Vallejo Tax Increase: Fool Me Once...You Know the Rest

Back in 2011, Mayor Osby Davis and his Council majority wanted a new public safety tax. They knew they didn't have the votes for a special tax, so they put forward Measure B, a general tax (they only needed a simple majority of voters to approve a general tax -- 50% plus one voter -- vs. 2/3 of the voters for a special tax).  They promised it would sunset in ten years, they promised they'd stick to our new policy of one time monies for one time costs. Councilmember Schivley and I knew that Measure B was a bag of empty promises pushed by the Public Safety unions, and we wrote the Argument Against Measure B.  Measure B passed in the 2011 election by a vote of 9,295 to 9,136 -- it won by less than one percent! 

I feel the same way now about a new proposed tax  by the City Council. First show me you can spend the money you have right now wisely before we give you any more. Right now, your grade is a solid "D-". 

	Measure B: To enhance funding for 9-1-1 response, police patrols, firefighter and paramedic services, youth and senior programs, street and pothole repair, graffiti removal, economic development, and general city services, shall the sales tax be raised one cent, expiring after ten years, with all revenue legally required to stay in Vallejo?[4]

1. ARGUMENT AGAINST MEASURE B

Stephanie Gomes, Councilmember, City of Vallejo
Joanne Schivley, Councilmember, City of Vallejo

Vallejo has been hit hard by this Recession - people and businesses are struggling just to survive.

If Measure B is approved, Vallejo will have higher sales taxes than American Canyon, Napa and all Solano County. This will put our existing businesses at a disadvantage and discourage new businesses. Sales taxes also hurt those who can least afford them – seniors on fixed incomes, students and the poor.

For years, Vallejo has balanced its budget by reducing staff and slashing essential services. We must stop cutting services and start reducing the cost of providing them. Many city employees make more than $100,000 per year, get free or reduced cost health care, and can retire in their 50s with pensions far greater than the private sector. These costs ($61,993,036) consume more than 94 percent of the current General Fund budget ($65,717,328) – leaving less than six percent for everything else.

Vacaville has 36 more police personnel (sworn and non-sworn) than Vallejo, and pays $4,000,000 per year less. They have three more firefighters, and pay $1,800,000 less. If our Police and Fire Departments were staffed and paid the same as Vacaville, we could have more public safety employees and still save $5,800,000.

Future City Councils will be able to spend new sales tax revenue however they choose – no restrictions. In bankruptcy, the Council majority approved two employee contracts that guaranteed raises and free health care. Considering that track record, we cannot trust that increased taxes will be spent on improving services, not on employee pay and pensions.

Increasing Vallejo’s sales tax now is a bad idea. It’s time to make tough choices, reduce employee costs and quit kicking the can down the road. We must get our fiscal house in order before asking taxpayers for more money.

Vote NO on Measure B

2. ARGUMENT IN FAVOR OF MEASURE B

Osby Davis, Mayor, City of Vallejo
Michael Wilson, Vice Mayor, City of Vallejo

Now is the time to rebuild our great city by reinvesting in public safety and economic development, attracting new businesses, repairing our streets, reestablishing quality of life services such as programs for our youth, senior citizens and the arts. It is time to put our safety and well being in a position of strength.

Voting YES on Measure B will allow us to begin the process of strengthening these vital services.

Since we were elected, the city council has passed resolutions and adopted measures to stabilize our finances. We have balanced our projected expenses with projected income. Our budget is projected to be balanced for the next five years. We have set in place policies for living within our means.

We are now in the process of rebuilding our city and this is the perfect opportunity to do so without costing the citizens of Vallejo any more in sales taxes than we have already been paying during the past years. The state of California’s 1% sales tax which diverted our tax dollars to state of California and away from Vallejo ended earlier this year. Measure B will allow us to keep our 1% sales tax dollars in the city of Vallejo to rejuvenate and rebuild our beautiful city. We will continue to pay the same sales tax rate as before.

It is time us to come together and invest in our future. If you want to rebuild Public Safety, Economic Development, Quality of Life Services and Repair our Deteriorating Infrastructure, we urge you to join us in Voting Yes on Measure B.

Let’s keep our sales tax in our City by voting yes on Measure B.

3. REBUTTAL TO ARGUMENT IN FAVOR OF MEASURE B

Stephanie Gomes, Councilmember, City of Vallejo
Joanne Schivley, Councilmember, City of Vallejo

 

The City Councilmembers who support Measure B are the very people who, while in bankruptcy, approved a new contract, with pay raises, that cut our police force from 134 to 117 in 2009, to 104 in 2010, and to 90 now.  Then, they approved a management contract with pay raises while employees in other California cities were taking salary and benefit cuts.  If all salaries and benefits had been cut 10 percent while in bankruptcy, Vallejo could have saved $6.8 million.  Now, they’re asking us to pay more taxes to fund those increased salaries and benefits.

 

Supporters of Measure B argue that it won’t cost more than we’ve been paying because the State sales tax was reduced one percent. If Measure B is approved, Vallejo will still have higher sales taxes than American Canyon, Napa and all Solano County.  This will hurt residents and businesses and slow job growth and economic development.  And, it doesn’t address the real issue that most contributed to Vallejo’s bankruptcy – unsustainable employee contracts and the exploding cost of pensions.

 

“Living within our means” doesn’t mean increasing taxes to cover costs that are too high and need to be reduced.  Because this is a general tax, there is no guarantee any increase will be spent on economic development, infrastructure improvements or quality of life services – and not on employee pay and pensions. Tell the City Council to make the needed changes to our employee costs first. Then they can ask for more tax dollars. 

 

Vote NO on Measure B

 

Link to final Citizens Public Safety Committee report

Final Citizens Public Safety Advisory Committee Report

Bloody Their Noses (Police Union reformers)

There have been many online conversations lately about the Vallejo Police Officers Association (VPOA) and their support of City Council candidates. What does their endorsement mean to candidates...and to us citizens? Some suggest their endorsements are benign, just an organization expressing their support. 

Ask yourself one question: why are Vallejo Police officers involved in Vallejo's elections at all (probably 99 percent of them don't live in Vallejo)? 

The answer: the candidates they support who win the election will vote on their next multimillion dollar contract, raises, benefit increases, etc. They will vote on things like giving the Vallejo Police Department a multimillion dollar office building on our waterfront. They will vote on whether to require officers to get drug tested after police shootings or any other reform the public wants. The VPOA is involved because they are trying to elect their next bosses, bosses who will vote the way they want them to vote. 

I will be repeating this often: when I first ran for City Council in 2005, I was asked by the unions, word for word, "If we endorse you, will you stay BOUGHT?" 

Yes, they asked that. Out loud. 

How some Vallejo Police Officers and the VPOA behave and what they do to get what they want is clearly laid out by Ron DeLord, a former Texas police officer and consultant to police unions. He wrote an article in 2008 in "American Police Beat Magazine" posted online called, "Time to Circle the Wagons." It's essentially the Police Union Playbook: how to confuse and scare citizens, buy local elections and votes, and how to threaten and intimidate "nonconforming" council members to shut them up.

