Counterfeit COIN - Just the Facts

by Mayor Pro Tem Greg Sebourn, PLS & Council Member Bruce Whitaker

The issue of open negotiations in government finances is nothing new.  In fact, Fullerton considered this at its November 5, 2013 City Council meeting in which the matter was tabled for nearly seven months.

Elected officials have a fiduciary duty to manage your tax dollars and the public has the absolute right to know how and why their tax dollars are being spent.  This right to know is underscored since unionized labor is the single largest budgetary line item for the City and the fact that the City is still operating with a City Council approved (3-2) structural deficit of at least $1.6-million! 

Fullerton taxpayers have a long history of being shortchanged by City Hall.  From illegal taxes to redevelopment waste, Fullerton taxpayers have every reason to question who is proposing to spend how much and on what.  Civic Openness in Negotiations, or COIN, offered a glimmer of hope to Fullerton taxpayers before being surreptitiously replaced with a Counterfeit COIN. 

On June 17 the Fullerton City Council voted 2-3 (Ayes: Whitaker & Sebourn; Noes: Chaffee, Flory, & Fitzgerald) to approve COIN based on the original model approved in other jurisdictions including Costa Mesa.  COIN would have provided a new level of openness and transparency into labor negotiations.  Unfortunately, after that motion failed, three Council Members (Chaffee, Flory, & Fitzgerald) voted to approve an ordinance that gives the illusion of transparency and rigor to a backroom process that has to this day remained secret.

Fullerton’s Counterfeit COIN ordinance lacks the two most critical components that make COIN an effective process for taxpayers and city workers - transparency and accountability.  Supporters of Counterfeit COIN point to the model guidelines “LABOR NEGOTIATION STRATEGIES AND PRINCIPLES” by the Association of California Cities of Orange County (ACCOC).  The guidelines offer up sample language and suggestions for COIN-like ordinances but Counterfeit COIN ignores the first rule of the guideline, Use of Outside Negotiators, as well as the second which calls for use of an independent auditor for financial analysis.

COIN and Counterfeit COIN both have a process for disclosure to the public regarding what the Council and public employee unions have negotiated behind closed doors.  Fullerton’s Counterfeit COIN, however, only applies to written offers.  Further, it does not specify when the details of the proposed agreements, offers, or counteroffers must be made public.  This means there may be countless secret “trial balloons” offered by both sides before settling on written terms.  This is where Counterfeit COIN fails the transparency test.

Accountability is completely absent from Fullerton’s Counterfeit COIN as well.  COIN required that all negotiations and economic analysis were to be conducted by professionals that were not subject to a public pension system and far removed from City Hall.  They are to be independent from the negotiating parties in every way.  Counterfeit COIN offers certain criteria that must be met in order bring in any outside parties. Even if the criteria is met, Counterfeit COIN requires the Council appoint a representative as a representative to the outside Negotiating Team, and further requires that representative be a public employee who stands to benefit by the outcome of the negotiation process.

COIN is really quite simple despite attempts to create the illusion of complexity or difficulty.  There are just three key components of COIN:  Independent Negotiator, Independent Economic Analysis, and Timely Public Disclosure. 

The lack of labor union opposition to Fullerton’s Counterfeit COIN sends the message to taxpayers that this new ordinance brings no substantive changes to the backroom labor negotiations. 

Until a clear majority of the Fullerton City Council is willing to recognize that feathering the beds public employee unions is contrary to their fiduciary duty, Fullerton’s legacy of backroom negotiations lead by city staff to benefit city staff will continue. 

More of the same, same as before.  

Where is Fullerton's Independent Advocate?

Fullerton water rate payers are becoming increasingly weary and suspicious of politicians and managers who have relied on the City's Water Fund to help offset the rising labor costs at City Hall. 

Inflation is at about 3.15% on average for 2011 and keeping up with it is challenging in a recession. Being somewhat predictable, we can manage to keep pace with it and plan for future investments in the water system.

However, Fullerton, much like Los Angeles, relies on the water rate payers to help offset and pad the ever-rising costs of labor. That's not fair.

So who at City Hall can Fullerton's water customers turn to when the City Council is dazzled by brilliance and baffled by BS?

