidates understand the litigation the city is involved in concerning water? Do they know what alternatives exist to the Wishtoyo Consent Decree of 2012? Do they know the Ventura River cross-complaint Ventura filed against 10,000 property owners along the river?

Homelessness and Vagrancy Are Important Campaign Issues

Ventura’s homeless shelter is operating. It costs the city $712,000 per year to house 55 of the city’s 531 homeless. Shouldn’t the Council and citizens know precisely how much homeless services cost and how they get allocated? What should Ventura do for those not housed in the shelter? Some of the remaining homeless are vagrants. They choose to live the lifestyle and to panhandle. How do candidates plan to combat that so Ventura is more tourist-friendly?

Future Budget Deficits Rank High Among The Campaign Issues In 2020

The current City Council balanced the 2020-2021 budget by reducing costs in 11 key areas. City employee pension costs continue to rise and may rise more quickly because of COVID-19’s impact on CalPERS’ investments. Each increase in pension costs squeezes money out of the General Fund that otherwise could go towards street repair, tree trimming or public safety.

Public Employee Pensions Is The Toughest Campaign Issues

Ask the candidates running in your district if they will work with the city’s unions to reform public employee pensions. The last time the City Council modified pensions was 2010, and those changes were modest. The city staff believes pensions will level out in six or seven years. Can Ventura last that long amid its other financial burdens? The city still hasn’t recovered fully from the Thomas Fire. The COVID-19 pandemic shuttered businesses for months, robbing the city of sales tax revenue, and there is no clear plan to reopen them completely.

Campaign Finances

The first district elections in 2018 were the costliest in history. The top three fundraisers were Jim Friedman, $60,887; Kevin Clerici, $44,862; and Erik Nasarenko, $36,464. Messrs. Friedman and Nasarenko won. On a cost per vote basis, Mr. Friedman spent $19.90 to get a vote. Mr. Nasarenko paid $11.97. Mr. Clerici, who lost, spent $45.52 per vote. Big money doesn’t always win, but the exception proves the rule.

We will monitor the candidates’ campaign finance reports to report this year’s totals.

Growth Is Always Among The Key Campaign Issues

Growth means different things to different people. It’s inescapable that Ventura needs to grow.

Ask if your candidates acknowledge that growth, jobs and water availability are inseparable. They also need to recognize the opposition to more houses (the NIMBYs) by some in the community. Forward progress on growth means accommodating, integrating and compromise.

Editor’s Comments

Voting works best when people take the time to learn about campaign issues. We urge you to get involved. Educate yourself on the candidates’ positions on the campaign issues for 2020. We’ve provided a framework to ask pertinent questions. Use ours or develop your own, but find out where the candidates stand.

Don’t succumb to the clichés candidates use to get your vote. Candidates always discuss growth and public safety while campaigning. Look beyond that. These are not the pressing campaign issues in 2020. The most demanding issues are water, labor contracts, long-term planning and reductions in services. These problems with budgets, growth and water have happened over the last fifteen years. Ask yourself, “Do these candidates have the capabilities to solve these problems?”

Once elected, it’s vital to review the new Councilmembers’ performance. Accountability and transparency are glossed over and only get ‘lip service’ during election time. In the past, Councilmembers knew voters would forget over the next four years. It’s up to each of us to make sure that our elected officials do what they promised to do.

We respect anyone who steps up to run for office. It is not easy to subject yourself and your family to public scrutiny and comments. So, regardless of the election outcome, we applaud everyone who threw their hat in the ring.

Postscript

The Fire and Police Unions are supporting Doug Halter in District 2, Aaron Gaston in District 3 and Nancy Pedersen in District 7.

Here’s How You Can Write Directly To Your City Councilmember

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What You Need To Know About The Schools And Communities First Initiative

July 21, 2020/in Newsletters/by VREG Editors

“Some taxpayers close their eyes, some stop their ears, some shut their mouth, but all pay through the nose.”