Ron DeLord instructed police unions to buy local elections: 

"Police unions can avoid many of these issues by endorsing and supporting candidates who will not ask them to make such a decision {arbitration or a legal decision} or negotiate in good faith with the union over any change. You have to recruit candidates and be involved in each election. Every decision impacting police officers is decided by a political vote. How many votes do you have on the issue? If you lack a majority, how many do you need to                     get right side up?"

DeLord also told police unions to, "get dirty and fight to win" by getting personal with "reformist" council members and to "bloody their noses".

"The main event is a POLITICAL GAME and the legal game is the side show. Unless you beat them politically, you will never win even if the courts one day decide in your favor. If you discover you cannot win under the current rules, change the rules, and go outside the experience of the elected officials. Think outside the box. Get dirty and fight to win. If you are in this predicament, then your elected officials did not RESPECT the union or the officers. To get respect you have to bloody their noses and demonstrate that the union is willing to make it personal, because it is personal on so many levels."

In 2008, when we went into bankruptcy, they began bloodying noses all over the place. Below is a billboard the Public Safety Unions paid to put up in downtown Vallejo to try and make the City Council look bad; some citizens felt it served as a welcome mat home robbers and car thieves.

2008 Public Safety Union billboard on Georgia St. and Sonoma Blvd.

Kurt Henke, former Vallejo firefighter and president of International Association of FireFighters 1186, specialized in bloodying noses. He filed lawsuits against fellow city employees, a Human Relations Commissioner and several City Council members who were pushing back against him. They were clearly SLAPP suits (Strategic Lawsuits Against Public Participation. A SLAPP suit is a lawsuit intended to censor, intimidate, and silence critics by burdening them with the cost of a legal defense until they abandon their criticism or opposition. In the typical SLAPP, the plaintiff does not normally expect to win the lawsuit. (Wikipedia)

Henke lost. Bigly. He owed a lot of money in legal fees (judges don't typically take kindly to SLAPP suits), and his union was on the hook for them (they weren't pleased). But he just tried to get the City to pay for those legal fees as part of their contract. Because that's how Henke rolled. It almost worked, too. But I caught it in my first budget as a Council Member, buried in an obscure line item so nobody would notice. 

When we finally started the Citizens Public Safety Advisory Committee after much gnashing of teeth and threats by VPOA, they circled the wagons. A post on Topix said it all, the wagons were circled: 

"The Schivley-Schussel lynch mob will not have the cooperation of any public safety agency in this state. They will have to form their reviews by researching public documents only. The word has been passed on what is driving this committee. The wagons are circled. A complete waste of time."

I'm not sure when, but American Police Beat deleted the "Time to Circle the Wagons" article and I can't find it anywhere online. But thanks to Marc Garman and the Vallejo Independent Bulletin, you can see the full copy, below. And Ron DeLord, who began trying to appear to play nice-nice in the sandbox, told Reuters in 2014 that, "he had learnt to be more collaborative since 2008, but said of the “get dirty” message: I wrote it. I believe it.”

It's still happening today. In Vallejo. And the VPOA is counting their votes and hand picking their candidates as I type this -- so please, beware any candidate endorsed by the VPOA or Jump Start. Trust me, we've been down this road before, and it's ugly. 

Note: I edited this post to shorten it and keep the focus on "Time to Circle the Wagons". I'll share more about my bloodied noses in future posts.

Time to Circle the Wagons By Ron DeLord (2008) The world of law enforcement is changing, not just in the U.S. but globally. The cost of wages, health insurance, pensions, training and equipment are skyrocketing at the same time as the economy worldwide is entering a recession. Elected officials are being forced to trim their budgets, and the biggest budgets in any state and local government are police and fire. In many states the non-essential public services have been trimmed back as the economy slowed down. Now many governments have decided to see how much they can trim from essential services. In the poorer communities, there is not much fat left to trim. So who should be worried? The highly compensated law enforcement agencies, especially in areas of the country where the housing markets have collapsed, are the most vulnerable. These agencies have received wages and benefits that far exceed those enjoyed by the general public, including many of the elected officials. Some police unions have started to believe that they are bullet-proof from budget cuts. Just ask yourself what happened to the mighty auto workers, steel workers and coal miners. They were at the top of their game and collapsed. If your union believes nothing bad will happen, you are in for a rude awakening. It will start with a trickle such as civilianizing or contracting out more positions and using technology. The elected officials will tell the public, “Why should we pay a police officer $100,000 a year to do a job a non-sworn employee or private contractor will do for half the cost.” It is getting harder and harder to justify using sworn officers in many jobs that were traditionally police functions. The next move will include red light and eventually speed cameras to “free up” these highly paid officers for more serious police work. Do not expect the revenue to go back to the police department. Next the pressure will mount to create two-tier wage and benefit plans. Despite knowing the internal dissension that will be caused by having two officers working side-by-side, and each having different health insurance or pension plans, police unions are starting to accept or be forced to accept two-tier plans. The common employer pitch to the union is, “We can continue to fund your pension, but we must have budget relief by allowing the city to pay less for future officers. If you refuse, we will be forced to lower the pension for current officers.” The pressure to sell the unborn to save themselves is more than many union leaders can stand. And if all else fails to squeeze concessions out of the police budgets, the city will declare bankruptcy to abrogate its employee contracts like Vallejo, California did recently. While the city is far from bankrupt, the goal is to use tax payer money to tie the unions up in court and drain their treasuries. If you know what to expect in the future and you do not prepare yourself, you only have yourself to blame. Here are some simple rules when you are forced to say, “I never believed it would happen to me.” Rule No. 1 – The battle is in the Court of Public Opinion! The employer will be making its case to the public and media. It is a fight for the hearts and minds of the tax payers. If the public is in a foul mood over their personal finances, you will get little sympathy by arguing you deserve to be paid more than the high school principal. The message has to be directed to how the reduction in police services will impact their lives. It is all about the public! Rule No. 2 – The political fight is the main event and lawyers are a side show. If you are forced into the courthouse or arbitration, you may have waited too long to start the political machine. Police unions can avoid many of these issues by endorsing and supporting candidates who will not ask them to make such a decision, or negotiate in good faith with the union over any change. You have to recruit candidates and be involved in each election. Every decision impacting police officers is decided by a political vote. How many votes do you have on the issue? If you lack a majority, how many do you need to get right side up? Rule No. 3 – If you get caught behind the eight ball, and the employer is attacking you as a greedy and uncaring union you must identify the vocal critics and make them feel your pain. Somehow this seems to be where the unions get queasy and weak-kneed. It is often difficult to convince yourself or the members to picket some councilman’s business, put their home telephone numbers up on billboards, and in general make their lives a living hell. Union leaders who feel they are too professional to stoop to these tactics are the same ones who believe they can win by remote control using some lawyer. The bottom line: The main event is a POLITICAL GAME and the legal game is the side show. Unless you beat them politically, you will never win even if the courts one day decide in your favor. If you discover you cannot win under the current rules, change the rules, and go outside the experience of the elected officials. Think outside the box. Get dirty and fight to win. If you are in this predicament, then your elected officials did not RESPECT the union or the officers. To get respect you have to bloody their noses and demonstrate that the union is willing to make it personal, because it is personal on so many levels. Ron DeLord is the former executive director of the Combined Law Enforcement Associations of Texas

APBWEB.COM Time to circle the wagons American Police Beat Magazine - The Leading Law Enforcement Publication. The Police Magazine for Cops.

