(October 31) UPLAND–At first subtly and then with greater urgency, Upland City Manager Stephen Dunn last Saturday attempted to usher the City of Gracious Living toward imposing on its residents a sales tax to shore up city finances.
Dunn was the master of ceremonies at a specially-called meeting of the city council that lasted from 10 a.m. until noon and was televised throughout the city to residents on the local Channel 3 government access station.
According to Dunn, who had arrived at City Hall at 4 a.m. to prepare his presentation, the city is currently functioning with a balanced budget but is on a collision course with fiscal reality in coming years. Before offering his own in-house analysis of the city’s financial condition, he cited two major independent size-ups of the city’s bleak financial picture, a 2012 auditor’s opinion from the certified public accounting firm Mayer Hoffman and McCann and Standard and Poor’s intended downgrading of the city’s credit rating. Mayer Hoffman and McCann said there are serious questions with regard to the city’s solvency to the point that in a short while “it will be unable to continue as a going concern.” According to Standard and Poor’s, the city, which has already been downgraded from an AA credit rating to an A+, is in danger of seeing its credit rating eroding even further. A municipality’s credit rating directly impacts the interest rate it must pay when borrowing money.
The city’s currently balanced $39 million budget is figuratively being held together by rubber bands, bailing wire, bubble gum and string, Dunn said, meaning it is borrowing heavily from rapidly evaporating reserves, while relying on income from two of the city’s enterprise funds which remain in the black, its water and sewer service funds.
Years of deferred maintenance are beginning to catch up with the city, pushing it to a point beyond which it will no longer be able to stave off those problems into the future, as potholes, streets and dilapidating equipment are being neglected, funding for promised post employment benefits is non-existent, and no programs are available for attracting businesses into the city or dealing with the city’s burgeoning homeless population, Dunn said.
Dunn provided the council a list of budget priorities and proposals for increasing revenues and cutting expenditures, asking them to rate each item 1 through 10 in order to give him direction on what action he should prepare to take. But two of the council’s members in particular, Brendan Brandt and Glenn Bozar, said they were reluctant to make any rating without having further information. Brandt noted that one of the items referenced the city making a $30 million sale of its water division, which he said was a far too involved and complicated proposal to make a facile judgment on.
The October 26 meeting was adjourned to October 28, at which time councilwoman Debra Stone lobbied her colleagues to comply with Dunn’s request so that he can move rapidly ahead with his budget balancing formula for the upcoming fiscal year. In his pitch Dunn strongly suggested that the most efficacious way out of the city’s financial dilemma is to seek and gain city voters’ approval of a sales tax override. He noted that over the last two years he has achieved substantial savings in operating costs that included substantial layoffs as well as obtaining concessions from remaining employees on pension fund contributions.
Dunn admitted he was thoroughly befuddled as to what to do about the city’s animal shelter operation, which is gobbling up a substantial amount of money on a constant basis.
Dunn said the $3 million layered into the city’s budget for all order of public works projects including street maintenance, is unequal to the $8 million per year need in that division. He said to stave off eventual bankruptcy, which he calculated was about five years out, the city needed to either reduce spending further by $3.5 million per year or generate that amount of new revenue annually over the next half decade.
Stone was the council member most willingly accommodating of Dunn’s suggestion that Upland’s residents would be amenable to taxing themselves to maintain the community’s reputation as the “City of Gracious Living.” It was pointed out that, measured by the standard of per household median income, Upland is the second most affluent city in the county.
Councilman Gino Filippi appeared willing to sponsor Dunn’s taxing proposal as well.
Bozar in particular, however, appeared unconvinced that Dunn has exhausted all of his options in streamlining and making more efficient the city’s operations before seeking a tax solution. Nor was he or Brandt willing to embrace any of the cost cutting proposals Dunn had cataloged without further information.
Accordingly, the council rejected Stone’s proposal that the council comply with Dunn’s request that they complete the questionnaires by next week and instead voted, with Stone dissenting, to create a 10-member subcommittee instead, which is to review the cities financial options and report back to the council by January 31.