—F.J. Raymond

The pandemic has impacted everyone and everything. Businesses large and small struggle, and while it has probably not come to your attention, this November, a proposed ballot measure aims to increase the cost of living for everyone. Under the guise of “helping our children,” the legislature placed The Schools and Communities First (initiative 19-0008) on the ballot. If approved, this will push prices higher for all residents.

Today’s property tax regulations — Proposition 13

On June 6, 1978, the voters passed Proposition 13 reducing property tax rates on homes and businesses by 57%. That happened because legislative bodies were raising taxes aggressively, the only limits being a legislator’s imagination on how to devise the next tax increase. So, Prop 13 rolled back and froze the taxable value to the 1976 level. Any increases were limited to no more than 2% per year as long as the owner did not sell it. Once sold, assessors re-valued the property at 1% of the sale price, and the 2% yearly cap applied to future years.

Changing Prop 13 Through The Schools and Communities First Initiative

The Schools and Communities First Initiative seeks to repeal Proposition 13 protections for commercial and industrial property owners. Every business, commercial and industrial property will be reassessed every three years and taxes assessed based upon “the fair market value” or the “income approach “of valuation, whichever is higher. They project it will raise $12 billion per year in new tax revenue.

Whether owned by a large corporation or a family, the initiative would be a massive tax increase. It will affect office buildings, retail stores, shopping malls, movie theaters, gas stations, supermarkets, factories, warehouses, self-storage facilities, auto dealerships, car washes, restaurants, hotels and every other job-creating business in the state. Even small businesses that lease space in a strip mall would see their operating costs jump sharply due to tax increases passed through from landlord to tenant.

Many public unions support this tax Initiative — the California Teachers Association (CTA), the Service Employees International Union (SEIU), California Tax on Commercial and Industrial Properties for Education, Education and Local Government Funding Initiatives (2020).

What The Proponents Say Is Wrong

Advocates argue that this is only a “split roll,” and it is “for the children.” Split roll is a shorthand term for proposed changes to Proposition 13 that would allow higher property tax assessments on a commercial property, but would not change for residential property.

Another argument advocates make is that corporations have benefited more than homeowners under Proposition 13. They assert that the business property tax-burden shifts from companies to homeowners; they call a “property tax loophole.” They say passing The Schools and Communities First Initiative closes this loophole.

The suggestion that there has been an “enormous shift” is untrue. Displayed is a chart showing the percentage of tax paid by business versus individuals in 1979-80 and then in 2015-2016. Using data obtained from the California State Board of Equalization and the California Legislative Analysis Office, the following pie charts show business property owners pay more in taxes now than they did 40 years ago:

Source: California Tax Foundation

How You Will Be Affected If This Passes

All consumer costs will jump. Business property owners will pass the tax increase to consumers in the form of higher prices for everything, for all goods and services.

Chain stores will pass on the costs to consumers and survive, maybe. Five hundred companies have filed for Chapter 11 since the pandemic began.
Shopping malls like the Pacific View Mall, where a retail tenant typically pays a Triple Net Lease (N-N-N),meaning the tenant pays the taxes. In this instance, property owners will not pay the higher taxes, as the proponents would lead you to believe. Instead, store owners will pay the tax and pass that expense on to their customers with higher prices. If not, they will fail.
If you rent a self-storage unit, pay attention. The self-storage industry is very concerned about the effect on its business. The industry calls the tax disastrous. Who are the most frequent users of self-storage units? Renters!
Gas Stations. If you drive, Schools and Communities First Initiative will hurt you. Retail gas stations would see price hikes and closures. A quick review of gas stations for sale shows that the split roll will negatively impact many of them. Gas prices will go up accordingly.

Opponents to the Schools and Communities First Initiative

A list of the opponents to the Schools and Communities First Initiative includes the Howard Jarvis Taxpayers Association, the Ventura County Taxpayers Association, the California Taxpayers Association, the California Chamber of Commerce, the California Farm Bureau, the California Business Properties Association and the Western Manufactured Housing Communities Association.

Willie Brown, former San Francisco mayor and the longest-serving Speaker of the California Assembly, also opposes this measure and stated: “…that the Schools and Communities First Initiative will harm small businesses, especially minority-owned small businesses.”

