Blogging Bayport Alameda

October 8, 2012

You asked, they answered: Tony Daysog, City Council candidate

Filed under: Alameda, City Council, Election — Tags: , , — Lauren Do @ 6:08 am

1.What is the hardest decision you’ve had to make in your professional life?

One of the most difficult decisions I made had to with Alameda Power and Telcom (AP&T), which is now called Alameda Municipal Power (AMP). In the summer of 2003, we on City Council were discussing ways to close a $7 to $8 million budget shortfall to construct the telcom /fiber optics project. I supported the telcom project as early as when the Public Utilities Board first surfaced the idea around 1997. In getting city approval via a successful 1998 ballot initiative, City Council promised that, outside of the initial capital infusion to start the project, electric utility revenues would not subsidize telcom operations, i.e. the latter had to stand on its own as a business operation. As the bulk of construction budget was spent in ZIP Code 94501, by the early Fall 2003, Council began discussing ways to finance the $7 to $8 million shortfall, because construction for ZIP Code 94502 had not yet started. In early Fall 2003, I scoured a number of documents such as the City’s Comprehensive Annual Financial Reports (CAFR) and the PUB’s Business Plan, to see if there were any revenue centers within the PUB’s budget that we could tap to close the shortfall.

To my surprise, as I examined these documents, I could see certain amount of funds in the electric-side of PUB/AP&T’s ledger in an area discussing the telcom project, with the same amount of dollars on the telcom side of the ledger side-by-side, with footnotes indicating transfer of funds between the two. And, I could see in the Business Plan further transfers of funds between the two were under consideration. As a Councilmember, what upset me the most was that we had hearings just days prior to my review of the books, and even then we discussed the possibility of **temporarily** breaching the so-called firewall; yet, in those discussions, even when asked, no staff member mentioned that not only was the firewall **already** breached (outside of the initial capital infusion to get the project started), but that even more transfers were contemplated. They acted like it was a brand new idea.

Analyzing what went wrong was not the difficult part; rather, what was difficult about all this was conveying to staff and the public generally via the local media how upset I was. Generally, people know that I tend to take a cerebral approach to policy issues; but when a problem occurs within City Hall that, at its crux, is really about trust, to me, it isn’t enough to simply say, “Oh, mistakes were made, let’s fix them.” On the one hand, a Councilmember cannot simply cry wolf and yell at the top of her or his lung on every issue and any occasion, lest he or she risks becoming ineffective; but, on the other hand, when serious problems arise, a Councilmember cannot be afraid to drop the hammer, to play the heavy, so-to-speak, and say in no uncertain terms as to what is and is not acceptable. When appropriate, a Councilmember must be prepared to go to the local media and go “ballistic” in a controlled and strategic manner, because failure to do so would send a mistaken message to staff and the public that whatever went wrong could be easily swept under the rug and subsequently easily forgotten.

2. Explain your understanding of the current state of the City Budget

City Council is responsible for setting policy for a number of municipal departments identified in the City Budget. Altogether, Council has authority over almost $225 to $250 million in expenditures – almost a quarter of a billion dollars. Of the $250 million, most residents are familiar with activities organized within the General Fund portion of the budget. Activities funded within the General Fund include police, fire, recreational services, planning – building – and community development, library services, and public works (streets, sidewalks, sewers, etc).

Every year, expenditures for the General Fund are roughly $70 to $75 million, the bulk of which is spent on personnel. Revenues to cover General Fund expenditures include property taxes, sales taxes, utility user tax, motor vehicle in-lieu fees, business license fees, building fees and permits, and other taxes/fees, such as real estate transfer tax and hotel occupancy tax (TOT).

City Hall right now is reporting a General Fund reserve of 24%. This means that over a number of years actual revenues generated had exceeded actual expenditures, such that, cumulatively, the dollar amount of savings is 24% of General Fund expenditures. So, City Hall has a reserve of roughly $17 million (i.e. 24% X $70 million).

Council has a standing policy of having a reserve amounting to 25% of GF expenditures; the rhyme and reason behind 25% reserve policy is that, 25% of GF expenditures represents the amount of cash you will need on hand (or be able to call on) to maintain City Hall operations for at least 3 months in the event of a major catastrophe (i.e. 3 months divided by 12 months equals 25%). By comparison, the Alameda Hospital is reporting a reserve of $650,000 – as a ratio of its roughly $66 million operating budget, that amounts to only one percent of the Hospital’s operating budget.