Why I can't run for Mayor -- Who's In?

Photo: a very sick me after six years on the Council

When I was elected to the Vallejo City Council in 2005, the City was teetering on the brink of bankruptcy. Former city councils had been kicking the budget can down the road in order to stay "solvent" by making deals with the Vallejo Police Officers Association (VPOA) and the International Association of Firefighters #1186 (IAFF). They kept agreeing to give these public safety unions (PSUs) raises and other extra benefits in exchange for agreeing to defer payment of previously given raises for the next couple of years. As councils kicked the can down the road year after year, these deferred raises and other contract sweeteners kept compounding. When I was elected, 12% was due. We didn't have the money to pay for those deferred raises -- though the PSUs "generously" offered to defer again if we gave them another sweet deal for a couple of years. 

I said no way, not going to happen. We'll take our medicine and fix the problem. I wouldn't leave for future councils what was left for me, and the citizens of Vallejo deserved better. We tried to bargain with the PSUs, asked them to take a modest pay cut so we could stay solvent. They refused. In the end, even the PSU paid-for council members had to vote for bankruptcy -- despite some of them frantically scribbling numbers just minutes before the vote. Numbers don't lie; we were bankrupt. 

 

The PSUs were livid. For years they'd gotten used to buying and bullying city council members, and hated me for leading the charge to tell them, "No." They made sure I paid for it, though. I've haven't talked publicly much about what they did to me, how they harassed me, harassed my family, helped try to recall me and Councilmember Marti Brown, the complaints I filed against them for their harassment, the Internal Affairs Investigation the police did, the brutal, misogynistic cyber bullying they engaged in on a daily basis on the Times Herald blogs, Topix. I stopped reading the blogs early on, and had friends who would read them and reported the ones to me that threatened my life or had personal information, etc. I had to stay away for my own sanity. I was being cyber bullied before it even had a name.

I NEVER let them silence me or stop me from pushing for reform and changes (like PB and passing Measure A -- yay!). However, with the bullying and harassment, combined with working a full time job, caring for my ailing mother, in addition to my Council duties, I got very sick. The photo above is what I look at when I'm tempted to run again. I'm not a thin person, never have been -- I obviously became very ill. 

 

So I understand Mayor Sampayan choosing not to run again. I'm so thankful to the wonderful people who have reached out to me asking me to run -- your support warms my heart. I know Vallejo needs strong, independent leadership like I could provide. That's the hardest part, I know I could do it. But I have to choose me first this time. 

It makes it so much harder knowing that our current choice is Councilmember Hakeem Brown, who is a PSU-supported candidate who follows their lead. And I'm sure Councilmember Rozzana Verder-Aliga will run, who is also a PSU-supported candidate who follows their lead. The same group of people who participated in bullying and harassing me for opposing them are now trying to elect a mayor who will do their bidding. 

I will say that I am very heartened by all the people showing up and demanding changes to the corruption and excessive use of force in our VPD. The people following the money, researching the budget, participating in meetings, watching what they're doing. I can only tell you from my experience, that while it may not feel like it does any good because the council majority just does what they want, it matters. Daylight matters. Your voices matter. It may not be instant gratification...but your pushing impacts them. There is such strength in a loud, vocal citizenry. I was in the minority on the Council for six of my eight years. But I was a strong, dogged, vocal minority, and I was able to make changes. And when I couldn't effect change, I spoke the truth about what was happening, and that made those who were serving the PSUs instead of the people of Vallejo mighty uncomfortable. 

I promise to keep fighting with you. I'm getting ready to start to tell stories and share information from before and during bankruptcy, which is in many ways mirroring what is happening now. I want to give you hope that we can make change together, and help you all see where we shouldn't repeat some mistakes. 

Now. I know there are a lot of people who have proven by their work in the community that they can be a good, independent mayor. You don't have to have experience as a city council member. That's easily learned. I've been watching the various battles you've all won. Will you consider running? I'd be happy to help. Who's in?  

 

A Lot to Be Moody About in Vallejo

A report from Moody’s Investors Service was released recently about Vallejo, Stockton and San Bernardino entitled, “Without Pension Relief, Bankrupt California Cities Risk Return to Insolvency”.

Moody’s warns that because of Vallejo’s continuing structural imbalance, the city, “risks a second bankruptcy filing if it continues on its current path.” And while the City did cut cut retiree health benefits, created a second benefit tier for new hires and made City employees contribute more of their pay toward their pensions, Moody’s argues that Vallejo missed the opportunity in bankruptcy to cut its pensions.

“Vallejo’s current budget challenges are largely driven by its failure to alter its pension obligations to CalPERS, the California Public Employees Retirement System,” the report says. Moody’s analyst Tom Aaron, who co-authored the report, says, “By failing to address its pension liabilities (Vallejo) remains vulnerable to increasing annual payments,” which will exceed 70 percent of payroll in just six years.

Having been through the bankruptcy up close and personally, I have mixed feelings about Moody’s pronouncements. They are spot on about Vallejo’s continuing structural deficits. Giving our police officers, some of the highest paid in the state, raises in bankruptcy was unfathomable, and refusing to cut salaries across the board for all employees, with the highest paid employees taking the biggest hits, was irresponsible. Moody’s is correctly sounding the warning bell about the dangerously steep rise in pension costs coming our way.

Vallejo’s own budget hawk J.D. Miller notes that:

“CalPERS rate increases will raise Vallejo’s pension costs roughly 50 percent by 2020…The combination of increased pension costs and the expiration of Measure B in 2023, in excess of $20 million a year, will reduce the amount of money Vallejo has to spend for police officers and firefighters…Vallejo could have 80 fewer police officers, 80 fewer firefighters, or some combination of these two.”

Many of us in Vallejo hear the tsunami sirens very loudly. We get it and we’ve been asking for pension and pay cuts from our city employees. But Moody’s blithely says that Vallejo should have “cut pensions while in bankruptcy.” Much easier said than done. CalPERS contends that pensions are not touchable under the Chapter 9 bankruptcy code because, under California law, public employees' pensions are contracts that cannot be involuntarily “impaired.” That’s definitely arguable. And with the judge’s ruling in Detroit's bankruptcy that pension obligations are debts that may be subject to modification like other debts — that definitely opens the door to a CalPERS challenge.