David Kline, vice president of communications and research for the California Taxpayers Association in Sacramento, said, “The last thing this state needs is higher taxes, and especially a tax that would increase the cost of everything we buy in California.”

The California Assessors’ Association (CAA) is also in opposition. Larry Stone, Santa Clara County’s assessor, said, “it is impossible to implement as written.” CAA President Don Gaekle, the assessor for Stanislaus County, wrote in a letter to lawmakers, “Current local budgetary realities will make the implementation of the initiative extremely difficult.”

Editors Comments

The high cost of living in California would be pushed even higher by this massive tax increase. Passing the Schools And Communities First Initiative would hit every business in the state at the same time.

Don’t be fooled when “split roll” advocates say that it just hits businesses. When their costs go up, so do the prices you pay for goods and services.

The “split roll” would make California’s brick-and-mortar businesses increasingly uncompetitive with online companies based in other states where costs are far lower. It would also accelerate business flight out of California.

Advocates of a “split roll” say it merely closes a “loophole.” They maintain that voters never intended Proposition 13 to apply to commercial property, but this isn’t true.

California has had a single or “unified” roll, treating all property the same, since the 1800s! Proposition 13 didn’t change that.

The government employees charged with implementing the Schools And Communities First Initiative say the law is untenable as written. They would need extra appraisers and support staff to do what the law requires, thereby increasing the government’s cost and adding to California’s pension burden.

Taxes are already too high in California, yet the demand for more is unrelenting. Read past the Schools And Communities First name on the ballot. Look beyond the rhetoric to understand the real costs to you.

Learn Where Your City Councilmember Stands On The Schools and Communities First Initiative

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What VenturaWaterPure Should Do To Be Better

June 23, 2020/in Newsletters/by VREG Editors

“Of all the tyrannies, a tyranny exercised for the good of its victims may be the most oppressive…those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience.”

—C.S. Lewis

Eight years ago, Ventura Water decided to pursue VenturaWaterPure single-mindedly. They are pursuing this course in the face of data that demonstrates it’s not in the best interest of citizens cost-wise or health-wise.

How Things Began To Go Wrong For VenturaWaterPure

Ventura Water based their decision on a faulty premise that Ventura needed additional water. The Wishtoyo Consent Decree opened the door for Ventura Water to select Direct Potable Reuse (DPR) as an integral part of VenturaWaterPure. Since 2012, nobody has tested the assumptions or sought lower-cost alternatives.

Ventura Water will do anything to pursue this goal, even when confronted with facts to the contrary. In June 2018, a group of concerned citizens went to each Councilmember to show them DPR was not approved and deemed not safe, yet. When the Council presented that fact to Ventura Water, they changed course slightly to Indirect Potable Reuse (IPR), but they didn’t drop VenturaWaterPure or challenge their assumptions.

More recently, when Ventura Water presented to the Water Commission, they said State Water was unreliable and they can only count on water 33% of the time. Commissioners pointed out that historical data show State Water was reliable 50%-75% of the time. Ventura Water backtracked again and said they’d upgrade their data, but they never questioned their assumptions.

What These Decisions Cost You

A September 12, 2019 report titled Ventura Water Supply Projects and Alternatives, commissioned by Ventura Water (Appendix E starting on pg. 405), shows estimated project costs of another $320 Million plus the annual operating expenses of $29.Million for VenturaWaterPure. The added expense could saddle Ventura’s citizens with another $260 per month in water rates unless Ventura Water takes an alternative direction.

Spreading $320 Million over ten years, divided equally among the 32,000 water ratepayers in Ventura, will cost about $83 more per month on your water bill. An extra 20-27 employees are required to operate the new facility, adding to the Ventura Water’s payroll, benefits and pensions. If Ventura Water adds the minimum number of new employees, using an average annual cost of $100,000 per person, plus benefits, will add $29.1 Million annually. Dividing $29.1 Million by 32,000 water ratepayers adds another $76 per month to each water bill.