No one.  There is no one left in City Hall to turn to when City staff draft a report - true or not - that paints a grim picture of the City if rates are not immediately increased.

To counter the misleading and false emergency to generate cash-flow which will be used to make up for poor fiscal management and planning, some communities, Los Angeles included, have turned to independent advocates or rate payer advocates.

The problem is that the advocate, which might be a single individual or a committee, is appointed by the very people who have their hands in the cookie jar thus making the advocate less than independent.

Fullerton is special.  Not because of the large number of schools or the inexcusable level of apparent police corruption but because Fullerton already has an independent advocate.  The Fullerton Association of Concerned Tax Payers (FACT) was created in 1996 after the last recall effort of 1993-1994 when the City Council voted to create a utility tax.  FACT founder, Bruce Whitaker, was elected to the Fullerton City Council in November 2010.  Time and again, FACT has fought for Fullerton taxpayers.  Current FACT president Jack Dean took over the organization in 2003 and has since launched http://www.pensiontsunami.com/.

FACT has helped residents, business owners, and taxpayers tackle the issue of excessive and unnecessary taxation.  FACT has a close relationship with the Howard Jarvis Taxpayers' Association (HJTA) which came together recently and challenged Fullerton's illegal and unnecessary in-lieu franchise fee which skims 10% of the total revenue from the Water Fund.  Some say the "fee" is nothing more than robbing Peter (the Water Fund and water consumers) to pay Paul (employee salaries, pensions, and benefits).

FACT has saved Fullerton taxpayers more than $150-million since its work to repeal the utility tax. 

FACT was the sole Plaintiff in lawsuits against the Gray Davis administration and, later the Schwarzenegger administration to block the issuance of pension obligation bonds of $2 billion and just under $1 billion respectively.  The second lawsuit was successful at the Sacramento Superior Court and later at the Court of Appeals and has since provided protection against the State issuing bonded indebtedness without voter approval.

FACT remains the only guardian against unfair and unwarranted taxation, whether disguised as a fee or buried in your utility bill. 

If you are having a hard time digesting City-imposed fees and taxes, and if you are tired of the lip service of politicians, please support the Fullerton Association of Concerned Taxpayers - your ONLY independant advocate in Fullerton.

Another county sues municipality over redevelopment merger

The Ventura County Star is reporting a familiar story being played out throughout California.  Redevelopment agencies have been attempting to merge their zones or areas into a single massive redevelopment area.

According to the Ventura County Star, Simi Valley merged three redevelopment areas into one last June.  Ventura County objected and has sued.  The County claims the area is not blighted.

Sound familiar?  It should!  Fullerton has done the same thing with their massive merger of redevelopment areas. 

The Fullerton Redevelopment Agency merged areas in 2009 and was sued by the County of Orange as well as a local resident and businessman.  Fullerton ended up paying millions for their greed to the County in property tax revenue that the County was going lose.  Over the next 45 years, the City could pay out as much as $500-million. 

Many of these legal battles may not be fought in the courtroom at all.  The California Supreme Court has been asked by the State's 425 redevelopment agencies to overturn the state legislation passed earlier this year which abolishes all redevelopment agencies unless they pay a "fee" to cover some of the lost revenue. 

It's somewhat satisfying to watch agencies fight one another over taxes.  The Cities, through their redevelopment agencies are like little Tea Parties trying to pay as little in taxes as possible.  It's really quite funny until you realize its all OUR money.  The City, County, and State took my money, squandered most of it on "overhead", and then gave what was left to another agency...

Special thanks to Redevelopment.us for bringing this story to my attention.

For more on Fullerton's Redevelopment Agency, CLICK HERE.

What's in the "Capital Improvement Program"

What’s a CIP and why do we have one?

The City of Fullerton’s Engineering Department webpage does not offer an easily found answer as to what the CIP is or why one exists.  However, the currently proposed 5-year CIP or Capital Improvement Program says that “the CIP is a planning tool for short- and long-term capital improvements and development.”  The CIP continues, adding “It links Fullerton’s fiscal planning process to physical development. “  I look at it as the 5-year budget plan for the City’s infrastructure.

According to the proposed 5-year CIP, the City projects spending $46,060,450 for 2011-12 and $32,866,050 for 2012-13, with a five=year total of $206,920,550.  The Fullerton Redevelopment Agency has a projected five-year total of $6,020,000.

