Bakersfield is currently conducting surveys on a proposed sales tax increase for the November ballot. Many of you may be asking why? Well, through a series of poor financial decisions, the City of Bakersfield finds itself in the worst financial crisis in its history.
First, the City gave its employees a very generous retroactive pension package. Unfortunately the stock market did not provide the returns that were anticipated, and the City began to build up a sizable pension debt. Bakersfield then compounded its error by continuing a spending spree on Thomas Road Improvement Projects (TRIP), ignoring the pension debt that was ballooning. Critical general fund dollars were diverted to road maintenance to backfill the road revenue that went to the local match on TRIP projects. Those general fund dollars could have instead gone to reduce the pension debt.
Today Bakersfield owes over $400 million to CALPERS at the high interest rate of 7 percent. This is double Bakersfield’s entire general fund budget. In the coming years, CALPERS will be doubling the City’s pension payments, and the payments will continue to increase thereafter.
Don’t blame CALPERS. Its investments have been performing on par with other retirement funds. Unfortunately, Bakersfield hasn’t even been paying enough to cover the interest on its pension debt. Bakersfield chose lower pension payments today in exchange for higher payments in the future. Over the past 10 years, the pension debt quadrupled, yet Bakersfield took no action. Significant layoffs and cuts to services are now unavoidable without additional funding.
But wait, there’s more: Most people don’t realize that the City doesn’t even have the money to finish the Centennial Corridor project. Funding for the project ends at Easton Drive. The City needs to find another $245 million to finish the project, according to the “2017 Centennial Corridor Project Financial Plan Annual Update." This was supposed to be our local match, but we don’t have it. This leaves the Westpark neighborhood in shambles with no resolution in sight. Why did they destroy all those homes if there is no way to finish the project?
Not all cities have a pension debt problem. Fresno, for example, has a pension surplus. Bakersfield got in this situation because of its own poor decisions.
The City is very embarrassed by this situation. Staff was careful to present this bad financial news to the City Council recently in closed session hidden from the public. Detailed reports regarding income and expense projections, possible sales tax increases, and possible parcel tax increases were presented. Of course, it is completely illegal to present this type of information in closed session, and of course the City has been sued, again.
Who is to blame? The buck stops at the city manager. In Bakersfield, the city manager alone is the primary decision-maker. The city manager gets $355,000 a year in pay and benefits, but the City Council positions are essentially unpaid. The council only meets a couple times a month and the agenda packets are extremely large. The agenda packet for January 10 was 801 pages; Dec. 13th was 1,388 pages. That’s a lot of material to go through. The net result is that most decisions by the city manager are simply approved on the consent agenda by the City Council with no discussion.
We can’t continue this way. Before we raise taxes, the City needs to take the following actions to reduce the likelihood of future financial misjudgements:
1. Require that a 10-year financial forecast of income and expenses be included with each annual budget.
2. Create a Citizens Finance Advisory Committee. This is something that many other cities have done. This committee would review financial plans, financial documents, budgetary policies, CALPERS activity, labor contracts, medical costs, and auditor selection.
I don’t have a problem voting for a tax increase if I know that the money is truly needed and will be spent wisely. Bakersfield clearly needs the money, but Bakersfield has not demonstrated financial responsibility in the past. I’m not interested in signing a blank check without additional financial oversight.
Anthony Ansolabehere is the retired assistant county assessor.