Assume the average monthly water bill in Ventura is $100 per month ($200 every two months) when adding another $83 for building and $76 for operations and maintenance, the new average total is $260 per month. The amount could be even higher if Ventura Water hires more than 20 new employees.

Known as the Carollo Report, this September 12, 2019 report looks at the high price of the VenturaWaterPure project. It also attempts to provide alternatives that would be much more cost-effective and allow Ventura to meet its three primary water goals. Ventura Water has rejected all lesser cost alternatives.

Ventura’s goals remain: 1) remove tertiary treated wastewater from the Santa Clara Estuary, 2) increase the water supply and 3) improve the water quality in the east end of Ventura.

The Driving Force Behind VenturaWaterPure

Ventura Water has already spent eight years to meet the demands of a Federal Consent Decree. Ventura must fully comply with the removal of remove tertiary treated wastewater from the Santa Clara Estuary by 2025. To achieve this mandate, VenturaWaterPure was set in motion to recycle its wastewater into something useful.

In 2012, there was no idea what the costs of VenturaWaterPure would be, from where the money would come or whether it was scientifically possible. The ideal outcome would be to make the recycled water drinkable and add to the dwindling water supply. The idea of ‘toilet to tap’ originated on the premise that ‘if the astronauts can drink it, we can too.’ That mantra assumes a great deal but is not that simple.

What Is Ventura Willing To Spend?

According to the Carollo Report, the current VenturaWaterPure carries a price tag of over $250 million and another $70 million to complete the project totaling $320 million. Do you spend another $320 million if Ventura Water can meet its three goals for less regardless of the money already spent? And if you do, how will a family afford a 260% water rate increase?

Today’s Plan

The current VenturaWaterPure plan calls for the construction of an advanced water purification facility, new pipeline infrastructure and three injection wells. This current plan also requires the addition of 20 to 27 more positions, with salaries, benefits and pensions. The Carollo Report indicates that much of the costs and liability that Ventura Water plans to take on as an independent project could be shared and reduced on a more regional basis.

So, What’s The Alternative?

It is not too late to reconsider some of the alternatives suggested in the Carollo Report. The redirection of the first part of the planned $270 million project does not mean the end of VenturaWaterPure. VenturaWaterPure can be completed at a savings of $270 million and meet all the city’s goals.

The alternative is for Ventura Water to construct a pipeline to the United Water settlement ponds near the intersection of 118 and Vineyard Avenue. The water can then percolate into the Oxnard plain basin. Ventura Water had always planned to inject the well water into the Oxnard plain basin under its current plan.

The United Water settlement alternative plan eliminates the need for Ventura Water to construct the advanced water purification facility, pipeline infrastructure and three injection wells. That is a savings of $320 Million. It would require the construction of nine miles of a 24-inch pipeline with a cost of about $50 million, so the net saving is still $270 Million.

There will need to be negotiations with United Water to complete the water transfer loop. Given the Groundwater Management act legislation (GMA), agencies transferring water to other agencies require cooperation in water exchanges. In that process, Ventura Water can obtain additional water allocations to add to the water supply.

Why Would There Be Any Objection?

The possible resistance to redirecting the tertiary treated Santa Clara Estuary wastewater to the United Water Saticoy Spreading Grounds is that Ventura Water may fear losing control of their water resource. This concern is unfounded, however. All water injected into any wells, may be drawn out by any water user with access to the Oxnard plain basin.

Improves The VenturaWaterPure Program

Saving $270 million by redirecting the Santa Clara Estuary tertiary treated wastewater to the United Water Saticoy spreading grounds does not derail the other Ventura Water goals. With the continued construction of the State Water Project, State Water will provide an additional water resource to compliment the river, groundwater and recycling programs in place. The State Water will also improve the water quality for the east end of Ventura. Additionally, the tertiary treated wastewater to the United Water Saticoy spreading grounds would remain available to be drawn out of the Oxnard Basin just as it would be if injected into any wells currently planned.