But under threats of long and costly legal action from CalPERS, as a Council Member, I made a choice not to cut pensions of current employees. Vallejo simply didn’t have the time or money for a long and protracted legal fight with CalPERS that would have stretched our bankruptcy out even longer. And CalPERS had unlimited time and money to fight us. It was an awful choice to make. But I figured that there would be other cities coming behind us that would file for Chapter 9, and they’d be bigger and wealthier than Vallejo, and therefore would have the resources to fight CalPERS on behalf of the rest of us. That’s what San Bernardino is doing right now. I applaud their chutzpa and wish that Vallejo had been able to lead that charge.

But it shouldn’t have to come down to a legal battle between cities and CalPERS. It really doesn’t have to. If we enacted the pension reform that San Jose Mayor Chuck Reed is proposing, and I am supporting, there would be no need for lawyers and judges to steer us through budget crisis. This statewide pension reform will give California cities the tools to negotiate new pension formulas with current employees for their future earnings (not what they’ve already earned). No bankruptcy or court battles necessary.

Ultimately, many California cities are in this position because they promised their employees much more than they could afford in terms of pensions and health care. And the solution is not as easy as just paying more to cover the deficit. No amount of economic development can cover a structural deficit based on exponentially rising costs like our pensions. Cities like Vallejo can’t pay much more or they won’t be able to provide even basic services to its citizens. The taxpayers have taken the hit again and again and again in terms of paying more to cover the pension deficits. It’s time we addressed these unrealistic pensions head on, together, as a united California.

Mayor Reed’s statewide pension reform — and elected officials with strong political will and public employee unions with integrity — is the only thing that will keep cities like Vallejo from being stuck in a revolving door of bankruptcy.

Read more about the Pension Reform Act of 2014: http://reformpensions2014.com

It's Time to Take Our Medicine

Daniel Borenstein, columnist for the Bay Area Newsgroup, recently wrote a cautionary and sharp article on the California Public Employees' Retirement System (CalPERS) and the unrealistic life expectancies they use  in their retirement system calculations. By using shorter life expectancies in their calculations, CalPERS is (again) underfuding the retirement system, which will eventually result in increased contributions to the system by local governments to make up for the "error". (And, as Borenstein points out, this is already on top of the underfunding of the system through overly optimistic high rates of return on their investments, which has and will continue to result in rate increases for local governments.) Borenstein said:

"The California Public Employees' Retirement System hasn't previously factored future mortality improvements into actuarial calculations. As a result, it has not collected enough money to pay pensions when workers retire.

The fix, which the CalPERS board will consider in February, would further drive up rates for public agencies, which already face recent changes to correct for the system's unrealistic investment return assumptions and a dangerously slow paydown of debt."

The CalPERS board must stop playing games with the numbers to avoid reality and protect the pensions for current public employee union members. This is hurting our local governments because these unrealisitc calculations are resulting in a seemingly constant rise in payments to CalPERS and a decrease in services to local taxpayers. It will also hurt future retirees, because there simply won't be enough money in the system to fund their retirements.

While the proposed fix the CalPERS board will be considering would result in a rise in rates that local governments will have to pay, not approving the fix will hurt local governments even more in the long run in terms of even higher unfunded liabilities. We can't keep passing these liabilities on to the next generation. It's irresponsible and it's not fair.

I'm not sure when the change occurred from our grandparents' generation that believed in sacrificing for the betterment of the next generation, and the current generation's belief in taking care of themselves first and foremost, the next generation be damned.

But we need to go back to that belief in sacrifice for the next generation, "take our medicine," come to grips with the real costs of the CalPERS retirement system, and realistically fund it. There should be a mandate that local governments with unfunded retirement and OPEB (health care) liabilities develop a 10 or 15-year plan, depending on the size of the liability, to fully fund their employee retirement programs. These plans MUST be available to the public in simple, easy to understand language.

Perhaps by daylighting the additional costs of these unrealistic calculations to the taxpayers, it will show that the current system is simply not sustainable for local governments. If so, then we need to look at transitioning into a hybrid defined benefit/401(k) style system. Either way, we can't keep whistling past the proverbial graveyard when it comes to public employee pensions in California.

Read Mr. Borenstein's article here:

My Final Speech: Two Terms and Eight Years

Before I begin, let me thank first and foremost my family, for understanding my absences and single-minded preoccupation these past eight years. I’d like to dedicate my two terms to my mom, who passed away one year ago this month. She taught me to be a strong and independent woman and to stand up and fight injustice, to use my strong voice to speak for those who didn’t have a voice, or whose voices weren’t so strong. Mom was was at every election night party, every swearing-in, and if she could be, she would be here with me tonight to walk up that isle and out the chamber doors. I think she’d be dancing up that isle, actually, as she wanted me to be done with this work so badly. Well mom, I’m done!

I’d also like to thank my friends, who have supported me through many difficult nights in these chambers, and many difficult decision-making processes. They were my sounding boards, my guides, sometimes even my conscience! You made me feel protected when I felt vulnerable. I won’t name you because somebody will be left out and I’ll get in trouble. But you know who you are.

I’d like to thank the city staff who have shared these council chambers with us so often, who I wasn’t always so easy on, but whom I depended on and came to have a deep respect for. We’ve grown together through these difficult years, and I wish you nothing but good luck and continued growth and success.

I have to thank my fellow council members — because despite our differences, together we achieved a lot!

Finally, I’d like to thank the public for voting for me, for believing in me and trusting me to represent you. Each election I felt so humbled by that, and I always remembered that feeling as I went about my business serving you. It has truly been an honor to represent you.

________

I’ve said this many times over the years, but one of my goals on Council was not to leave for future councils what was left for me. So to the incoming Council — you’re welcome. :-)  

I was fortunate enough to be the public’s representative before, during and after bankruptcy. I sometimes lamented that fortune, that my time on the Council has been full of difficult “Sophie’s choices”, service cuts, personal attacks, intimidation tactics, and employee union  skirmishes. But really, I was probably the right person to pull that short straw. Because I’m smart, I’m stubborn, I’m headstrong, I’m ethical and I’m outspoken. And that’s what we needed to unravel the dysfunction, the misconduct, the backwards financial practices and the unsustainable employee contracts.  

My accomplishments aren't newsworthy or sexy or anything that will get a building named after me some day. My name will be but a footnote in time. But my accomplishments were course-altering. Because in eight years, I, along with several of my colleagues, have dismantled and began rebuilding a strong foundation from which the city can build on in the future. When I was first started, we had a fire union president suing council members, trying to get his personal lawsuits paid for in their new contract, years of raise deferrals coming due that were about 12%, city managers going in and out of a revolving door, a police and fire chief who represented the unions and not the city and definitely not the people of Vallejo, and a budget that was bleeding red all over the place. It was one big hot mess. 

Today, the undue influence of the employee unions is out of the closed session room and contract decisions. We have a City Manager who is professional, ethical, strong and determined to turn this ship around. We are close to having a budget devoid of a structural deficit. And we have police and fire chiefs who represent the City but who also represent their employees in an appropriate  balance.