While City Hall enjoys roughly $17 million in reserves, to their credit, city staff warns that City Hall will have to enact a combination of cuts and other measures in the near future. In large part, this is because, on the expenditure side of the equation, we know with some amount of certainty the level of expenses that City Hall will incur in the near future, as these expenses are driven by agreed-upon labor contracts. City Hall also has a keen grasp of what it will spend with regards to physical infrastructure (streets, sidewalks, etc). On the revenue side of the equation, city staff projects future revenues (property taxes, sale taxes, etc.) in a conservative fashion. In comparing projected expenditures against projected revenues, staff is able to see that expenditures will begin to eat into the $17 million in reserves, such that by end of next fiscal year alone (June 30, 2013), the reserve ratio will go from 24% to 17%.

What that tells me is that City Council needs to focus on the expenditure-side of the ledger right now by freezing hiring, freezing wage increases, and freezing step-by-step promotions (in other words, current workers will not be able to get pay increases via step-by-step promotions). Council is taking some of these actions, to their credit. But we need to implement harder measures now, as well as rescind some agreements recently entered into, particularly with regard to sharing future new revenue increases as increases to staff pay. City Hall is already projecting negative fund balance (negative reserve ratio, in other words) of -1% by June 30, 2015: act now, don’t wait around until June 30, 2013 or June 30, 2014.

If elected, I will work with staff in a professional and respectful manner – but we need to make very difficult decisions soon. To deal with annual budget situations, I will not support raising property tax rates and/or sales tax rates to pay staff to deliver municipal services. My emphasis will be primarily on freezing expenditures in places, and only grudgingly would I consider cutting staff if freezes don’t result in needed outcomes. I will also strongly consider implementing furloughs to generate savings that I would then re-program back to deal with the structural portion of our budget inadequacy. For me, privatizing basic municipal services is not a consideration, as I am convinced we can deal with the immediate and structural budgetary deficit through freezes and cuts. I would enter every fiscal discussion/negotiation with a firm reserve ratio in mind ranging between 20% to 25% of GF expenditures, because we need to maintain ample reserves just in case of a major disaster.

While my approach will be to focus on the expenditure-side of the ledger, I will work with colleagues and the community to improve the situation on the revenue-side of the ledger, in a fashion that does not raise property or sales tax rates for municipal services. To this end, we need to think about immediate-term economic development opportunities, as well as medium- to long-term economic development strategies:

  • In addition to focusing on household consumer-driven retail sales taxes, we need to implement measure to improve sales taxes collected via business-to-business activities, by working with Harbor Bay Isle and Marina Village to attract businesses that conduct these kinds of transactions.
  • In the medium- to long-term, we also need to implement strategies that positions Alameda to tap into short-term visitors, such as those who travel from afar to come to Oakland Raider games or Oakland A’s games, as well as those who travel from afar for temporary work in the East Bay region: they are a source of taxable-spending and hotel taxes.
  • We also need to attract household consumer spending from outside of Alameda, but not by attracting big box retail stores that generate their sales by shifting sales away from locally-owned “mom and pop” stores.
  • We need to be open to **possible** new opportunities based on full and complete discussion that identifies upside potential and downside risks, such as sales tax on medical marijuana.

3. Much is made of the City’s “unfunded liabilities,” briefly explain the issue and what solutions, if any, do you feel should be pursued

When it comes to understanding the City’s “unfunded liabilities” issue,there are three key issues. The first two have to do with certain formulas in place, whereas the third has to do with the discrete magnitude of unfunded liabilities.

In total, Alameda has roughly $200 million in unfunded liabilities. According to Alameda ’s most current audited Comprehensive Annual Financial Report, there are roughly $95 million in unfunded liabilities with regard to CalPERS, and another unfunded liability of roughly $100 million for post-employment health care. To be sure, city workers are not going to retire en masse tomorrow, forcing Alameda to cut a check in the amount of $200 million.

So we need not panic – but we need to plan!

The $95 million CalPERS-related unfunded liability is driven largely by the 3% at fifty retirement formula – the first of two sets of formulas discussed above. The first set of formula let’s City Hall calculate how much in retirement each worker gets annually via CalPERS. The retirement formula for police is called “3% at 50”, while for all other workers it’s “2% at 55”; in other words, you multiply the 3% (in the case of police/fire) against the number of years served in Alameda, and that percentage is applied against an average of the final three years salary earned by a worker. So, if a police office worker for 25 years and her or his final average pay amounted to, say, $150,000, then through this first set of formula, this worker’s annual CalPERS retirement pay is $112,500 (i.e. 25 X 3% X $150000 = $112,500). Thus, you can see how the “3% at 50” formula is driving many cities’ including Alameda dire fiscal situation.