As you can see, these are not exactly small figures and therefore should not be taken lightly. 

The funding sources include property taxes and various excise taxes attached to services. 

More importantly, what does it cover?  What will get fixed?

One of the first things Fullerton residents and business owner’s hope will get covered are the City’s roads.  Rest assured, the roads are addressed in the CIP but not as fast or frequent as many of us might like.

To understand the road repair portion we have to look at what constitutes our streets.  There are curbs, gutters, sidewalks, asphalt, trees, and all of those utilities. 

Of the $46,060,450 for 2011-12 about $4,043,000 is to be spent on resurfacing existing roadways.  About $270,000 will cover curbs and gutters.  Last year Mayor Pro Tem Bankhead said that Redevelopment funds pay for those sidewalks around town that need repair. The Redevelopment Agency’s total planned contribution towards curbs and gutters is just $20,000.  And of the $4,043,000 to be spent on resurfacing our roads, $1,000,000 is from the Redevelopment Agency.

Now let’s consider our water system and keep in mind two things: 1) our water rates will increase at least 7.8% in just the next year; 2) the CIP does NOT include the rate increase; 3) there is 10%-11% that is skimmed from our water bills to cover general funding obligations like police, parks, and fire in the form of a franchise tax.  The tax amounted to $2.5-million last year that does not go back into our water system.   The total projected spending for the water system is $1,600,000 for 2011-12.  Now imagine taking that $2,500,000 that is diverted each year and put it back into the water system.  That would give us $4,100,000 to invest in our water system without having to raise water rates.

Now let’s look at what many taxpayers might consider pork.  Here is a short itemized list of proposed expenditures of the next 2 fiscal years:

$60,000 - Target Retrieval System for the gun range at the Police Department

$155,000 – Duane Winters Field Fence Replacement (this is the baseball field across from City Hall.  The Flyers are in negotiations to use the field for their independent league)

$350,000 – To design and install a pump to circulate water used for the spray ground at Valencia Park.

$150,000 – “Safety enhancements” at various public facilities.

$25,000 – “Public Art Program” from Redevelopment Agency

$183,000 – Replace gates and fencing at Basque Yard (Director Hoppe noted at last week’s Planning Commission meeting that the gates are poorly designed and require constant maintenance.  Nice to know we got our money’s worth!)

$158,600 – “Downtown Plaza Stage Improvements”

Taking the cake is $50,000 in my book is the item shown as “window coverings” at Basque Yard!

So, if we aren’t spending all of our CIP on roads and the water system, then where is it going?

Aside from some of the “pork” noted above $40,417,450 will go into the 57FWY/Chapman intersection ($238,000) as well as widening Bastanchury east of St. Jude ($625,000) and the grade separations ($28,800,000There is also the sewer system which will receive about $4,500,000.

Looking over all of these items and funds I am compelled to ask the question WHY?  Why are we allocating $50,000 for window coverings for one of our newest facilities while our water system is crumbling and we are looking at closing the Hunt Branch Library?

A similar question was asked to Public Works Director Don Hoppe who responded by saying that these allocations represent the standard maintenance and replacement plan for these facilities.  It’s a good answer if we applied a similar philosophy to our countless roads, waterlines, street lights, etc.  Unfortunately, it looks like we are not thinking outside the box when it comes to investing in our infrastructure.  It will take City Council Members and a City Manager with courage to take a hard look at the budget and make sensible decisions that reflect prioritized needs.  I’m not holding my breath…

Controller Releases January 2011 Cash Update

PR11:08
2/10/2011

Contact: Jacob Roper

916-445-2636

SACRAMENTO – State Controller John Chiang today released his monthly report covering California’s cash balance, receipts and disbursements in January.

Total receipts for the month were $714.5 million, or 8.1 percent higher than estimates found in the Governor’s proposed 2011-12 State Budget. Sales taxes were up $192.4 million (19.2 percent) in January, but corporate taxes were down $69.2 million (-16.4 percent).

“January revenues rose above expectations, but unemployment has remained in the double digits. And while the stock market was up, January corporate taxes were down,” said Chiang. “These mixed messages tell us we still have a long way to go. We urgently need a solid budget with real solutions for California.”

