By Mark Gutglueck
Slightly more than four years after Yucaipa’s voters soundly rejected Measure E, a one-cent sales tax override, city officials this year have returned with an identical proposal, once more calling upon the city’s residents to consent to increasing the tax they will pay on all goods, with the exception of food and medicine, purchased within the 28.3-square mile confines of the city.
There have been a number of developments in the city of 53,733 in the last four years, ones which compelled the current municipal leadership to press forth with the tax proposal, even though there is questionable prospect that the city’s residents have changed their attitudes toward City Hall and the officials who run it sufficiently to give this year’s initiative, which has been designated as Measure S, any significantly greater odds of passing than in the last go-round. Indeed, a good deal of what occurred, particularly in the last two years, has deepened the distrust many city residents feel toward their civic leaders.
Among those events were the voluntary departures of two of the city council’s long-serving members, Greg Bogh and David Avila, who both opted out of running for reelection in November 2022. That led to the voters installing two newcomers to the council, Matt Garner in the city’s First District and Chris Venable in the Second District. Thereupon, in short order, less than a month after the two newest city fathers were sworn in, a newly-formed ruling coalition on the council, consisting of Garner and Fourth and Third district council members Justin Beaver and Bobby Duncan, made its move. Beaver and Duncan, who had been selected by their colleagues in December 2022 to serve as mayor and mayor pro tem respectively, at the January 9, 2023 council meeting used the threat of a vote to fire Ray Casey, who had been city manager for nearly 15 years, to get him to agree to resign his managerial post during a closed-door executive session of the council.
There ensued outrage among a wide cross section of the city’s residents over Casey’s forced departure, leading to an ultimately unsuccessful effort supported by 193 Yucaipa residents to remove Beaver, Duncan and Garner from office. With chaos and unrest settling over City Hall, Chris Mann, the city manager with the City of Canyon Lake, whom the council had installed as Casey’s replacement, at once began work on preparing Yucaipa’s 2023-24 budget, which was to run from July 1, 2023 until June 30, 2024. Despite Mann’s best efforts, he was not able to conform the city’s planned spending for what was to be the upcoming fiscal year to an amount less than the projected revenue. Ultimately, to cover what was to be expended for city operations, referred to in governmental parlance as the general fund, Mann had to utilize all of the money coming into the city from sales tax, property tax, other money passed along to the city in what are called subventions, along with available grants and he still had $2 million less in revenue than he had in planned expenditures. To make the city’s books balance, he had to dig into the city’s reserves – the amount of money it had accumulated or saved since its 1989 founding – to plug that gap.
Earlier this year, during the budgeting process for what is now the current 2024-25 fiscal year, Mann and Yucaipa Finance Director Phil White found themselves faced with a situation even more acutely challenging than what had been the case the previous year. This time, the city’s 2024-25 budget projection was that there would be $40.1 million expended from the city’s general fund and that approximately $35.7 million in revenue would come into the city from all sources. That immediately apparent $4.4 million deficit would be compounded by the consideration that within the general fund’s public safety subfund, the city would suffer a $2.9 million shortfall in covering its $7.4 contract for the provision of fire protection and paramedic operations with the California Division of Forestry and Fire Protection, known by its acronym CalFire, which serves as the city’s contract fire department. The city will have just $4.5 million in its fire fund over the whole of 2024-25. To cover the $2.9 million needed to shore up safety operations and the $4.4 million to fill the gap with regard to basic municipal operations, the city would need to, White said, utilize another $7.3 million from its reserves.
After less than a year-and-a-half with Mann at the helm, the city council found itself gazing into a fiscal abyss. If the deficit spending that had become the norm under Mann were to persist and continue in the established pattern, in less than four years the city’s reserves would be depleted and the next stop on the line would be bankruptcy.
To stave that off, at Mann’s and White’s prompting, the city council voted to request that the San Bernardino County Registrar of Voters Office place another one-cent sales tax measure on the November 5 ballot. The registrar of voters complied, whereupon Measure S was hatched.
As was the case in 2020 with Measure E, there is a sizeable contingent of Yucaipa’s residents who are adamantly opposed to Measure S. While the sheer number of residents opposed to increasing the city’s sales tax resulted in Measure E’s defeat four years ago, there has been no coordinated effort to actively oppose Measure S, which has given those who are in favor of the sales tax increase some hope that things will go differently this year.
A significant number of those backing Measure S are supporters of the city council and Mann as city manager. Indeed, the city council, Mann and other city staff are in the thick of the organized program to promote Measure S. Of note, however, is that there are some vocal elements of the community who are supporting Measure S who are not favorably impressed with Mann or the council majority which put him in place by ousting Casey. In recent weeks, as the promoters of Measure S were seeking to convince voters that they had to pass Measure S or the city would within the next three to four years have to seek Chapter Nine bankruptcy protection, the dismay with Mann became palpable.