In addition to the 3% @ 50 / 2% @ 55 formulas, there is a second set of formulas, which tell how much the worker and the city contribute toward the CalPERS related retirement. In this second set of formulas, police/fire set aside 11 cents for every one dollar in pay toward their own CalPERS retirement fund; all other workers set aside roughly 8.9 cents for every one dollar in pay toward CalPERS. However, bear in mind that the 11 cents/$1 dollar and 8.9 cents/$1 dollar are **not** the total amount contributed funds toward workers’ CalPERS retirement. CalPERS calculates the total ratio that needs to be set-aside for workers’ retirement: so, according to CalPERS, Alameda needs to set aside roughly 31 cents for every $1 in police/fire pay, and 13 cents for every $1 in pay for all other words. As indicated, police/fire and other workers are already paying 11 cents and 8.9 cents for $1 in wage/salary respectively, meaning City Hall picks up the difference by contributing 20 cents per $1 salary for police/fire, and 4 cents in $1 in salary for all other workers.

But here’s the problem: even as we (City Hall) are legally and contractually obligated to make good on the two sets of retirement formulas described above, for a variety of reasons, City Hall has not been adequately funding CalPERS and post-employment health plans, leading to the unfunded liability of $200 million. Why hasn’t City Hall been socking away money? Largely because, right now, City Hall is already setting aside roughly $10 million a year on CalPERS, and a little under $2 million for post-employment health. But we really need to set aside more than $10 million for CalPERS and more than $2 million for post-employment health each year. So, in aggregate, we’ve set-aside “x”, but we really need to set-aside “z”, and the cumulative difference between “z” and “x” is $200 million: the issue is that City Hall is not socking away enough out of a concern for having enough money to pay for on-going municipal services.

Compounding the problem: the bulk of the $200 million in unfunded liability is not for current workers, but for workers who are already retired. So, as important as this is, simply changing the two sets of retirement formulas above is not enough to declare victory, so to speak.

The City Manager/City Treasurer/City Auditor are right now putting together a plan to deal with the unfunded liabilities of $200 million in a sustainable manner. I look forward to reviewing their plan; but, in reviewing their plan, I will be clear as to what I, as a
Councilmember, expect to see:

  • two-tiered system: any new police/fire must return to “2% at 55”
  • keep “2% at 55” in place for current non-police and fire worker
  • keep agreed-upon “3% at 50” for police/fire in place, although put that on negotiating table
  • Increase worker contribution toward own retirement, meaning police-fire will contribute more than 11 cents on the dollar they are already contributing, recognizing that the legal maximum is 15 cents on the dollar.
  • Increase all other workers’ CalPERS contributions above the 8.9 cents per $1 in pay they are already contributing
  • Implement furloughs to generate savings that are then re-programmed back toward retirement plans: for two years, change workers’ 4 days-by-10 hour schedule to 4 days-by-9 hour hours, to generate savings over the year of up to 10% of GF wage/salaries expenditures (i.e. $4.2 million to $7.0 million). Because Alameda is already operating on a 4-day work week, and because very few people access City Hall from 8 to 9 am, this two-year furlough plan will not result in a reduction of services to the public; they are not open on Friday anyways.
  • During 2 year furlough period, identify City Hall positions that might be combined so as to deliver services in a more efficient manner, such that, **after** the 2-year furlough period, when these targeted positions are combined, we generate savings commensurate to annual $4.2 million to $7 million in savings generated during the furlough period. In this way, City Hall can begin to incrementally buy-down $200 million in unfunded liability.
  • “Lock Box”: In late 1990s, Al Gore talked about setting aside Clinton’s surplus into a “lock box” to shore up Social Security: similarly, City Hall must create a policy whereby a portion of any new money (such as sales tax from the upcoming Target project) must be set-aside to pay-down the $200 million in unfunded liability.
  • Be prepared to implement Jerry Brown’s recent “50/50” CalPERS retirement, and other features of that plan: by “50/50”, Brown meant that if City and bargaining groups don’t come to an agreement in five years, cities can unilaterally impose the “50/50”, which means all workers (police, fire, others) could be required to contribute up to 14% of their salaries toward retirement, with City matching that with a corresponding 14% of pay contribution (hence, “50/50”)
  • What is NOT on the table for me: For me, privatizing basic municipal services is not a consideration, as I am convinced we can deal with the immediate and structural budgetary deficit through freezes, cuts, revenue policies, and new retirement formulas.