But don’t let the good news settle you in your seats. There is much work to be done, and there is much danger in the decisions ahead. If this new Council and the citizens of Vallejo aren’t careful, all the work we’ve done to change the trajectory of our city can be turned back around in a minute.

------------

So as I pass the baton of leadership on to a new City Council, I have some thoughts to leave with everyone.

The economy is slowly recovering — do not use that as an excuse to stop restructuring. Our reserve fund is pathetically low and our infrastructure is aging, broken and underfunded. The next financial crisis that hits the country, be prepared to weather it and not be forced to make poor decisions or go into bankruptcy again. Just because the intense pressure of the Great Recession is over doesn’t mean you should let up on reform. Continue full tilt until Vallejo is healthy again.

And don’t forget about our unfunded liabilities. By imposing the police contract and getting agreement on the CAMP contract, the City cut its OPEB (health care) liabilities 70 percent — from $110 million to “just” $33 million. That’s a big deal.

And our unfunded pension liability remains overwhelming. If this City doesn’t address this unfunded liability, we will never be healthy and successful. It will always be a yoke around our collective necks, something that J.D.’s grandchildren and great grandchildren will be stuck with. 

Consider this, and please, heed this warning: 

Our unfunded pension liability is $239 million dollars. This year, for every dollar we spend on salary to a public safety employee, we are paying 52 cents for their retirement and those who have already retired. In just six years, for every dollar we spend on salaries, we will be paying 73 cents for their retirement and for retirees. So this means that in just six years, we’ll be paying almost double for every public safety employee we have on duty.  How will Vallejo afford that? Measure B will be sunsetting just a couple of years later. 

To the City Manager:

(1) Thank you for coming to Vallejo, for believing in us, and for having the spirit that loves a challenge.

(2) Think about offering pension plan education to city council members — we make multi-million dollar decisions on contracts with little to no education. Perhaps make that education available to the public. Knowledge is power.

(3) Good luck. You’ll need it.

To the City Council:

(1) Let your city manager manage the city — he’s the best city manager we’ve likely ever had. He has the education, the skills and the drive to manage this city well. You now have a luxury I didn’t have — a city manager you can trust so you can focus on setting policy.

(2) Your city manager and economic development staff are already bringing in new business opportunities and development proposals. Trust them and work with them on economic development.

(3) Continue the simple but critical fiscal policy of “one time money for one time costs.” Don’t see Measure B money as a solution to our structural deficit. Structural deficits are reduced by ensuring that your long term obligations aren’t larger than your long-term revenues. And you can’t count on the citizens voting for another tax. So be prudent and conservative and base your long-term projections on long-term, reliable revenues. 

(4) Build your reserves as large as you can. If we learned anything from bankruptcy, it was that you can’t live paycheck to paycheck and not invite disaster. 

(5) Continue down the path we’re on to get our pay and benefits package in line with what Vallejo can afford, not with what Napa or Berkeley can afford. 

(6) Remember, a contract is not a promise, it’s a contract. Getting hired as a public employe, and I am a public employe myself, doesn’t mean that we get a lifetime shelter from the economic storms of our country and our economy. A contract is a contract, and sometimes they need to be changed.

(7) Finally, in the words of Steve Jobs: “Your time is limited...Don't be trapped by dogma - which is living with the results of other people's thinking. Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition.”

To City Staff:

(1) Whether you live here or not, we’re all in this together. Please join with our community to make Vallejo prosper. We know most of you work hard and care about this city. Know that many of us residents recognize this and appreciate you. Please remember that residents in this city have been through the wringer alongside of you. 

To the residents of Vallejo, I leave you with this:

(1) YOU have the most important job to do — more important than the city manager, staff or the city council. YOU are the watchdogs. It’s up to YOU to ensure that the city council does’t let the city backslide. Please, pay attention, read the staff reports, and speak out if you see something wrong. A strong democracy cannot exist without a thoughtful, involved citizenry. 

(2) This last election turnout was abysmal. Next election, please, come out and vote. Get your neighbors, your family, co-workers and friends and convince them to vote. And before you vote, please, do your homework. And by that I don’t mean read the glossy flyers that fill your mailboxes during the election season. The JumpStart mailers are proof that you can’t trust the information coming from special interests — they were so full of lies, but just enough fear, to be effective. So don’t trust what somebody paid for you to read or to know. Study the candidates, go to a forum or two, ask people their opinions, ask questions. 

(3) Take a moment to think about the ramifications of our city employees, most who don’t live in Vallejo, spending large amounts of money in our local elections to sway votes for their chosen candidates who will then approve their pay and benefits packages — pay and benefit packages that are three, four and five times the median household income in Vallejo of $56,000. Remember, when I first ran for office, the public employee unions asked me in my endorsement interview: “If we endorse you, will you stay bought.” Just think about that.

(4) Why is this important to you? Because you take the hit for us not getting employe costs under control in terms of higher taxes and fewer services. Ask yourselves, haven’t our services been cut enough? 

_______

I will say the biggest threat to Vallejo’s economic recovery is what I will call the “police and fire political complex.” (I’ve obviously been reading President Eisenhower’s “Military Industrial Complex” speech!) Those who have had the courage to question the unsustainable pay and benefits of police or fire have been dismissed or attacked as haters of police officers, firefighters or working families. Apparently uncritical support of all things police or fire is now expected from the public safety unions all in the name of “safety”.

The influences of politics and fear, rather than solid financial accounting, is consuming an unwarranted and alarming part of the debate in our elections and the overall budget in Vallejo. We must avoid letting the public employee unions, either separately or together as the Central Labor Council or the JumpStart label, dictate how our city spends our taxpayer dollars or who sits in the City Manager’s seat. 

Again, think about it: employee pay and benefits make up 82 percent of our general fund. That leaves just 18 percent to spend on our roads, trees, libraries, senior centers, etc. Eighty-two cents of every tax dollar we give to the City is consumed by employee pay and benefits. 

That, my friends, is why the public employee unions are willing to spend big money on our little ole’ elections and why your mailboxes are stuffed with glossy, colorful flyers every other November.

So to Jon Riley and his JumpStart “Siblings": 

Fool me once, shame on you, fool me twice, shame on me. We’ll be watching you and your “siblings” and will participate equally in our own way. But just know, we’re not going away, and we don't give up easily. Never again will undue influence or corruption control this City because we, the citizens of Vallejo, will be watching with magnifying glasses.

____________

So we stand now on the other side of the painful precipice that was bankruptcy. Looking backwards, there is a wide and deep canyon behind us. I can confidently say that Vallejo is better off than it was eight years ago. But we’re not that far from the canyon. I hope our new leaders won’t let us fall backwards into the precipice and instead will take strong and confident strides into a healthy future.

