If passed, where will Lodi’s Measure L funds go?

As the Nov. 6 general election draws closer, there has been some debate in Lodi as to whether funds from the half-cent sales tax increase proposed in Measure L would go to the city’s general fund to pay for services, or to cover rising pension costs.

Lodi’s general fund of approximately $50 million is used to pay for the police department at approximately $20 million per year, fire department at approximately $12 million, library at approximately $1.3 million and parks and recreation at approximately $6 million, according to city manager Steve Schwabauer, although parks and recreation is usually able to generate enough revenue to cover much of its costs.

The remainder of the general fund is spent on streets and some administrative costs, Schwabauer said, along with the rising pension costs.

“The pension bill is going to get paid, so some services are going to get pushed out,” Schwabauer said. “Whatever money Measure L brings in would be used to cover the costs of those services.”

Pension costs will continue to increase each year, Schwabauer said, and the city will most likely have to decrease the services offered if Measure L does not pass this November.

Without the tax increase, pension costs would continue to rise causing Lodi’s expenditures to exceed revenues by fiscal year 2019-20, Schwabauer said recently, and the city could face a $6 million deficit by fiscal year 2023-24.

“The (city) council is going to have to have a conversation with the community about what services the community wants to prioritize,” Schwabauer said. “It shouldn’t be hard to figure out that it’s going to be a very hard, painful discussion when year five rolls around and we’re talking about eliminating some of the services the general fund provides.”

If approved, the city projects the half-cent sales tax increase could generate between $5.3 million and $5.4 million annually with collection beginning. April 1, 2019.

“The sales tax increase takes a little bit of time to accrue, but it will allow us to maintain the services we have and hopefully increase those services by hiring more police, more firefighters and hopefully dealing with the homeless issue and clean up the parks,” Michael Carouba, a Lodi real estate agent who worked on the Measure L campaign, said.

Although the measure would raise Lodi’s sales tax from 7.75 cents per dollar to 8.25 cents per dollar, Carouba said Lodians would not be the only people paying the increased tax.

“About 25 percent of our tax dollars come from people from out of town shopping (in Lodi), so we think it’s nice that we’d be able to capture their tax dollars, too,” Carouba said.

John Johnson, a Lodibased financial consultant, opposes the measure and believes the tax increase is a short-term solution to a longterm problem.

“We cannot tax our way out of this pension problem, this pension problem is going to continue,” Johnson said.

Although Measure L revenue could be used for any

general fund purpose, Johnson said he does not believe the tax increase would generate $5.4 million per year, and would not be enough to fund services that may be cut due to rising pension costs.

“We have to make a fundamental change to a retirement model that pays people much, much more than what they would have made working the same jobs in the private sector,” Johnson said.

Lodi’s current defined-benefit plan uses a formula to calculate a employee’s pension based on factors such as their last paycheck and the number of years they worked, which Johnson said is then paid regardless of how much money is under the general fund.

Under a defined-contribution

plan such as the 401k plans commonly found in the private sector, employees contribute a percentage of their paychecks into their own retirement funds, Johnson said, with their employer often matching that contribution, or at least part of it.

Johnson believes definedbenefit plans are too costly, he said, using the example of a city employee with a $200,000 salary who could be eligible for a pension of up to $175,000 per year.

“At least in my mind, defined-benefit plans are fundamentally flawed and that’s why you see very few of them in the private sector,” Johnson said. “The model is unsustainable, and there are some drastic changes that need to be made.”