Santa Paula: I don’t Care…Fix My Roads

By Sheryl Hamlin

 

With Santa Paula’s deteriorating streets and council members receiving daily complaints about such, the council had no other choice than to support a motion unanimously in opposition to Prop 6 (Gas Tax Recall) at the October 3, 2018 council meeting.

The image below shows just one of the many streets that have deteriorated beyond repair and require a full reconstruction. Read the detailed presentation of street conditions here.

Bad Streets in Santa Paula

The image above was taken from a Facebook :post with commentary still active.

What’s a council member to do?

Where is the funding?

Prior to the passage of the Measure T Sales Tax proposition in 2016, Santa Paula had not prioritized streets due to funding. There are various reasons with blame going as far back as 2004. Below is the allocation of the T revenues for the current fiscal year.

Measure T allocation for FY 2018/2019

One of the strategies has been to re-pave a street when major water or sewer work occurred. This strategy worked until the 2010 bond money was spent. How was $55 million spent? When the city received the proceeds of the 2010 bond sale, it used half of the proceeds to pay off the 2003 bonds, putting money in a secure account for principal and interest of the 2003 bonds, thus removing these bonds from the balance sheet. Thus, the 2010 $55 million sale was reduced in half the day it arrived! This is a legal Ponzi scheme called “defeasance”.

State Funding Pre-SB1

The image below shows cities and counties the recipients of billions in gas and diesel excise taxes. The amount received by Santa Paula was not discussed at the meeting, but obviously it was not enough due to the condition of the streets.

For a larger image of the Pre-2017 State funding to cities and counties, click on this link:how_spent large format. Source

SB1 Passed in 2017

The massive gas and diesel tax increases along with VLF increases and new EV fees were all packaged into a complex bill call SB1. Santa Paula, according to some estimates, could receive $500,000 a year indefinitely as long as people still buy gas and have cars. Read about the SB1 bill here.

The complexity in this bill is not for the faint-of-heart and by some casual observers is unauditable. To see the official Department of Transportation flowchart of this funding, click here. This chart is very important. Who could audit this flow?

Public Comments

Two speakers only spoke in Public Comments: one representing various labor groups and Sheryl Hamlin.

Sheryl Hamlin explained a recent LAO (Legislative Analyst Office) report which studied the period of 2007-2016. During this period 6 million people left the state and 5 million people migrated into the state. The demographics of the two groups represented two different segments of the population. The out-migration made less than $72,000, low education and had children. The in-migration population earns over $110,000 annually and is single. The obvious point is that California is too expensive for families raising children and regressive taxes like SB1 exacerbate the exodus. Read the report here.

The other speaker spoke of jobs, jobs and jobs for construction and related industries.

In fact, if you peruse the list of donors to the No on 6 (SB1 recall), the $20+ million primarily came from this group. There was a detailed study, also funded by a coalition of labor groups, describing the potential jobs of SB1. They estimate over 62,000 new jobs with associated revenue enhancing the economy. The construction industry, the report said, had not recovered since the Great Recession, so SB1 would put them on par with 2007. See graph below which is taken from this report.

Total California Construction Employment 2007-2017e

The above cited report declared that there is a four-to-one return for every dollar spent on transportation. However, the report did not differentiate between skills for housing construction versus road and infrastructure construction, nor did the report indicate the availability for the latter types of skills.

The Elephant in the Room: CalPERS

According to the FY 18-19 Santa Paula budget 65.6% of the General Fund Revenues are consumed by Salaries and Benefits. Measure T also has personnel in its separate budget. The total bill to CalPERS is not shown in the budget. But the FY 16/17 Comprehensive Audited Financial Report (CAFR) says “As of June 30, 2017, the City reported a liability of $22,609,596 for its proportionate share of the net pension liability”. A CalPERS bill goes toward paying a portion of this liability amortized over 20 years or about $2 million annually. Historically, CalPERS amortized this over 30 years, but cities were paying interest on interest, so CalPERS reduced the amortization period to 20 years. Additionally, the fund’s actuarial model used historically a rate of return that was 7.5% which has been unrealistic for years, so CalPERS is gradually dropping this rate of return, which means the payments from cities and counties and employees will increase. Some analysts project 15% annual increases. Read this report from the League of California Cities.

…Rising pension costs will require cities over the next seven years to nearly double the percentage of their General Fund dollars they pay to CalPERS
League of California Cities.

Demographics and Roads

With California’s population aging and pension costs rising, cities and counties cannot fund roads, so they look to Sacramento for help. California has its own pension issues with trillions in unfunded pension liabilities, all of which was exacerbated in 1999 with a retroactive pension increase signed by Grey Davis.

Jerry Brown’s very modest PEPRA (Public Employees Pension Reform Act) is under suit by CalFIRE. A loss in the court would decimate Jerry’s signature legislation.

Solutions?

Clearly Sacramento feels more taxes will solve all problems. But taxes without metrics and measurements is simply a formula to grow government. Prop 69, the LockBox bill of 2018, attempted to assuage voters that SB1 monies will be watched in a lockbox, however, only the gas and diesel fuel fees are “locked”, while the VLF and EV fees just go into the system (see flowchart above).

Prop 69 allows cities to exclude SB1 projects and expenses from the Gann Spending limit formula, which mandates a fixed year-over-year expense increase based on revenue and population. By excluding the SB1 monies, local government will grow, including pension obligation.

SB1 should be repealed. Suggestions would be 1) a progressive formula based on Miles Traveled and income, 2) a ten year renewable term with a progress and status report of repairs made, and 3) the entire package presented to the voters rather than by fiat in Sacramento.

To watch the video and download the information, click here.

For more information on author click sherylhamlin dot com


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3 Responses to Santa Paula: I don’t Care…Fix My Roads

  1. Sheryl Hamlin October 16, 2018 at 3:48 pm

    Prop 6 does not repeal the labyrinthine SB1 … merely the gas taxes … so there will still be money flowing based on new allocations of SB1 using pre-SB1 revenue …

    Reply
  2. Sheryl Hamlin October 10, 2018 at 8:16 am

    1100 jobs at Caltrans based on SB1 …

    https://www.sacbee.com/news/politics-government/the-state-worker/article218170925.html

    Reply
  3. Sheryl Hamlin October 9, 2018 at 7:56 am

    Yes on 6…

    Reply

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