My parting words to the new Council: you will face extremely difficult choices, made that much more difficult because of the demands you will get from your special interest campaign donors. Don’t give in to that pressure. Remain independent. Do what’s right for us, the citizens and taxpayers of Vallejo. 

Please don’t make me come back and say “I told you so.” Remember, reality leaves a trail. I wish you good luck and prosperity for all. 

I will end with a final quote by Sir Winston Churchill: “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Faces in the Crowd

By Vice-Mayor Stephanie Gomes
December 20, 2013

Monday, December 16, was my last “full” meeting of my two terms on the Vallejo City Council. And it was a tough one. A fitting end, I think, because so many meetings over my eight years have been just like this -- extremely difficult decisions, lots of controversy and people crowding the chambers with passions running high. 

There’s one common thread that has been woven throughout all of these meetings for me: the faces in the audience. Friends and strangers alike, there were always familiar faces I could look to for a friendly smile, an emphatic shake of the head, or just a solid supportive presence. Some of these people have spoken eloquently and passionately at the podium, and some sat quietly and radiated their passion. You know who you are, and you’ve meant the world to me in some of my most difficult moments as a Councilmember.

And while they weren’t sitting in those uncomfortable, ugly green chairs in the chambers, I know many people who watched every Council meeting on television. There were people who watched quietly, and then there were the people who loved to provide a running commentary of the meeting on my voicemail, which was always hilarious to listen to after the meetings! Please know that although I couldn’t see you, I knew you were watching and I felt your support.

And last but not least, to those of you who took a moment to write a quick email or note of appreciation — you’ll never know how much that meant. Those emails or notes always seemed to come when I needed them most, when I felt the lowest. You helped pick me up and keep me going when sometimes I didn’t feel like I could.
Lots of people say they could never do my job, they just don’t have it in them. Well, it takes all kinds of participation to make a democracy work. Yes, it takes the people who can sit on the dais and make the difficult and sometimes unpopular decisions. But I could never have done my job without the people who took it upon themselves to stand in solidarity with me and show their support. Courage comes in many colors.

You all know who you are. Thank you for your support not just of me, but most importantly, for our work for a better Vallejo. Nobody could do it alone — it takes all kinds and levels of participation to make the changes we’ve been making. Lasting change is the hardest of all to make; and for all of us, that’s the only change we’ll accept in Vallejo now.

This is the Place for Me

When Supervisor Kondylis told me last summer that she was thinking about retiring and that she wanted me to consider running for her seat, I was excited. It was a new opportunity to take everything I'd learned over the last six years and put that to use at the County level while still working for Vallejo. I was honored in Supervisor Kondylis' faith in me.

So I spent a lot of time thinking about it, talking to my friends and family and my supporters. I was somewhat surprised to hear some of my staunchest supporters ask me not to run for Supervisor -- they really wanted me to stay on the City Council for as long as I could. It was an odd sort of flattery, I have to say!

I realized that my decision wasn't about my skills or qualifications, or even my personal desires for my career. In the end, my decision really came down to two things: re-writing a story, and my sense of responsibility.

In the dark of the night when sleep can be so elusive when faced with important decisions, I asked myself what was best for Vallejo. As a senior councilmember with six years of intense learning and experience under my belt, would my leaving the City Council before my term is up hurt the forward momentum we as a community have so painstakingly made?

We are on the brink of a hard-earned recovery, we have a City Council that is working well together, and we have a strong new city manager coming on board soon -- there is a bright light at the end of what has been a long and difficult tunnel. But our recovery is sill tenuous and will require experienced leadership and guidance. I worked too hard to help get us to this point to leave right before we turn that corner. Our story is still unfinished, and I want to stay and help finish re-writing it.

And during those sleepless nights, I also felt a nagging sense of guilt about leaving my term early. Two years ago, I asked the voters of Vallejo to re-elect me. I made a commitment, promised to work hard and focus on addressing Vallejo's serious challenges. The voters put their faith and trust in me for a second time – even in the middle of our bankruptcy turmoil – and I want to respect that trust and honor my commitment by completing my full term.

So once I made my decision not to run for Supervisor, it all became very clear. It was the right choice. In my heart, I want to stay and keep working. I didn't run for public office to start a new career, I ran because I believe in citizen representation and I thought I could help our city. And the best place for the city and me right now is right where I am.

Speech to the Contra Costa Taxpayers Association

Last Friday, I was asked to speak to the Contra Costa Taxpayers Association on Vallejo's bankruptcy experience. I've been working with a new group called California United for Fiscal Reform on statewide pension reform, and one of the members asked me to present to her organization. I hadn't taken the time to look back yet, so I used this as an exercise to start telling the story as I saw it -- and the story behind the story. (Please note that this was a speech prepared and presented by me and is not the official position or opinion of the City of Vallejo or the Vallejo City Council body.)

I can't add PDF attachments using this blog program, so I'll have to post the whole speech here. It's long, so I apologize in advance. I didn't use it word-for-word, and had to make changes due to time constraints. But it's pretty close. I'm sure this document will evolve and I will make changes and additions. (Because of the time constraints, I didn't get to mention everyting -- like the 1993 Citizen's Budget Advisory Committee warning on the structural deficit, or the 2003 letter from community members outlining every pitfall with the new public safety contrcts that ultimately proved right, yet was completely ignored by the then-City Council. You can watch a video of the presentation, or just fast forwad to the Q&As afterwards with me and former City Manger Joe Tanner, at the Vallejo Independent Bulletin website.

I think it is critical to honestly look at what got us to the point of bankruptcy -- and what happened in bankruptcy -- so we never repeat our mistakes. I do think our current five-year plan is as solid as it can be in these uncertain economic times. But beware our unfunded pension/health care liabilities. The new proposed changes by the GASB (Government Accounting Standards Board) will force cities to show our unfunded liabilities as debt, not just a footnote. This is the tsunami behind the tsunami. The GASB hasn't released their draft changes yet, but there will definitely be more to come...

Speech before the Contra Costa Taxpayers Association by

Stephanie Gomes, City Council Member, City of Vallejo

June 24, 2011

One main question I was asked in coming to speak today: is Chapter 9 (Municipal Bankruptcy) a “way out” from the financial crisis facing our cities and counties?

The short answer is: No.

Unfortunately, just like weight loss, no matter how much we desperately want one, there is no magic pill that will solve our financial problems. It’s a simple math problem: revenues in, expenditures out.

Many cities, counties, states and indeed our country have been living beyond our means for quite a few years, gorging on the money filling our coffers during the bubble, and committing those coffers to living off that same amount of excess in perpetuity. There’s one problem with that – the good times never last forever. But our leaders failed to account for that.

And the good times are gone. At least for the foreseeable future.

So that leaves cities and counties asking that million dollar question – how do we hit the “reset” button and make our budgets sustainable again? Many of us are getting deeper into the red, with sales taxes and property taxes on the continual down slide, unions are digging their heels in to more concessions, and the voters are loathe to agree to pay more taxes for increasingly fewer services.