Editor’s Comments

The challenge in 2012 was to comply with the Federal Court Decree, and the chosen solution was to convert the estuary into drinkable water. Ventura Water created VentruaWaterPure on the pretense that the cost of moving the water away from the estuary could be justified because we could then drink it. At the time, the costs not known and the scientific reports were incomplete. Fixated on controlling all water resources, and reject all alternatives, sounded good eight years ago. However, the original plan is too costly now, and the scientific studies still discourage drinking the treated wastewater.

Utilizing the regional resources to accomplish the same goals at a lower cost is better for Ventura. With this one primary change, VenturaWaterPure will succeed, and the citizens will save as much as $137 per month or $1,644 per year on their water bill.

Call or email your City Councilmember to tell them you want to save $270 Million and not have your water rates nearly triple.

Tell City Council you want to save $270 Million and not have your water rates nearly triple.

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program ready to write directly to that Councilmember.

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The Best Thing The Council Can Do About The Deficit

May 30, 2020/in Newsletters/by VREG Editors

“History doesn’t repeat itself, but it often rhymes.”

—Mark Twain

Ventura finds itself staring down another multi-million-dollar budget deficit. This time we must overcome a 10% deficit, or $12 million.

Most people’s attention won’t be on the budget because they’re focused on COVID-19 and the upheavals it has caused. The City Council will use the pandemic as a reason to make decisions they otherwise might not make. Make no mistake, however. The budget deficit existed before COVID-19 but became worse because of the economic shutdown.

Decisions by several past City Councils have brought us to today’s $12 million budget deficit. Previous Councils have not fully replenished the city’s financial reserves and have not planned for an economic downturn like the one Ventura is facing today. Now, the current City Council must find ways to make up for the lack of vision of previous Councils.

The Covid-19 Impact

The Covid-19 shutdown put hundreds of people out of work and decimated the local economy. Six of the seven Councilmembers and many of the city staff have never experienced such a dire situation. Fortunately, City Manager Alex McIntyre has. Even so, the current conditions will test his mettle.

The spotlight will be on Mr. McIntyre as Ventura moves forward after the pandemic. The burden is squarely on him to prove his effectiveness and value. The recommendations he makes—and the decisions the City Council make—will impact the city for years to come.

What Faces Ventura

Mr. McIntyre’s challenges are daunting. The local economy is in shambles. The city government and businesses will struggle to put people back to work safely and quickly. To survive the impending recession will require working closely with the city’s three unions, Fire, Police and Service Employees International Union (SEIU). And, he will have to guide an inexperienced City Council through budgeting during a recession.

Sales taxes have been severely impacted by the COVID 19 pandemic. Sales tax revenue has plummeted. The auto dealers, the casino, the Pacific View Mall and restaurants aren’t generating the taxes the city expected. They are the city’s most significant contributors to sales taxes. To make matters worse, the transit occupancy tax (TOT, or bed tax) has been non-existent.

Procedures are in place to reopen businesses, but reopening will be slow. Under the best circumstances, returning to pre-pandemic sales revenue levels will take time.

Consumers are reeling from the loss of jobs, reduced hours, and volatility in the stock market. Venturans may be reluctant to return to “normal” right away based on the experience of other people in countries that have already opened up.

A Daunting Deficit

Ventura faces a budget deficit the likes of which haven’t been seen since the 2008-2009 Great Recession. Four months ago, city staff projected the 2020-2021 budget was to be a $4.1 million deficit. In April, before the effects of the business shutdown were fully realized, the gap rose to $7.2 million. Now, the staff has revised the shortfall to be about $12 million below the projected $118.7 in revenue.

Plans To Address the Deficit

The city staff presented the City Council with 13 possible ‘tools’ to balance the budget. Seven of the 13 recommendations are personnel-related. These include:

Transfer the Harbor Garage Debt to Parking Fund
Hiring Freezes
Reduce Employee Travel
Eliminate of Cost-of-Living Adjustments (COLA)
Eliminate Merit & Step Increases
Reduce Support to Outside Agencies
Draw from Unrestricted Fund Balance/Financial Reserves
Increase Cost Sharing for Employee Benefits
Reduce Benefits
Furloughs/Reductions in Hours
Separation Incentives (e.g., Early Retirements)
Reduce or Eliminate Services
Revenue Enhancements

Interestingly enough, what is missing is the ‘modification of current and future construction projects.’

