Op-Ed: We Should Repeal the City's Half-Cent Sales Tax Increase

Editor's Note: These are the notes Tom MacDonald used when he spoke to the Novato City Council on July 17 to protest the agreements reached between the city and its labor unions. The City Council unanimously approved the contracts at Tuesday's meeting.

These tentative agreements should not be approved. The progress on pension reform is woefully inadequate.

In a letter on March 13, 2012, the Novato Citizens for Pension Reform asked for six specific items to be addressed in negotiations. 

The only item of the six on which progress was made was the elimination of pick-up of the employee contribution amounting to 7 percent on safety and 5 percent on Miscellaneous employees. Yet the “savings” were offset by salary increases of 5.25 percent and 3 percent.

This agreement amounts to an annual net savings of only $400,000.  Savings without a salary offset would have been more than $1,030,000.  Yet, with savings of only $400,000 the staff memo is trying to convince us that a significant dent has been made in the City’s ongoing budget problem. This is lipstick on a pig.  

In fact, with yesterday’s announcement that CalPERS made only a 1 percent return in the recently ended fiscal year, we can expect future pension expense to increase yet again.  A good portion of the $400,000 savings was probably just wiped out by this investment shortfall.

On the other five items in our March letter, no progress was made in this 2012 negotiation. The can was just kicked down the road again.

Historical Perspective 

In July 2010 the Gang of 12 requested progress on a number areas in the 2010 negotiation: reduced pension formulas, elimination of pick-ups, changes in final compensation formulas and elimination of excessive longevity steps.  

Negotiations in 2010 were only partially successful.  But 10 of the 12 Gang members agreed to support the Measure F sales tax increase.  We made this decision with some reservations. Our letter in September 2010 stated:

“City Council members and City management have indicated that they will continue to address pension reform. Normally, we are skeptical about promises in the political world. But, in this instance the Council, management and employees have earned a substantial degree of trust as a result of the recent significant budget cuts and the first steps in pension reform."

Now, after these current 2012 negotiations, it is clear that the existence of Measure F funds has eliminated the sense of urgency for pension and compensation reform.  We have to conclude that Measure F actually played a role in the disappointing results of this negotiation.

I now personally regret my decision to endorse Measure F back in 2010.

What Next?

It is now clear that the needed long-term reform will not be achieved through the bargaining process.

I believe it is time for Novato to go to the ballot box. Labor negotiations two years ago and then again this year have failed to produce satisfactory results. It’s time to go to the next level.

A number of us are giving serious consideration to two ballot approaches:

• A pension reform initiative modeled after San Diego or San Jose that passed by convincing margins, plus
• Repeal the remaining years of Measure F, Novato’s five-year half-cent sales tax increase.

Citizens get it. They are tired of supporting excessive pensions with increased taxes. We believe both measures will have an excellent chance of passing.