A handful of those saying they were hopeful that Measure S would pass said the reason the city was in such dire straits was because it no longer had the steady hand of Casey to guide it. They cited the consideration that in the time corresponding to Mann’s tenure as city manager, the city has engaged in deficit spending.
The upshot in multiple statements was that Casey had managed to operate with a surplus for two years running in the aftermath of the fiscal challenge of 2020, when the city last took in less money than it spent, which was an outgrowth of the COVID crisis/pandemic.
The back-and-forth that ensued among city residents revolved around what many unquestionably assumed was Casey’s consummate skill as a municipal administrator, even despite his training as an engineer, and his ability to conform spending to revenues, even in very trying circumstances. This was contrasted with Mann’s performance during his tenure, in which he oversaw the city during a relatively stable economic period, while he proved incapable of instilling the discipline in city staff to balance Yucaipa’s budget. There was parallel discussion about city employees being overpaid and underworked, in which Mann’s lack of will to get city staff to accept salary cuts and reform the city’s pension arrangements was referenced as the primary factor in the city’s deficit position.
The conclusion reached by that particular subset of Measure S supporters was indistinguishable from the position virtually universally held by those who are opposed to Measure S, that being that Mann is inadequate to the task of being Yucaipa city manager, given the seemingly insurmountable challenges the municipality faces. Three individuals in favor of Measure S, including one who deals with Mann on a constant basis, opined that there is little hope for the city with Mann in charge, but that at least getting more money flowing into city coffers will leave City Hall better positioned when a future council gets around to terminating him.
Dick Riddell, who served on the Yucaipa City Council for a quarter century, including multiple stints as mayor, lambasted Beaver, Duncan and Garner for providing Mann with “a lucrative contract that includes a huge severance package,” and he openly accused Mann of “hiring personal friends at inflated salaries.”
With Measure S on a trajectory to be decided by those voting by mail and turning up at the city’s 57 voting precincts on November 5, the Sentinel approached Mann to see why he felt it necessary, after the voters resoundingly turned back Measure E in 2020, to seek a do-over with Measure S this year. The Sentinel inquired as to whether he believed there will be a different outcome this time around and whether, from his experience in trying to tame the challenges facing the city over the last 21 months, he sees justification in the perception of many that the city council made a mistake in forcing Casey’s resignation. The Sentinel asked Mann if he was prepared to acknowledge that his predecessor was better equipped than he is to deal with the managerial challenges in Yucaipa.
The Sentinel asked Mann what his response would be to someone who observed that over the course of the nearly decade-and-a-half that Casey was in place as city manager, the term bankruptcy was never mentioned with regard to City Hall but that after less than two years with him at the helm, it appeared that he was steering the Yucaipa ship of state toward the shoals of Chapter 9. The Sentinel asked if Mann considered the loose talk in Yucaipa with regard to bankruptcy as a blot upon his record.
The Sentinel asked Mann about the estimate made by an accounting professional involved primarily in municipal finance that if the city were to impose an across-the-board 12.5 percent pay cut on those working directly for the city and under contract with the city that Yucaipa would be able to balance its books going forward.
The Sentinel asked Mann if he would be willing to force city employees to defray from their own paychecks 100 percent of the city’s costs relating to the pension program Yucaipa municipal employees participate in.
The Sentinel asked Mann if in his estimation Yucaipa municipal employees are overpaid and underworked compared to their counterparts in the private sector. The Sentinel asked Mann if the salaries provided to Yucaipa municipal employees are overgenerous and whether the benefits and perquisites Yucaipa municipal employees receive are excessive. The Sentinel asked Mann, relative to his role as city manager, whether his first loyalty was due to the city council, the city’s residents or municipal employees. The Sentinel asked Mann if it is reasonable for city officials to ask of the city’s residents that they agree to a tax increase without first reforming the city’s bloated and overpriced municipal workforce. The Sentinel asked Mann if he thought it a fair comparison when examining Yucaipa city employees’ salaries and benefits to contrast them with municipal employees elsewhere rather than contrasting them with the salaries and benefits of Yucaipa residents. The Sentinel asked Mann why Yucaipa’s residents should support Measure S if the employees at City Hall are not likewise willing to make financial sacrifices.
The Sentinel asked Mann what he would do if Yucaipa residents fail to pass Measure S.
In response to the Sentinel’s inquiries, Mann said, “I have a lot respect for Mr. Casey. We knew each other just a little bit, as I would see him at conferences, meetings and around town from time to time. I always enjoyed the conversations. He was the city manager in Yucaipa for almost 15 years, which is a tremendous run when you consider that the average length of time for a city manager to stay in any one city nowadays is less than five years. During his time here, the Yucaipa grew in terms of population and organizational structure. Over the last 20 years the city experienced substantial growth, and he was instrumental in having the governmental structure keep pace with that, which included creating or expanding several parks, stormwater basins, the Performing Arts Center, etc.”
Mann indicated that the financial challenges the city is facing are not a product of his management of the city, but a consequence of municipal fiscal reality, which was baying at Casey’s heels as well.
