TOM BUTT E-FORUM: Richmond Flirts With Bankruptcy as Moody’s Downgrades its Debt

Although the editorial copied below is nothing but a blog from a central county Republican, Bill Graham-Reefer, and I disagree with most of it, especially his call to terminate City Manager Bill Lindsay, he points out some trends in Richmond that are disturbing.

Reefer seems to be especially interested in the Fire Department, but his advice to emulate Confire is ridiculous, since Confire is the poster child of budget and mismanagement. I agree with him that the nearly half a million paid to Fire Captain Angel Bobo last year is crazy.

Last night, we passed a budget that was technically balanced, although it still included one-time revenue, such as the Chevron tax settlement money, and it did not address any of our multi-hundred million dollar pension and OPEB liabilities. As has been pointed out by many, it absorbed all Measure U funds to balance the budget rather than using even half of them for streets.

It was the first budget in 20 years I voted against, and I did so because the RPA insisted, and the City Council majority supported, adding thousands of dollars for a growing number of frivolous festivals and adding direction to staff that any one-time revenue be prioritized to creating new job positions on the City’s street crew.

Instead of being concerned with the big picture of a tenuously balanced budget, the RPA council members were obsessed with micro-managing the road crew and the bookmobile driver, all part of their long-time pandering to SEIU Local 1021, which is, in turn, obsessed with increasing the number of public employees in a city teetering on the edge.

Only Council member Pimple demonstrated any common sense, and he too refused to support the budget.

Tom Butt


June 30, 2015 by Richard Eber

As the City of Richmond flirts with bankruptcy, Fire Captain Angel Bobo of the Richmond Fire Department already knows he is famous. With an employment package of almost $509,000, he is the highest paid civil servant in Contra Costa County, and the poster child for Richmond’s fiscal problems.

This might be considered a statistical anomaly except Bobo has a lot of company where he works in Richmond. Over 225 employees make an excess of 200K a year when all forms of compensation are factored in including base pay, overtime, medical, retirement, etc… Over 90% of these people either work in the police or fire departments.

Were Richmond a wealthy community that could afford a hard worker such as Bobo, who received more than $ 279,000 in overtime (plus benefits); it would be no big deal. This is clearly not the case as the City is at risk for joining Stockton and Vallejo in bankruptcy Court.

Such a disturbing development has not escaped Moody’s that evaluates bond risks. Recently because of Richmond running a structural deficit of 45 million over the past 5 years and their mounting unfunded pension obligations which run to 446 million, Richmond’s bond rating went from A-1 to BAA-. This places them in a higher risk category which means it now more expensive for them to borrow money and receive credit from vendors.

Under these dire circumstances what does Richmond under the leadership of Mayor Tom Butt and long time city manager Bill Lindsay do? Aside of vowing to balance the budget in 2015 (after failing to do so since 2010), their solution is raiding Richmond’s rainy day fund of 7% reserves, while borrowing bond money which was earmarked for road repairs to pay for pension payments for city workers. Even these payments do not cover the costs of debt service leading to further red ink for the city.

How such action resonates with voters, who are constantly being asked to take on a higher property and sales tax burden, is anyone’s guess.

With this economic collapse going on and more bond degrading threatened by Moody’s, one would think Richmond would take a look at their salary structures and ridiculous overtime expenditures. This is likely not going to happen as the community has lived in “entitlement world” for a generation going from government bailout to bailout including their historically pathetic public school system.

Richmond flirts with bankruptcy despite the good intentions of the “Progressive Coalition”, which is the most powerful political force in Richmond, the atmosphere in this rich in resources port city holds a striking resemblance to Baltimore. Both places have been controlled for the past 2 generations by liberal Democratic regimes who despite receiving multi-million subsidies in housing, law enforcement, and education, have failed miserably.

Unfortunately, it appears that both cities have confused their dedication with helping the poorest members of society with the need to properly manage their resources.

Richmond has many advantages that other municipalities in Contra Costa do not possess.  They have an excellent income stream coming from taxes from the Chevron Plant which bring over a fourth of the revenue the city takes in each year. Richmond is also blessed with prime real estate resources including a priceless port area for which they are intent on using for constructing homes that many fear will be destined to be Section 8 Housing in a few years.