4.  Explain how you, as a member of the City Council, would address these issues facing Alameda ; falling revenues, increasing costs, deferred expenses and Alameda Point redevelopment.

Falling revenues:
I will work with colleagues and the community to improve the situation on the revenue-side of the ledger in a fashion that does not raise property or sales tax rates for municipal services. To this end, we need to think about immediate-term economic development opportunities, as well as medium- to long-term economic development strategies:

  • Implement measure to improve sales taxes collected via business-to-business activities, by working with Harbor Isle and Marina Village to attract businesses that conduct these kinds of transactions.
  • Implement strategies that well-position Alameda to tap into short-term visitors, such as those who travel from afar to come to Oakland Raider games or Oakland A’s games, as well as those who travel from afar for temporary work in the East Bay region: they are a source of taxable-spending and hotel taxes.
  • Attract household consumer spending from outside of Alameda, but not by attracting big box retail stores that generate their sales by shifting sales away from locally-owned “mom and pop” stores.
  • We need to be open to **possible** new opportunities based on full and complete discussion that identifies upside potential and downside risks, such as sales tax on medical marijuana.

Increasing costs:
While City Hall enjoys roughly $17 million in reserves, to their credit, city staff warns that City Hall will have to enact a combination of cuts and other measures in the near future. In large part, this is because, on the expenditure side of the equation, we know with some amount of certainty the level of expenses that City Hall will incur, as these expenses are driven by labor negotiations in staff, as well as keen understanding of infrastructure needs. As a result, staff is able to say mounting deficits will begin to eat into the $17 million in reserves, such that by end of next fiscal year, the reserve ratio will go from 24% to 17%. What that tells me is that City Council needs to focus on the expenditure-side of the ledger by right now by:

  • freezing new hiring, freezing wage increases, and freezing step-by-step promotions (in other words, current workers will not be able to get pay increases via step-by-step promotions). Council has entered into some of these steps, to their credit.
  • But we need to implement harder measures now, as well as rescind some agreements recently entered into, particularly with regard to sharing future new revenue increases as increases to staff pay.
  • City Hall is already projecting negative fund balance (negative reserve ratio, in other words, of -1% by June 30, 2015): act now, don’t wait around until June 30, 2013 or June 30, 2014.

Deferred Maintenance
The City of Alameda needs to spend approximately $2.5 million a year to keep basic infrastructure (roads, streets, sewer, etc) in excellent shape. However, city is spending on average $500,000 a year, though in my last several years on Council we spent $2 million a year.

  • Create a policy of setting aside a portion of any previous year’s GF reserve in excess of 20% target toward current year’s infrastructure needs, and ensure that funds generated in this manner is **additive** (on top of) to historic baseline amount of funds typically set-aside for infrastructure in the first place. When 20% target is not met, the policy is not triggered.
  • Create policy of setting aside a portion of Alameda Point’s property taxes toward Alameda Point infrastructure, so that the Point has its own stream of funds separate from funds for infrastructure for historic Alameda: redevelopment is no longer in place at Alameda Point, which means property taxes generated there now and in the future will be generated by the 1% ad valorem mechanism: historically, the City of Alameda receives 26 cents for every $1 in property taxes, with the other taxing entities (BART, AC Transit, mosquito abatement community colleges, etc), splitting the rest. We must set a policy apportioning a part of the 26 cents for every $1 to pay for infrastructure, above and beyond what we apportion already via the typical GF budget process. In other words, don’t let infrastructure deferred maintenance issues at AP drag down infrastructure/deferred maintenance needs of historic Alameda .
  • Bring back policy of separating small and large capital improvement projects: when I was on Council, I set a policy of separating small and large community infrastructure projects, which were being scored by the same set of metrics, which resulted in small infrastructure needs (like recreation ball fields) losing out to large projects, like street re-resurfacing. That process has been abandoned.