Working with the Unions To Bridge The Deficit

Balancing the budget will involve cooperating with the city’s unions. There have been closed session discussions between the City Manager, Mr. McIntyre, and the union representatives.

In April, Councilmember Lori Brown reported at the Finance, Audit & Budget Committee meeting that the SEIU union rep was already circulating through City Hall. These are signs of a union anxious to defend their current status. The substance of these talks has remained private.

Hurrying City Councilmembers Up the Learning Curve

As we already described, the recovery may be slower than many would like. When confronted with a list of alternative solutions, inexperienced Councilmember might leap at the easiest, viable solution. One Councilmember seems to lean towards using all of the city’s financial reserves. While no one considers using up the city’s financial reserves to be the first option, they must answer specific questions if they choose this solution. First, how would the city replenish the reserves?

Second, what happens if the city uses all its reserves this fiscal year, but the recovery takes several years? From where will the city get the funds to pay for services in 2021-2022?

Third, how would using the city’s reserves impact the City’s bond ratings?

Another Councilmember wants to replace the word ‘Eliminate’ with ‘Defer’ COLA or Merit increases. And finally, other Councilmembers search for a solution that equally spreads the pain, sort of a “one size fits all” approach.

The problem with this narrow thinking is that it does not address unintended consequences. As an example, a 10% cut for an employee making $100,000 is far different from a 10% cut for someone making $40,000. While a $10% reduction of $40,000 is less money in absolute terms, the $4,000 reduction has a much more significant negative impact. Whereas, a 10% cut for the person making $100,000 still leaves that person with $90,000 in spendable income for food and transportation.

If the Council chooses to cut salaries, maybe a higher percentage for higher gross-salaried employees and a lower percentage for income under $100,000 would address this disparity. Over 250 Ventura city employees are making over $100,000 a year.

Voters Elected the Councilmembers to Set Policy

Voters elected the Councilmembers to set policy, set goals and let the city staff execute the plan. It should not get bogged down in the details of the City budget. As an example, the City Council recently took valuable time at a Council meeting reviewing fee increases to discuss whether a fee should increase by 3% or $5. Such debate appears to be a poor use of City Council time.

More impactful and vital discussions on how to help Ventura citizens recover faster and have more spendable income for their families is needed. For instance, this Council can spare Venturans from the potential tripling of water rates by redirecting Ventura Water’s plans. Changes can save hundreds of millions of dollars immediately.

Get Everyone Safely Working Again Safely

The state and the County Board of Supervisors have outlined the Phase Two procedures to return to work. This return will be slow as businesses and governments grapple with social distancing. No one knows how long this recovery will take. However, time will eventually fix our problems. Getting all companies safely up and running will fix a lot of these budgetary problems.

One thing the pandemic has shown us is how to work efficiently. It has forced us to evaluate what’s essential and what’s not. Post-pandemic, we will need to learn to do “less with less with less.” We hope the city government heeds this lesson.

Editors Comments

A Safer Approach would be for the City Council and our City Manager to consider a combination of all 13 possible ‘budget-balancing tools.’ What’s more, they should consider deferring a few more pending projects. Take nothing on that list off the table.

In the past fifty years, there have been recessions in 1974, 1978, 1982, 1987, 1992, 1999, and 2008-2009. Each downturn caught the City Council facing a budget deficit they didn’t anticipate. It’s happened again in 2020.

We strongly suggest the City Council give City Manager Alex McIntyre the chance to do his job. Let him draw on his experience and knowledge to navigate the city through the challenges it faces. Mr. McIntyre knows what works and what doesn’t. We pay him to make these decisions. He is the one to implement the plans.

Our elected officials should not make each minor budgetary decision. Only one Councilmember has been through similar difficult times before. Some have limited experience when it comes to running a business or managing a multi-million-dollar budget.