While Richmond first with bankruptcy, it squanders their opportunities and lacks common sense solutions such as limiting overtime to address their budget woes. There is also the matter of cutting wages and benefits for city workers starting with City Manager Bill Lindsay who is among the highest paid civil servants in the County.

Part of his compensation is based upon police and fire workers receiving pay raises. It is not a wonder why other cities and businesses have not followed this model.

Such  a long time pattern of incompetence stretching back many years are how the city and associated regional agencies operates. The financial woes of Doctor’s Hospital and the West County School District are symptomatic of this. It seems that Richmond is always looking for bailout from the County, State Government, and the Chevron Refinery whom they have historically demonized.

Continuing to play the blame game with all of these entities is getting long on the tooth. As evidence of this the Contra Costa Board of Supervisor declined to put a sales tax increase on the ballot this year that would have assisted Richmond’s Hospital woes because there was no support for the proposal with voters for it to possibly  pass.

The demographics of the city has been changing in recent years as more affluent families have migrated there because of the affordability of housing compared to adjoining communities such as Berkeley, Emeryville, Albany, and El Cerrito.  Richmond has the foundation for turning their financial fortunes around including raising their bond rating with Moody’s. What they need to do is find the will to make needed changes.

Indicative of positive developments in Richmond has been the lowering of their felony and murder rate in recent years. While they are still much higher than most of Contra Costa and Alameda Counties, crime is on the decline which shows not only good police work but also demographic changes occurring in the community.

To make up the current budget shortfall, if past history is any indication, the City Fathers of Richmond they will likely ask for another property tax increase and/or a new sales tax be enacted.  The problem is that might be difficult to obtain as the recent road repair bonds have been used for other purposes not mention and their property tax rate being among the highest in the county. Instead of finding new revenue streams the so called “Progressive Alliance” dominated government should consider a 10 point austerity plan:

  1. Fire or not renew the contract of their City Manager Bill Lindsay whose contract ends next February. Mr. Lindsey has been around for almost a decade and must take at least part of the blame for the deficit laden budgets and inept administrative policies that have consistently transpired under his leadership.
  2.  Hire an outsider as City Manager and give this person the authority to shed city workers as other  cities have done in financial crisis to reduce costs in local government.
  3. Reform the fire department (see graph) that is paying excessive salary and benefit packages to employees . In cases where managers are getting ridiculous amounts of overtime, new people should be hired to avoid much of this. In addition, managers  should have provisions included in their contracts giving them comp time instead of overtime as their base pay exceeds by over 3 times the income of the average citizen they protect.
  4. Shift hours and work rules of the fire department need to be changed to lower overtime costs. In cases where ambulances can be used for emergency services (especially at the end of shifts) sending out a fire truck should be avoided if possible.
  5. In this regard, Richmond should emulate some of the same reforms as the County Agency ConFire to reduce costs and increase efficiency.
  6. Ditto for the Police Department that also has a high amount of overtime that exceeds what other cities in the area pay. At the end of shifts not spending overtime of officers on non-felony cases should be strictly adhered to.
  7. Non-essential city workers should need approval from the head of their departments to receive any overtime exceeding 4 hours a week.
  8. Richmond as a whole needs to be more inclusive with those of differing visions especially in developing new projects to reflect the changing demographics of those who are moving into their community. Their Housing Department, which has been under investigation by the FBI in recent years, needs to “clean house” and bring in a new team from the outside to make necessary reforms.
  9. Have a more constructive working relationship with Chevron and stop using them as a foil to win elections. At the same time the giant oil company should agree to a truce with the city and stop fighting them while creating a new spirit of co-operation.
  10. In future elections for City Council, the electorate might want to consider putting into office those who are pledged to fiscal reform as opposed to those dedicated to changing the world.

This is a long “to do” list but these are largely steps other communities have made in Contra Costa and Alameda Counties since their revenues were cut by the State and property tax income following the recession eight years ago. Such a task will be especially difficult for Richmond to accomplish as their politics are dominated largely by doctrinaire progressives who prefer to grow government rather than contain costs.

Right now the ball is in Richmond’s court as a visit by the Tooth Fairy does not appear to be imminent.

City of Richmond Employees making $200K+ per year

Reposted from the Contra Costa Bee.

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