Alameda Point Redevelopment

  • Tap local money: I created policy of Alameda Point must pay for itself policy: we must continue that, and, in particular by continuing to segregate any new Alameda Point revenue centers (such as the ad valorem property tax discussed above or sales tax generated at Alameda Point) from historic Alameda, so that Point pays for itself. In addition, revenues generated by current leases should continue to be saved for Alameda Point only.
  • Tap local money: when I was on City Council, I created municipal services district (“MSD”) for Alameda Point, so that properties there would pay a portion of municipal services rendered there via the add-on MSD fee. Even with the change in redevelopment, we must continue the MSD, though hold discussions for reducing the annual fee by some amount, depending on how “new infrastructure district” redevelopment legislation emerges.
  • Tap state money: help shape emerging infrastructure district redevelopment legislation to benefit Alameda Point specifically.
  • Tap state money: access state funds for infrastructure, such as State Infrastructure Bank.
  • Tap federal money: access IRS’ EB-5 program ( http://1.usa.gov/4h1syb ) to encourage foreign investment in Alameda .
  • Tap federal money: re-use building at Alameda Point for commercial/industrial activity, and finance through federal historic preservation tax credit (http://1.usa.gov/PkzXhr ).
  • Private sector money: work with community to determine whether Alameda Point should be redeveloped with a single Master Developer or with a slew on different developers: in any event, require private sector partners to bring own equity capital into project.

5.  Explain your position on employee negotiations and the role of the public in this process.

Public must be better integrated in financial aspects of the City, including employee negotiations. To this end, I will:

  • Create Council-appointed Finance Commission, one of whose responsibilities will be to accept in public meeting opening bargaining requests for labor groups, comment on opening request, and forward recommendations to city Council.
  • City Council will also accept employee opening request labor negotiation bargaining points, in a public hearing; Council can deliberate minutiae in closed door meeting subsequently – but public have a right to know what is being asked by bargaining groups on the front end of the labor negotiations process, so they can ultimately compare what was the initial position and what was ultimately agreed to.

6. As an elected official what is your specific role in promoting civic engagement as opposed to staff’s role?

As a Councilman, I held informal coffee talk meetings noticed in local newspapers, as well as more formal policy-making town-hall meetings and workshops. I will continue to do that kind of person-to-person civic engagement. I will also continue writing Op-Eds in the local papers explaining key issues. In the age of the internet, I will also be active in social media fronts, having my own web-site and blog, as well as engaging in other social media such as twitter. I also am a signatore to the 10-Point Sunshine Pledge, although, if elected, I will work closely with local residents and Terry Francke on further elaborating Point 6: I’ve been in touch with Francke about that and I think we both think that can be re-worded. CalAware’s ten-point sunshine pledge is at (https://laurendo.wordpress.com/2012/08/15/crowdsouring-a-city-council-questionnaire/#comment-104668 )

7. Who is funding your campaign and which groups and individuals have endorsed your candidacy?

I am not taking funds from political action committees of private sector developers or public sector unions. I purposefully did not attend the endorsement meeting sponsored by local public sector unions, because I feel, if elected, I need to be independent. Thus, my campaign is mostly self-funded – contributions are still welcome! I have received three contributions so far for $100 from two retired residents and one employed resident, none of whom, I believe, have any particular business before the city. As for endorsements, I’ve garnered a few endorsements from local residents, including the Hon. Richard Bartalini (ret. judge), Alameda school advocate Barbara Kahn, Councilmember Doug DeHaan, East Bay Regional Park Trustee Doug Siden, West End neighborhood advocate Steve Gerstle, and City of Alameda Open Government Commissioner Kurt Peterson.

8. What current American (not a relative) do you admire the most and why?

Even though I’m a Democrat, I’ve always admired George Herbert Walker Bush (the president between 1989 and 1993). Here’s a write-up of him I wrote in my moderatedemocrats.com blog (http://bit.ly/OSdkiZ ).

13 Comments

  1. Hate to say this, Tony, but you get an F for leading the reader along on your #1 Hard Decision answer. You brought us up to the climactic moment with anticipation after you researched the books, found evidence that the electrical fiends were commingling our electrical rate payments with the cable debacle funds, then…then…then?

    Did you or did you not cry wolf and yell at the top of your lungs? Did you or did you not make the hard decision and bring the hammer down hard, did you or did you not go ballistic or instead did you take the cerebral approach, honestly I don’t remember.

    Comment by Jack Richard — October 8, 2012 @ 8:52 am

  2. Here’s the 2003 article:

    Alameda Journal
    COUNCILMAN ACCUSES AP&T OF VIOLATIONS
    November 14, 2003
    Section: News
    Edition: Final
    Page: a01
    SUSAN FULLER, STAFF WRITER

    Alameda Power & Telecom has continually violated the financial firewall separating its electric and cable operations, Vice Mayor Tony Daysog charged Wednesday.

    He pointed to a $10 million initial investment in the system in 2000, a $3.3 million “interfund cash inflow” in 2002 and a $17 million “electric working capital/interfund loan” in the 2004 AP&T budget.