So we’re back to that collective problem that cities and counties across the U.S. are experiencing: “revenues in, expenditures out”. The revenue side is a bit trickier given this Great Recession that we’re slogging through. Some agencies will try to ask the voters for more taxes. When the economy picks up again, we will all be focusing on economic development. That’s an “easier” side of the equation given the right conditions and good planning.

The tougher answer, and the one that got Vallejo into so much trouble, is reigning in the expenditures. Given that local government is labor intensive, our general fund budgets are consumed by salaries and benefits of the employees who provide vital city services. And in Vallejo our public safety employees were some of the highest paid in the Bay Area. So when we need to address budget deficits, we have to look to employee costs. Anything else is just kicking the can down the road.

Vallejo should serve as a cautionary tale not so much about bankruptcy, but of the real and painful repercussions of financial mismanagement, poor planning, and giving control of the purse strings to our public employee unions. Vallejo was indeed unique in almost every aspect. I doubt that many municipalities will face our perfect storm. But many will face several parts of it:

• Years of wage and benefit deferrals coming due
• Closure of MI Naval Base – huge loss of jobs/economic impact
• Employee union influenced City Council
• Crash of the housing market
• Crash in sales, property, transfer taxes
• Budgets based on rosy economic forecasts
• Revenue sources not identified for new expenditures
• Huge unfunded liabilities

I will state a disclaimer here before I go further and say that I do not believe the whole problem in Vallejo is our public employee unions. Management in Vallejo failed on many levels over a period of many years to get the city to the brink of bankruptcy. They failed to invest in good, smart economic development when the iron was hot. They agreed to the public safety union’s requests, didn’t cost them out, and left the results to future leaders.

But the public employee unions, especially our public safety unions, helped engineer this unsustainable system, with the compliance of weak leaders, and ultimately they could have saved Vallejo from filing bankruptcy. They could have made real, hard concessions on pay and benefits. They could have saved Vallejo millions in legal fees arguing whether the city was hiding money and indeed was bankrupt. But Vallejo was the epicenter of failing cities, and we were first. The public employee unions didn’t have a “Vallejo example” to urge them to cooperate and negotiate reductions that were distasteful but preferred over the bankruptcy experience.

The law of unintended consequences. Cities like San Jose and Stockton and Oakland are using Vallejo’s bankruptcy experience as a bargaining chip and extracting huge givebacks from their employees that were unthinkable three years ago.

So in the drunken halcyon days of the bubble, the public safety unions in Vallejo grew extremely powerful by putting their union dues into local elections and to buy favor with the city councils. (and if you don’t believe this happens, when I first ran for office in my endorsement interviews, the coalition of unions asked me point blank: “If we endorse you, will you stay bought? My answer was, “You couldn’t buy me in the first place, so how could I “stay” bought?”)

Before I was elected, the City finally hired a city manager who was tough and willing to demand changes from our public safety unions. Ultimately, he was sued by the IAFF 1186 President, along with two other council members, for defamation of character (that was a practice used or threatened against community members and council members before). This case was thrown out in court as a SLAPP suit (a Strategic Lawsuit Against Public Participation (SLAPP) is a lawsuit that is intended to censor, intimidate and silence critics by burdening them with the cost of a legal defense until they abandon their criticism or opposition (Wikipedia definition).) The legal fees for that SLAPP suit, for both sides, was approximately $140,000, and the IAFF 1186 President was ordered to pay it all. Amazingly, they turned around and tried to incorporate that $140,000 into their next round of contract negotiations, right after I was first elected. I said that I'd climb to the top of the tallest building and tell the entire city if they tried to fold these legal fees into any new fire contract. Ultimately, the members of IAFF 1186 were on the hook for the legal fees -- why they voted to cover this SLAPP suit is beyond me.

Soon thereafter, we hired one of the best city managers we've had, Joe Tanner (who is in this audience), who also had the courage to take on our powerful public safety unions and help us solve our crushing financial problems. He was beaten up in the local newspaper repeatedly, targeted by nasty union propaganda, and ultimately became a victim of the dark side of politics.

So back to when I was first elected in 2005. The City had a $3 million operating deficit. The previous City Councils had tried to balance the budget by “negotiating” increasingly lucrative contracts with the employees in exchange for raise deferrals and contract extensions. Raise deferrals given in prior years to balance deficit budgets were due in 2005 – something like eight percent raises. (We won’t even go into unfunded liabilities). Our employee contracts extended to 2012, we had minimum staffing on our fire trucks and a debated minimum-manning clause in the police contract. And we had binding arbitration in our City Charter. That all added up to the fact that any changes the City needed to make to cut back expenditures and balance the budget would need to be approved by the unions. If not, then by an arbitrator. The City Council’s hands were effectively tied. I knew then that we were headed for bankruptcy.

So, the unions negotiated with the city for a year, until the then city manager gave up and declared the negotiations a failure. I am proud to say that for the first time in years, the City Council (except two newly elected union-endorsed council members) refused the unions’ offers and decided to cut the fire truck staffing to achieve the cost savings we needed to stay solvent. The city stayed solvent -- barely. The unions arbitrated the decision. But we cut the truck staffing, eliminated all funding for community based organizations, stopped funding vehicle replacements and road repair and maintenance, and exhausted the rest of our meager reserves.

Enter 2008. The perfect storm. The City lost the fire truck arbitration (the arbitrator did not have to consider the financial implications of the decision), which immediately increased our deficit by several million dollars. Development revenues dropped off, housing started to decline. Employees near retirement or able to transfer saw the writing on the wall and jumped ship – taking a $4 million leave payout with them. The City tried to negotiate last minute concessions to stave off a bankruptcy filing. I was opposed to this agreement – it was business as usual. But the Council majority resolved all union grievances in return for some temporary labor concessions that lasted a couple of months and an agreement to “come to the table” again. That was a net loss.

So our General Fund was depleted. Our reserves were depleted. Labor concessions were expiring. We were flat broke. Our closed session meetings were brutal. Those Council members who didn’t want to recognize that bankruptcy was a foregone conclusion, spent hours picking through the numbers, desperately trying in vain to make things pencil out. Trade this for that, move this here, put that there. It didn’t work because of that very simple math problem: revenues in, expenditures out.

So on May 6, 2008, the City Council authorized a filing for bankruptcy. An agonizing, painful watershed moment. The council chambers were packed with union members, community members, media…and lawyers. It was a unanimous Council decision, which shocked the unions I think. Their council members had never voted against them before. But there’s a little part of the law that says that if an official uses restricted funds to balance the budget or allows employees to work with the foreknowledge that there was no money to pay for that work, the governing body would not have normal governmental immunity for official acts and they would not be protected from personal liability. I believe the prospect of landing in jail or losing one’s home was quite persuasive.

So what happened then? It became a nasty legal battle. The unions fought our declaration of insolvency – they said we were hiding money. They said we had tons of money in our water fund, our redevelopment fund, our transportation fund. Just use that. (That’s illegal, by the way).

