May 19 2011

Opinion: How Will Our Taxes be Spent?

Questions on the Budget submitted to the City Council by a resident:

1.  5 Year Cost Projections: Many cities do a five year cost projection.  Has Piedmont done such a projection?  If so, will costs exceed revenues in the next five years?

2.  General Fund Reserve: The City’s general fund reserve is quite low, compared to generally recognized reserve requirements for cities of its size.  How will the City build reserves back to a level that will ensure the City can handle a fiscal emergency?

3.  Employee Contributions to Pension Benefits: The costs for 3 percent at 60 for miscellaneous employees and 3 percent at 50 for public safety employees will likely rise sharply in the future.  Are the projected increases in these costs incorporated into the budget?  Are there plans for negotiating with employees to have them pay for the employee share of their California Public Employees Retirement System (PERS) costs?  How much would the City save if all employees paid their share of PERS?

4.  Employee Contributions to Health Care Benefits:  The City’s costs for health care and retiree health care will likely rise sharply in the next few years.  Are there plans for negotiating with employees to have them pay for a portion of their health care benefits?

5.  Recreational Facilities Operational Costs Covered by User Fees: It is unclear how much the City is spending for maintenance and operation of recreation facilities.  The statement that the Recreation Department pays for itself is only accurate in terms of staff hours; it does not include the costs of the facilities themselves.  Does the City have any accurate information on how much General Fund money is being used for the overall operation and maintenance of these facilities?  If not, why has this not been calculated?

6.  CAFR Reporting: Most cities develop and publish a Comprehensive Annual Financial Report.  Why has the City never developed such a report?  Are there plans in the future to develop a CAFR?

7.  Blair Park Operational Costs Covered by User Fees: The Blair Park project will require maintenance and operation costs that exceed the $30,000 the project proponents say they will pay.  Will General Fund monies be used to pay for the shortfall?  How will this impact the City’s long term cost/revenue projections?

8.  Blair Park Construction Costs – Who Pays?

  • Water and Sewer Lines: The Blair Park project will require relocation of a sewer.  Will these costs be allocated to the Sewer Fund?  If so, how much will this cost?  The Blair Park project will require relocation of a water line.  Will these costs be allocated to the General Fund?  If so, how much will this cost?  Water and sewer lines must be located in separate trenches.  Has the City determined where these lines will be located and the cost of any easements that might be required?
  • Traffic Improvements: Will the City use General Fund money to pay for traffic improvements that are needed for the Blair Park project?  If so, how much money will be required?  If not, how will the City ensure that the project proponents have enough funds to complete the improvements?
  • Cost Overruns
    • Has the City assessed exactly what the project proponents will be paying for and what the City will be paying?  This is important in light of the undergrounding failures.  If this question is not answered before the project is approved, a significant cost may have to be borne by the taxpayers.
    • If the Blair Park project costs more than the proponents have raised, will General Fund money be used to complete the project?  If not, how will the project be completed?

  • Mitigating Cost Risks:  Will the City require an independent cost assessment for Blair Park in order to prevent project overruns such as those that occurred in the Havens School project? 
  • Indemnifying Neighbors: The City has long had a policy of requiring indemnification for homeowners who are adjacent to projects that involve grading.  How will this indemnification be implemented for neighbors adjacent to Blair Park?

9.   Project Administration Reforms: Does the Council intend to follow the recommendations of the League of Women Voters “Lessons Learned” forum?  In particular, the Piedmont Civic Association report on the forum noted in the LWV report:  “The Council becomes vulnerable to unknown costs when private funding for City improvements is offered—such as undergrounding or Blair Park…. Bids and contracts need to be assessed by experienced, knowledgeable individuals, rather than relying on in-house staff who do not possess the specific type of experience needed…All costs of a project need to be identified and assessed  including a required independent project manager hired by the City and reporting directly to the City.”

Ralph Catalano

Piedmont Resident

(This letter expresses the personal opinions of the author. All statements made are the opinion of the writer and not necessarily those of the Piedmont Civic Association.)


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