In the month of January, personal income taxes came in $628.4 million above (8.8 percent) estimates. Part of this jump was due to lower-than-expected taxpayer refund payments, possibly because taxpayers are filing later than usual. The State Controller’s Office expected to issue $380 million in the month of January, but only $197 million was sent to taxpayers.

The State faced an $18.5 billion cash deficit on January 31. That deficit was covered by $8.5 billion of internal borrowing – short term loans from special funds – and $10 billion of external borrowing.

The Controller also launched a new section of his website today showing basic information on State revenues and program funding over the past 10 years. State Finances 101, along with January 2011's financial statement and the summary analysis, can be found on the Controller's website at www.sco.ca.gov.

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Controller Urges Support for CalPERS, CalSTRS Reform

PR11:07
2/9/2011

Contact: Hallye Jordan

916-445-2636

SACRAMENTO – State Controller John Chiang today announced he is sponsoring two bills to improve the performance of and the public’s confidence in the nation’s two largest public pension funds – the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS). The bills would cap the amount of gifts members and staff may receive each year, and require a pension fund board member or employee to wait two years after leaving before working with a firm that has business with the funds.

“The appearance of impropriety by some former board members and investment staff of CalPERS raises concerns that members and staff may be using their past relationships and positions of power to influence decisions regarding the investment of public pension funds,” Chiang said. “I believe these bills are a critical step toward restoring the public’s confidence in the professionalism of all of our activities on behalf of the retired public employees and teachers, and the taxpayers of California.”

Authored by Senator Gloria Negrete McLeod, chair of the Senate Public Employment and Retirement Committee, one bill will lower the amount of gifts CalPERS’ and CalSTRS’ members and staff are allowed to receive under the Political Reform Act. By reducing the amount from the current $420 a year to $50 a year, the bill will address the influence-peddling practices revealed when the placement agent scandal broke in the spring of 2009.

“California’s public pension systems are the largest in the country and should be held to a higher standard,” said Negrete McLeod. “Limiting gifts from individuals and organizations trying to influence the decisions of pension boards and government employees is the right thing to do.”

The second measure, by Assembly Member Furutani, chair of the Assembly Public Employees, Retirement and Social Security Committee, would prohibit, for two years, CalPERS’ and CalSTRS’ board members and employees from accepting a job with any employer who had substantial contracts or investments in the five years the employee or board member worked at the fund. Employees or board members who had worked with placement agents during the 10 years prior to leaving CalPERS or CalSTRS would be prohibited from going to work for the agent or the agent’s firm for two years after leaving the public pension system.

“Public trust and government accountability within the nation’s largest pension systems are critical to any of the reform proposals that are on the table,” Furutani said. “Implementing a ‘cooling-off period’ would ensure that decisions being made by board members and staff are being made for the right reasons and not to encourage future employment opportunities.”

In letters to CalPERS’ and CalSTRS’ officials sent late last week, Chiang noted that the placement agent scandal has eroded the public’s confidence in the handling of public funds. “These measures were developed with the principal goal of protecting (CalPERS and CalSTRS) investments from unsound influence and restoring the system’s credibility in the public eye,” Chiang wrote.

The legislation may be discussed at the CalSTRS meetings this week and at the next CalPERS meetings that start February 14. The bills are expected to be in print within the next two weeks.

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Controller Comments on Governor’s Decision to Drop Sale-Leaseback Proposal

PR11:06
2/9/2011

Contact: Jacob Roper
916-445-2636

SACRAMENTO – State Controller John Chiang today issued the following statement regarding Governor Brown’s decision to drop the proposal to sell, then lease back, several state-owned buildings:

“This decision shows Governor Brown is serious about ending the budget gimmicks and sideshows. Only real, on-going solutions will improve our balance sheet and solve our annual fiscal problems.”

“While the sale of these buildings would have provided immediate cash for the state, it would have cost Californians more over the long haul. Selling low and renting high would not have served taxpayers' interests.

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Fullerton City Council Gets It Wrong...Again

Tuesday night's City Council meeting resulted in the passage of bad laws and a request that I believe would result in the misappropriations of federal funds.

Tough questions were hinted at but the council members were pacified by staff assurances of checks and balances. 

