Lodi weighs sales tax measure to deal with expenses

City manager says tax is just one possible option to tackle pension, service costs

The City of Lodi is weighing its options for tackling its current financial challenges, and a possible sales tax measure is on its list of alternatives.

On Wednesday, the Lodi City Council authorized staff to enter into an extended agreement with CliffordMoss LLC, a political strategy and public affairs firm located in Oakland, to help engage the public about a potential measure for the November ballot.

“We haven’t made any decisions,” City Manager Steve Schwabauer said on Thursday. “We’re not presuming anything. We’re just trying to engage in an open, transparent process to make sure that the needs that we’re hearing about are met. No decisions have been made. The council will make that decision based on the city’s needs and the community’s input through the outreach we are doing.”

Schwabauer noted that the city provides police, fire, water, wastewater, library, electric, streets, and parks and recreation services to its residents. However, due to spiraling pension costs and new state mandates, the city’s ability to provide those services are at risk, and without additional revenue the city may no longer be able to maintain them on the same level that it has in the past.

“There are a lot of things that make our expense profile increasingly complicated,” Schwabauer said. “We have all kinds of laws that have been passed that create an expense. Mandatory leave laws for any number of issues have increased costs because when you’re dealing with a 24-hour operation, every time you have to give somebody leave, even if it’s an existing benefit, you’ve got to pay time and a half to replace it.”

Minimum wage also has an effect on the city’s expenses, he said.

“I’m not being critical of the minimum wage law one way or the other, but there’s no question that these mandates that come down on communities make it more expensive for us to operate,” Schwabauer explained.

While the pension system and other state mandates financially stress the city and make it more difficult to provide services, Schwabauer said that the intention of the proposed measure would not be to cover pension costs.

“It would be a mistake to say that the measure is being done for the pension system,” Schwabauer said. “The measure is being done to make sure we can continue to provide a level of service not withstanding the increase in our expenses.”

Schwabauer said he’s often asked why the city just doesn’t leave CalPERS, the agency that manages its retirement plans, but in order to do that the city would have to pay $400 million to cover its pension liabilities.

“We couldn’t write that check on our best day,” Schwabauer said.

Even though the city has put $10 million into a pension stabilization fund, it still doesn’t solve the problem, Schwabauer said, noting that the city’s five-year projections show increases in expenses in

the range of $5 to $7 million a year.

At this point, Schwabauer said, it’s up to the community to decide what to do about the increased costs the city is forced to pay.

“There is no question that PERS is part of our increasing costs profile, but for there to be another option the city has to have another option and there isn’t,” he said.” If you could say tomorrow we’re going to leave PERS, and we’re

going to forget about it and this goes away, our cost profile gets worst because we have to fund a half billion payment for liability.”

According to Schwabauer, many cities have waited until they were in a dire situation to take action and push for a sales taxes.

“That’s really the choice. Do we want to let our services deteriorate and then decide, or do we want to stop it from happening and continue to be

the place that Lodi is,” Schwabauer said.

Lodi doesn’t have a heavy debt load and is operationally lean, but additional revenue is needed if the city is to continue providing the level of services that it does today, Schwabauer said. Without the additional revenue, Schwabauer said the council will have to make the hard decision about what services will be cut, based on community input.