Tell City Council To Let The City Manager Do His Job

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Important Trends You Should Look For In The COVID-19 Recovery

April 28, 2020/in Newsletters/by VREG Editors

“Wealth Is The Ability To Fully Experience Life.”

—Henry David Thoreau

We’re living through unprecedented times. No one knows how events will develop as we emerge from the COVID-19 crisis. Yet there are specific unmistakable trends to watch. We want you to be aware of the trends and to look out for the critical choices that will shape our future.

Now is the time to support our elected officials as they negotiate the COVID-19 epidemic. The time will come soon when the quality of their decisions will affect how much pain and sacrifice Ventura residents must bear. As a community, we’ve shown that we are resilient and generous. The Thomas Fire is a recent example. The impact of the Thomas Fire could pale in comparison to the coronavirus pandemic fallout.

Lost Sales Tax Revenue From COVID-19

The City of Ventura relies on income from two primary sources: property tax and sales tax.

Property tax revenue is constant and predictable. Yet, the Ventura City Council has little control over property taxes.

Sales taxes will be severely impacted by the COVID 19 pandemic, and Measure O depends on sales tax revenue. Sales tax revenue has already plummeted. The auto dealers, the casino, the Pacific View Mall and restaurants aren’t generating the taxes the city expected. They are the city’s most significant contributors to sales taxes. To make matters worse, the transit occupancy tax (TOT, or bed tax) has been non-existent for the past six weeks. With no date set to reopen businesses, the losses will continue to mount.

How will Ventura make up the difference in sales taxes? Consumers are reeling from the loss of jobs, reduced hours, and volatility in the stock market. State unemployment benefits will help some. It’s notable, though, the Unemployment Insurance Fund (UIF) has limited reserves, which will deplete quickly.

Furthermore, many businesses closed by the shelter-in-place order will not open. Those with large amounts of debt are most at risk. Don’t be surprised by some of the large businesses that fail in addition to the smaller, Mom-and-Pop establishments that will inevitably close—resulting in even more job losses.

Solutions Will Require Creativity

With the two primary sources of income for the City of Ventura in serious jeopardy, and the City Council has little control over either. Finding a solution will require ingenuity.

With no chance to increase income, the only option available is to reduce expenses for the city. Before COVID-19, the city faced a $4.1million annual deficit for the 2020-2021 fiscal year. After the business disruption from the epidemic, the $4.1 million deficit will be a welcome alternative to what is likely to happen.

City Major Expenses

The most considerable expense for any city is payroll—including benefits and retirement. The salaries, benefits and pensions are all controlled by labor contracts. In fact, because of the COVID 19 pandemic, these costs will likely blow up. The Ventura City Council’s control of this expense is limited to reducing staffing levels. Here are examples that the City Council is considering. See page 6.

CalPERS Damaged By The COVID-19 Pandemic

Before the start of 2020, CalPERS required Ventura to pay an additional $2 million above the $16 million it pays typically. Even though the economy experienced a decade-long economic boom, CalPERS is only 70% funded. The drop in the stock market following the COVID-19 panic hurt CalPERS’ investment portfolio even more. By October, the $2 million additional CalPERS requires Ventura to pay may be considerably higher.

Editor’s Comments

The City Council will be in the troublesome position of making significant, painful decisions to cope with the fallout. Payroll is the only controllable, significant expense that this Council can alter. While a hiring freeze is likely, it will have limited immediate effect.

There are other costs the Council can influence. It’s time the City Council scrutinizes all the cost of services to consider less costly options. Those services can be General Fund items like fire and police, or they can be other operational items like water.

In fact, water directly impacts every household. The rates water users pay are approved by the City Council, even though Ventura Water operates outside of the General Fund.

Any increase to cost of water will be damaging financially to many families already burdened by the economic shutdown.

Lost sales tax revenue, steady property taxes, and an out-of-control, bloated retirement plan are out of the Council’s control. We hope they will focus on the things they can control and rein in expenses to avoid more extensive economic pain for the city and its citizens.

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