At the heart of my criticism is the amendment of the City's municipal code with respect to trash cans and tarps, two objects I am not particularly fond of. 

One amendment makes it a crime, an infraction, to have your trash cans out more than 24 hours before collection or more than 12 hours after collection.  The new regulation does not take into account those of us who work long hours.  There are many days that trash is collected at 8 a.m. and I don't get home from work until 11 p.m.  That would place me in violation of the law and subject to an infraction. 

Another amendment, also an infraction, is the use of a tarp to, among other things, provide weather protection for the interior of a building.  Again, missing from this amendment is a time element.  The law does not allow for a temporary tarp, say from a downed city-owned trees onto a home, for any reason.  The law is simple and specific enough that any tarp for any period of time used in the manner described above it is an immediate violation.

Both amendments, and others, passed without a great deal of questions, despite pleadings from the public. 

These amendments will allow code enforcement, also known as "community preservation officers", to drive around and issue citations immediately.  The "due process" which was mentioned briefly as a check-and-balance to enforcement is that the citation may be appealed after the fact.  This so-called due process will require that the person cited take time off of work to defend their actions.  Simply adding a 24-hour clause for trash cans and a time-line for the tarps would lend some assurance that the regulations will not be forced simply to harass residents and taxpayers. 

Also being approved by the City Council was a federal appropriations request which listed four projects that need funding.  I first mention this in Federal Money, Local Problem. 

Surprisingly, Fullerton Association of Concerned Tax Payers (FACT) co-founder and councilman, Bruce Whitaker, voted for the request.  I have not spoken with Whitaker regarding the list and he did not comment after the motion was seconded so I don't know his rationale for the vote. 

In my opinion, the only item on the list that might qualify for federal aid would be the Harbor Blvd Slope Stabilization Project.  The other three, park modernization and two parking structures, are local issues that are not a threat to the health and welfare of the community if they are not completed.  In fact, a strong argument could be made that supporting these specific parking structures is support for redevelopment, eminent domain, wasted tax dollars, and abuse of power.  Both projects violated the rights of the previous property owners. 

And if all of that wasn't bad enough, two residents spoke about receiving citations for having a pick-up truck and a toy hauler on the street over night.  The Fullerton Police Department considers pick-up trucks to be a commercial vehicles because the DMV classifies them as such, even when they are owned by individuals for personal or recreational purposes.  The trailer, I suspect, falls under a similar twist of the law because the trailer was not attached to the vehicle that normally pulls it.  Taking these residents at face-value, it sure sounds like Fullerton residents continue to be beat up and abused by City Hall. 

Maybe things will change in 2012...

GodzillaPERS

$13,000,000 Credit Card Bill

Is it responsible city governance to invest 20 years of planning on the renovation of an athletic field and then breakout the tax payer's credit card (issue tax bonds) to pay for it all? 

The OC Register is reporting that today the City of Fullerton is "unveiling" the new and improved Lion's Field after a $13 million upgrade and rehab, complete with that nifty artificial turf that has been showing up in shopping centers and yards around town.  The turf will be the new playing surface for kids in Pop Warner football and Bobby Sox.  I'm not a big fan of artificial turf but I can appreciate some of its advantages like maintenance cost savings and water conservation.

I'm also not a big fan of tax bonds for athletic fields but I can appreciate a bond's usefulness under certain circumstances.  In my opinion, this athletic field, which is used by a select few, should not be paid for with the taxpayer's credit card, the bill for which our children will be burdened with.  I love working with kids, hence my continued involvement and support of Boy Scouts, which is privately funded; however, this facility is paid for with tax revenue which means that's another $13 million for something other than our infrastructural needs including public education and public safety.

I would rather see tax bonds issued to help recover from emergent and disastrous events, such as a major earthquake or tsunami.  Janet Morrissey wrote a good article for Time/CNN on the muni bond debacle which paints our City's current path towards filing Chapter 9.

"Since last July, 207 municipal issuers defaulted on bonds valued at $6 billion, and that number is expected to escalate..."

Our elected leaders should exercise better judgment when it comes to the indebtedness of our children.  I find it ironic that the same children on the Lion's Field this season will be the ones saddled with paying the debt of their youth sports, unless of course the kids get smart and move from Fullerton.