    He also charged that AP&T General Manager Junona Jonas has been less than candid with the council about AP&T finances.

    “There’s been an absolute lack of candor (about these money swaps) on Jonas’ part, and the people of Alameda deserve more,” he said.

    The City Council insisted on complete financial separation between the utility’s two businesses from the earliest consideration of AP&T’s entry into telecommunications, Daysog said. Nothing is said about a firewall in the minutes of council sessions considering placing the telecom measure on the November 1998 ballot. However, a sentence in one of the ballot arguments reads, “The communications business plan does NOT indicate that electric rates will subsidize the cable operation.”

    Despite his criticism of the financial management of the system, Daysog remains a supporter of the city-owned business.

    “I am a supporter of AP&T moving forward with telecom and am supportive of finding a way to fill the $7 million gap,” he said.

    Daysog began casting a skeptical eye at AP&T finances after the utility’s request to borrow $7 million from the city’s general fund reserves to complete cable construction on Bay Farm Island.

    It’s a matter of semantics, said Junona Jonas, general manager of AP&T.

    “It’s my understanding the firewall was established on capital expenditures so third parties (such as banks or other lenders) would have no recourse to electric resources or assets,” she said.

    Jonas said these exchanges of funds aren’t transfers, as Daysog called them. They are loans, she said, interest free for the first year, then at the same rate of return as AP&T’s portfolio.

    In response to a question about whether interfund borrowing puts the electric side at risk, Jonas said, “We hope not.”

    That $17 million loan on the 2004 budget has been cut to $13 million, she said.

    To date, AP&T has spent $21 million on cable construction and nearly $23 million in non-capital expenditures related to the telecom system, according to financial manager Ron Buck.

    The budgets and annual reports with these exchanges of funds were all approved by the Public Utilities Board, which governs AP&T.

    Mayor Beverly Johnson agrees with Daysog about the council’s intention for a complete separation between AP&T’s two businesses.

    “One of the concerns we have, from the council standpoint, is that we’re the ones with fiduciary responsibility,” Johnson said.

    The council, not the utility board, sells any bonds needed by AP&T.

    “I do believe the City Council has to have greater authority over the (AP&T) budget,” Daysog said. Now, the board forwards the budget to the council for information.

    “I wish I would have had the authority to raise questions, give direction,” he said. “It would take a voter-approved change to the City Charter to give that authority to the council.

    Since adding broadband to the electric company, the money spent on marketing has dramatically increased.

    Marketing and public relations has gone from one person to four, with a salary line of $1.7 million in 2003 and $1.3 million in 2004. The 2004 budget calls for $234,000 in non-salary expenses for promotion and marketing. That figure has been cut, Jonas said, by reducing the number of free months offered to new subscribers.

    The marketing expenditures were validated by an outside study of the system, said marketing manager Bill Garvine.

    Marketing costs high, others average

    They thought AP&T’s costs were within the normal range of the industry but that rates and marketing costs were too high, Jonas said.

    For example, the industry-wide construction cost per neighborhood is $51,000, among other municipal utilities is $65,000 and in AP&T is $38,000. The construction cost per home that cable passes is $580 in the industry, $759 for other municipal utilities and $492 for AP&T’s Main Island construction.

    Adding in the $7 million contract to build out Bay Farm Island, the cost per Alameda home passed becomes $625. AP&T’s operating cost per subscriber is a little higher than the industry but much lower than municipals.

    AP&T has an exclusive contract with the Housing Authority so anyone who wants cable will have no choice but AP&T. Some 60 to 80 percent of those 580 households will subscribe to cable – a higher rate than more affluent neighborhoods – because in low-income areas cable television is a primary source of entertainment, Garvine said.

    “It’s a fantastic time for a municipality to get into this business,” said Steve Oscherman, president of Vectren Communications, the Alameda Journal.

    Comment by Tony Daysog — October 8, 2012 @ 9:11 am

  3. That’s better! Thanks Tony, you should have made some of the article findings apparent in your #1 Decision answer, a lot of folks can’t remember the details. Now I can continue with the Q’s and your answers.

    Comment by Jack Richard — October 8, 2012 @ 10:51 am

  4. Mr. Daysog, this is your statement:

    “Even if they haven’t yet, sooner or later China will need to adopt social reforms that give rise to a free and independent civil society — otherwise economic growth withers on the vine.”

    You saw fit to include your linked piece on Bush as the last utterance of the last answer to the last question so it’s only right you expand a bit.