“I believe that he [Casey] did recognize the financial challenges ahead, which we are now working through,” Mann said. “He was pursuing projects like Costco, and due to the action of the property owner, that project went away and is now going to the City of Highland. That was a commercial use that would have enhanced city revenue. He recognized our need for revenue enhancement. He saw the issues we are now dealing with coming, and he attempted to address that in 2020 with Measure E, which failed.”
Deficit spending in Yucaipa was postponed during the 2021-22 and 2022-23 budget cycles, Mann said, as a consequence of generosity from the federal government. That subsidization has now ended, and the fiscal dilemma chickens have come home to roost, he said, while pointing out that this would have occurred whether he or Casey was the city manager.
“Like all cities, Yucaipa was a recipient of American Rescue Plan Act funds, which provided $8 million over several years,” Mann said. “Yucaipa used those funds to plug the holes in the budget. Had we not received ARPA funding, the city would have had the discussions we are having now four years ago.”
With regard to having to approach the city’s residents hat-in-hand and ask for more money in the form of an increase in sales tax, Mann said, “It is a difficult thing. We have an obligation to be conscientious in how we are spending public funds. If we want quality services, we have to be able to pay for those services and the people who will provide them.”
Irrespective of whether residents who work in the private sector make less, on average, than those in the public sector, Mann said, the reality is that public sector employees have come to expect and are, by virtue of the public sector marketplace, entitled to higher wages and benefits. “We have to be willing to compete with other jurisdictions to be able to employ quality people to do that work,” Mann said. “If we are not able to retain quality people, our service will fall below standards.”
Mann disputed that all employees in the public sector are overpaid, saying that there are those in the private sector who outearn those in the public sector. He conceded, though, that those working for the city, on average, are paid better than those who live in the city.
“You can find examples of people in the public sector who are overpaid” when you draw comparisons “to the type of jobs they are performing,” he said, referencing county government and other cites, but added, “I don’t believe that is the case in every organization. Some are more efficiently run than others.” Mann included Yucaipa among those where the taxpayers are getting their money’s worth out of public employees. “There is no dead weight here,” he said.
“When people say that public employees are paid better than those [doing essentially the same work] in the private sector, that may be true in some cases, but we have to be able to offer [government employees] a sufficient wage in order to get them to come here [i.e., Yucaipa] to work,” Mann said.
Mann said the city is in the process of initiating a survey or soon will complete such data collection relating to pay levels of city employees in comparison to those in the private sector as well as those employed by other governmental jurisdictions.
Said Mann: “We are spending less on general government staff today than we were in 2003, when you adjust for inflation.” He added, “The net cost of support staff is only 9 percent of the city’s budget. That is dangerously lean. In most cities, if that number is 20 to 25 percent, they are considered very efficient. I’ve never seen that number below 10 percent in any other jurisdiction.”
The degree to which operations in Yucaipa have been pared back, Mann said, is “alarming. When I arrived, the city had no HR [human resources or personnel] department. At one time, Yucaipa had an HR professional, but that person left, and the duties were handed to an executive assistant. There was no risk manager, and there is still no procurement officer. We no longer have a community development director. When I got here there were just three employees in the streets division to take care of our 209 miles of public roads. We have gaping holes in our organization, with most employees wearing multiple hats. We are operating lean and efficiently. That is good, but if you get too lean it becomes a liability for the city. It is critical to have basic checks and balances in place. That is how, a few years ago, the city ran into a situation where we had an employee embezzle hundreds of thousand dollars.”
Mann said, “We need to be lean, but we also need to be able to perform and provide the services the citizens expect. That is not to say we have not tightened our belts already. We have frozen a number of vacant positions and left them unfilled. We have reviewed every contract and have made changes where we could. If Measure S does not pass, we will have to make much deeper cuts. We will have to inform the citizens that there will be significantly less of the services they want to see.”
Come what may, Mann said, “One way or the other, we’ll have a balanced budget next year.”
To the Sentinel’s query as to whether he believes the residents of Yucaipa will depart from their solid rejection of an increased sales tax in 2020 and pass Measure S in November, Mann said, “We will find out soon enough. It is not our job in government to advocate one way or the other. I intend to present [to the public an explanation] of what the choices are and make clear to the citizens the implications of each option. The question is really quite simple: ‘Do we [i.e., the residents] like the services being provided now, and at the levels they are currently being provided? If so, are we willing to pay a little bit more to keep those services?’”
If the voters reject Measure S, Mann said “then, that is okay.” He said the city will deal with no further infusion of funding by further reducing services.
Mann said it is his personal belief that the solution to the city’s financial circumstance should not be to reject revenue enhancements.
While he said, “If people want the problem solved with cuts, we will do that,” he also said, “We can’t cut our way out of this problem without dramatically impacting services. As public safety is 63 percent of the city’s budget, there is no way to balance the budget through cuts alone without deeply impacting public safety services. There is simply not enough meat on the bone anywhere else.”