Eventually, the City prevailed and the judge indeed said we were insolvent. It was a very hollow victory.

So the City created a “Pendency Plan” – essentially our operating plan during the bankruptcy proceedings. We were able to do things we couldn’t do without the protection of bankruptcy. We froze wages and benefits and implemented furloughs. In 2009 we cut our interest payments to the banks to equal what we were cutting our employees – for three months our payments to the banks were suspended to conserve cash. This pendency plan allowed us to continue to operate, to provide services to the public and keep the lights on at City Hall.

We negotiated with our creditors, including our employee unions and retirees. And right here lies the exact moment of Vallejo’s failure in bankruptcy.

In February 2009, the City Council majority (excluding myself and another council member) agreed to a new police contract. You’d think that if unsustainable salaries, benefits and pensions the largest part of your structural deficit, you’d target that if you absolutely, positively had to file for bankruptcy. Right? I mean, why go through the pain of bankruptcy if you’re just going to limp out with a continued structural deficit and the same contracts and with which you went into it?

For reasons I intellectually know, but still in my heart cannot fathom, this police contract didn’t cut wages. It didn’t cut pensions. It didn’t ask for employee contribution to medical. It guaranteed RAISES for the next two years. And it agreed to pay the Vallejo Police Officers Association legal fees if the City was forced to bring that contract back into bankruptcy. And if that wasn’t reason enough to reject it, our finance director said on that very night during that discussion that we were facing another $12 million deficit next year. But the Council majority approved it. This was a huge failure of political will.

That was the most painful moment of my entire Council career. I KNEW approving that contract was wrong. I KNEW we couldn’t afford it. But worst of all, I KNEW we had just failed bankruptcy. Because every employee union that came after that said, “Me too.” It failed to address our structural deficit at THE best time to do so. And it set up one employee group against another. It gave more to police and less to fire and even less to IBEW. It just wasn’t fair.

But eventually I had to set it down and move on. So we created a five-year plan that – at this point in time – is sustainable. We should be out of bankruptcy in July or August. But I have my worries. We haven’t addressed our structural deficit, our employee costs keep climbing while we have fewer and fewer of them to do the work. Our property taxes are down 24 percent since 2008. Our sales taxes are down 22 percent. And they’re still dropping. We’ve tried to be as conservative as we can with our economic forecasts. We’re planning for the worst, hoping for the best. At this point in our economic history, a stagnant budget is a good thing. Not up, but not down. Again, I won’t even go into our unfunded liability – that’s a whole separate discussion that threatens the very core of local governments.

One bright spot of our bankruptcy experience, though, was a shift in public opinion regarding our employee unions’ pay and benefits. Vallejo had binding arbitration in our City Charter – an arbitrator was the deciding official in employee wage/benefit disputes. The City tried to remove it from our charger a couple of times since the 1970s, and it failed. But this time we fought a difficult, bitter battle, with the unions spending ten times what the community spent. We raised $7,000 and hand made our signs in my backyard! But we won. Now, in 2012, when three of our four employee contracts expire, the elected officials of this city will decide on what pay and benefits the City can afford. That is a huge change.

Ok, so what’s the “good, bad and ugly” of bankruptcy?

The good:

• In the first two years of bankruptcy, the city was able to save $35 million just implementing the pendency plan. Granted, to date our legal fees are $11 million. But do the math – we saved $24 million.
• Abuse, undue influence, poor accounting practices – they were all revealed. Painful, but absolutely necessary for any chance of recovery.
• Political leaders are forced to show their cards – there is no hiding, no avoiding. Vote for the people, or vote for your campaign contributors.
• An opportunity to reorganize and restructure.
• A municipality can void unsustainable labor contracts, with the judge’s permission.

The bad:

• $11 million in the pockets of very happy lawyers. Despite the $35 million in savings, I’d have rather spent that $11 million on attracting new businesses, fixing our streets, or hiring more police officers to patrol our neighborhoods.

The Ugly:

• Bankruptcy hurts. It hurts your city’s image, it hurts the relationship between the community and our city employees, it destroys employee morale.
• Public employee union battles. Have you ever heard of the “Bloody their noses” doctrine? It's alive and well.

The City has done good things since 2009 to begin to rebuild our financial structure. We have adopted new “Rules to Live by” that may be common sense, but many municipalities haven’t been following them:

1. Live within your means
2. Look to your future
3. Stop deferring expenses
4. Fund retirement obligations
5. Dedicate your surplus
6. Set up a rainy-day fund

If we can follow these rules, Vallejo will indeed be on the road to recovery. Actually, when we were first going into bankruptcy, we saw that other cities were snickering at Vallejo, absolutely unaware that they would be facing similar challenges in just three years. Now, when Vallejo has done our hard work, we’ve got a semi-stable budget while cities all around us are in freefall.

If we have learned anything from Vallejo’s Chapter 9 experience is that filing for Chapter 9 should be an absolute, positive last resort. It is not an end to a means. It’s painful. It tears a community up. But I will say this: if given the same circumstances, I’d vote to file for bankruptcy again. We didn’t have a choice. And contrary to the media reports, Vallejo’s bankruptcy did not cause our decrease in police or fire services, our library cuts or our road maintenance deficits. Our financial mismanagement caused that long before that vote to file for bankruptcy. Those services were steadily decreasing as our deficits continued to increase. And the structure of that deficit was not addressed. It was just covered over with a band-aid year after year. And I understand why, to a certain extent – once you give something, it’s hard to take it back. And trying to take it back from powerful public safety unions is incredibly difficult, legally exhausting, financially crushing, and pretty much political career-ending. It takes courage of conviction, a very stubborn personality, and a very thick skin to try to right that ship.

I’ll close with this difficult conclusion. But I think this is a seminal issue all over this country, and I believe that it’s so bad that many of the traditional Democratic base of union supporters are starting to reach this very same conclusion -- unfortunately, long before our elected leaders are willing to admit it. But Vallejo’s experience ripped the cover off of the dirty little secret of how public employee unions can buy power and control over the very people who vote on their wages and benefits. Private sector employee unions cannot control who their bosses are. But public employee unions take their collective power and money to essentially control the hiring – and firing – of their bosses. This is a systemic problem that must be fixed or the system will ultimately fail.

And waiting for our elected leaders to make these changes will take a long, long time. Just look at the legislature’s response to Vallejo’s bankruptcy – to write a bill that requires municipalities to get permission of a union-majority committee to declare bankruptcy and remove employee contracts from bankruptcy proceedings if a declaration is made. What did Assembly member Noreen Evans and then Senator Pat Wiggins do when Vallejo was on the verge of declaring bankruptcy? They sent a letter chastising the city for considering bankruptcy and being so unfriendly to our employee unions. Did they talk to us to reach their conclusions? No, never.

So I am convinced that we taxpayers of California must demand these changes. We must join together, city-to-city, county-to-county, and raise our voices loud and strong demanding legislative solutions to these issues. There are no saviors – there is only us.