    Where did this maxim come from? What gives you the idea that China must mimic the west’s social milieu in order to continue economic growth? Please defend your statement with evidence, historical or otherwise because right now you have my three votes for CC but that may change depending.

    Comment by Jack Richard — October 8, 2012 @ 5:44 pm

  5. 20.Tony

    Do you still stand by your analysis of the Employee Contracts you voted yes on in 2001 of Public Safety that was then 31-32 % of Total city Budget which has risen to 71% of present Budget. With pension costs rising 2000% since then during the worst financial conditions this City, State and Country has ever seen . Do you feel those contracts have had any impact on the City and it’s financial situation and the budget crisis we know face?

    Comment by John — January 10, 2012 @ 10:38 am

    https://laurendo.wordpress.com/2012/01/09/happy-landing/#comment-99522

    https://laurendo.wordpress.com/2012/05/22/your-numbers-up/

    https://laurendo.wordpress.com/2012/05/23/nothing-compares-2/

    Comment by John — October 8, 2012 @ 7:31 pm

  6. With all due respect to Mr. Daysog, his description of how employer and employee contributions to CalPERS work does not appear to be accurate.

    In fact, the City does not “pick up the difference” between the employer rate and the employee rate set by CalPERS. Instead, the City pays the required employer rate less the percentage of that rate the employees agreed to pick up under the Variable Rate Cost Sharing program. Under that program, employees can agree to pay up to 5.057% of the required employer contribution; in the Memorandum of Understanding approved in July 2011, Alameda’s public safety unions agreed to pay 2% of the required employer contribution (in addition to the employee contribution).

    Thus, for FY 2012-13, the rate paid by the City for safety pensions is 36.363% (the required employer rate of 38.363% less 2%) of payroll and the employee rate is 11% (the previous employee rate of 9% plus 2%). Contrary to Mr. Daysog’s statement, the latter is not subtracted from the former to determine the contribution by the City.

    In November 2011, CalPERS issued actuarial variations for the Alameda safety and miscellaneous plans that explain these facts. They are available on the CalPERS Website.

    Comment by Robert Sullwold — October 8, 2012 @ 8:12 pm

  7. First and foremost, I think it’s important to recall Truman’s saying, “If you can’t stand the heat . . . then get out of the kitchen.” I can stand the heat.

    Listen, #5, I think the fundamental question before Alamedans today is whether or not they want new Councilmembers who are going to implement (as I say in my Alameda Sun ads) the best pensions reforms, and do so pronto. This is not an academic question: I had the good fortune of serving on the Fiscal Sustainability Committee in 2009 to review a City Hall pension system that everyone agrees is sorely in need of reforming; having wrapped-up our work in 2009, and submitted recommendations with regard to reforming our municipal pensions, we find ourselves three years later in 2012, and nothing had been done.

    Let me repeat: we, in the Fiscal Sustainability Committee, finished our work three years ago, and to date, no action taken: how can that be?

    Don’t get me wrong: I’m glad to see that the City Manager / City Treasurer / City Auditor are right now putting forward recommendations that Council will mull over later this month, but I really wonder if their proposed shift in CalPER retirement pay for new police/fire hirees from (what it is now) 3% at 50 to 2.7% at 57 itself is feasible. Let me explain:

    The City of Oakland and Fremont have 2.7% at 55 and 2.5% at 55 respectively for “other” workers (i.e. those who are not police and fire). According to the latest State Controller’s data on the web (go to page 280 : http://www.sco.ca.gov/Files-ARD-Local/LocRep/retirement0910.pdf [also see http://www.sco.ca.gov/Files-ARD-Local/LocRep/retirement0607.pdf ]) office, these cities have not been able to keep up as, year in/year out, the “other” workers’ CalPERS “funding ratio” is hitting well-below 100% (i.e. 100% means the value of the assets equals value of liabilities / anything less than 100% means you’re experiencing unfunded liabilities). Remember: we’re talking about “other workers”, not police and fire.

    In other words, these cities are experiencing unfunded liabilities not just because of police/fire 3% at 50, but also because of “other workers'” 2.7% (Oakland) or 2.5% (Fremont) at 55 formula. So, if we in Alameda change our retirement-pay formula for new police/fire hirees from 3% at 50 to 2.7% at 57, I am left wondering if we are really addressing the pension problem even for new hires? Doesn’t the example of Oakland and Fremont suggest even the 2.7% retirement-pay formula is problematic?

    And . . . remember, as I say in my write-up above, simply dickering around with the retirement-pay formulas — as necessary as this is — doesn’t begin to really address the unfunded liability issue, because much of the liabilities are attributable to people who are already retired.

