Newark Residents, Vote No on Measure PP

Submitted on behalf of author, Fred Arredondo

The utility users’ tax was originally presented to Newark voters in 2010 after the city declared a fiscal emergency. It was a temporary measure, expiring in December 2015, to maintain city services after the budget cuts of the Great Recession. In 2014, voters approved an extended utility tax expiring in December 2020.

In Newark’s city council minutes of May 28, 2020, the city manager said reserves are adequate to balance the 2020-2022 biennial budget, which can be reexamined this fall to consider corrections.

Before the fall, the council voted on July 23, 2020 to put Measure PP, a 9-year utility tax extension, on the ballot. So instead of considering corrections, the council placed the measure on the ballot and threatened to reduce city services if not passed, as was done after the 2009 recession. This budget approach is tax now and not worry about corrections.

The PP ballot measure estimates the tax extension would generate approximately $2,750,000 annually. Consider the city’s biennial budget report for 2020-2022. The unallocated general fund balance estimate is $15,921,000. The city’s fiscal uncertainty reserve balance estimate is $5,878,000. The estimated balance in the emergency reserve is $8,817,000. The total of these balances is $30,616,000. The council should consider budget corrections and the use of over $30,000,000 in these funds, instead of asking voters to extend the utility tax. In the voter information guide, an argument for the measure states that the city has “nowhere left to cut.” This argument is inappropriate, when these fund balances exceed what the measure would generate over 10 years ($30,000,000 divided by $2,750,000 annually).

The Great Recession of 2008 and 2009 is over. Here we are eleven years later, and the city council wants voters to approve a 9-year tax extension, threatening to curtail emergency (911, fire, etc.) and public infrastructure maintenance (streets, etc.) services. The voters deserve better budgeting from the council before essential city services are threatened. This is legalized extortion: vote for the measure or your services will be cut. Continuing a recession-initiated tax from eleven years ago to balance the budget for a total of 19 years (2010 to 2029) does not reflect sound financial management by this council. Yes, we must deal with the Covid-19 pandemic, but not for nine years into the future.

In 2016, the city council promoted the need for a 25-year long sales tax increase for a new civic center at a cost of $64,000,000 projected to June 2018. So, Newark voters approved the project. In August 2019, the reported cost of the civic center project was $88,700,000, which exceeds the projected June 2018 estimate by $24,700,000. This is a 39% increase from June 2018 to August 2019, caused by project additions. So, the question is, will the 25-year sales tax increase be enough to handle the cost overrun? Again, sound financial management is missing here, such as cutting back on those project additions.

The council should address all the funding needs of the city, including the fall 2020 corrections and the pension liabilities. The plan for the net pension liability in the city’s financial report for 2019 was $40,819,004. The report shows this amount has been steadily increasing for the years 2015 through 2019. It was $28,347,644 in 2015. This liability needs to be better managed.

Concerned Newark voters need the council to go back to work on the budget, make corrections, and stop threatening to take away essential services.

Vote No on Measure PP. Otherwise, standby for more tax measures to bail out the council’s financial problems.