    So, back to my message: we need to implement the **best** pension reform plan that addresses **all** aspects of our unfunded liability situation. I have ideas as to what constitutes weak from strong pension reforms, but certainly I will listen and learn from many inside and outside of City Hall. But in running for Council, I believe it’s important for me to put forward my pension-reform plan (discussed above in my Q and A), which I believe begins to address all aspects of the unfunded liability situation.

    Thank you.

    Comment by Tony Daysog — October 9, 2012 @ 9:15 am

  8. “•During 2 year furlough period, identify City Hall positions that might be combined so as to deliver services in a more efficient manner, such that, **after** the 2-year furlough period, when these targeted positions are combined, we generate savings commensurate to annual $4.2 million to $7 million in savings generated during the furlough period. In this way, City Hall can begin to incrementally buy-down $200 million in unfunded liability.”

    Tony,

    Has the Unfunded Liabilty grown from 3.5 Million in Feb of 2005 to 200 Million in 2012?

    How long can we keep hiding and not paying. We have been shoving it under the rug since 2005.

    City Council Meeting Feb 2005

    http://www.cityofalamedaca.gov/getdoc.cfm?id=493

    The Interim City Manager responded there is a $2,453,743 set aside for accrued vacation and $1,444,000 for post employment health; the total accrued liability is about $3.5 million of the reserves.
    Mayor Johnson inquired whether the general reserves are about $10 million.
    The Interim City Manager responded that after removing the $3.5 million required in set aside and removing loans to other funds, the amount remaining is $8.9 million; if action is not taken, the reserves could be used in 2 years; the federal and State governments have deficits; other cities are making staff reductions, doing furloughs and closing City Hall one day per month; Alameda’s financial problems are not unique; the problem is due to the State taking property taxes and the large increase in the PERS contribution for retirements; since CalPERS investments have not done well in the last few years, contributions have to be raised significantly.

    From the Treasure and Auditor

    ° In 2005, we convinced the city that long-range planning was imperative to ensuring our financial future. We spent many hours with the CFO developing a tool that could be used not only by staff, but also accessed by the public to better their understanding of the budget. For unknown reasons, this effort was abandoned when it was 90 percent complete.

    ° In 2008-09, we co-chaired the Fiscal Sustainability Committee, which completed a comprehensive study of the city budget and provided a 10-year forecast of city finances. The members of the committee included a former city manager, a former council member and a former city CFO. This information was presented to council and many community groups beginning in June 2009.

    ° In May 2010, we did a follow-up presentation of the sustainability commitee report to council, re-emphasizing the key information the report had presented a year earlier.

    Comment by Joh — October 9, 2012 @ 3:47 pm

  9. “•Tap state money: access state funds for infrastructure, such as State Infrastructure Bank.
    •Tap federal money: access IRS’ EB-5 program ( http://1.usa.gov/4h1syb ) to encourage foreign investment in Alameda .
    •Tap federal money: re-use building at Alameda Point for commercial/industrial activity, and finance through federal historic preservation tax credit (http://1.usa.gov/PkzXhr ).

    We might be close to tapped out . But what do accountants know.

    http://www.youtube-nocookie.com/embed/EW5IdwltaAc?rel=0

    Comment by John — October 9, 2012 @ 8:59 pm

  10. I am less likely to vote for Tony Daysog after seeing the lawn signs for other candidates that he has posted at his home.

    Comment by Jon Spangler — October 9, 2012 @ 11:48 pm

  11. 10

    Elaborate.

    Comment by Jack Schultz — October 10, 2012 @ 6:40 am

  12. These are the three lawn signs you can read without going to his house that makes me likely to vote for Tony Daysog.

    -freezing new hiring, freezing wage increases, and freezing step-by-step promotions (in other words, current workers will not be able to get pay increases via step-by-step promotions). Council has entered into some of these steps, to their credit.

    -But we need to implement harder measures now, as well as rescind some agreements recently entered into, particularly with regard to sharing future new revenue increases as increases to staff pay.

    -City Hall is already projecting negative fund balance (negative reserve ratio, in other words, of -1% by June 30, 2015): act now, don’t wait around until June 30, 2013 or June 30, 2014.

    Comment by Jack Richard — October 10, 2012 @ 8:36 am

  13. Freeze!
    Rescind!
    Act Now!

    Now those are lawn signs I can live with.

    Comment by Jack Richard — October 10, 2012 @ 5:21 pm


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