by Venturans for Efficient & Responsible Government (VERG)
No one makes a lifetime commitment based on a single moment in time. Yet, the Ventura City Council made just such a commitment. In November 2020, they awarded step and merit raises to city employees based on revised sales tax figures. This decision is disturbing on several levels:
The city staff led the Council to believe financial conditions were improving based on very short-term statistics.
The people benefiting from the salary increases were the ones making the recommendation.
Our elected officials failed to question the rosy picture the staff presented during the pandemic economic shutdown.
How Did We Get Here?
In the city’s fiscal year 2020-2021, the Ventura City Council faced a $12.0 million budget deficit due to California’s coronavirus shutdown. Among the solutions city staff recommended was the option to ‘defer’ $1 million in employee step and merit salary increases until financial conditions improved.
As a provision of the FY2020-21 budget, former-Mayor Matt LaVere, the City Council and all the bargaining units agreed to freeze employee step and merit increases as a down payment on the massive reductions necessary in the year ahead.
What Was The New Projection That Justified The Step And Merit Increases?
To everyone’s surprise, the September sales tax report was higher than anticipated. The city staff projected that General Fund would be $1.657 million higher than forecasted. The City Council seized this as the ‘green light’ to reinstate the employee step and merit raises.
At the November 9, 2020 meeting, the Council rescinded the suspended step and merit salary increases for city employees. The suspension lasted from March to November 2020.
Was The Decision To Grant Step And Merit Increases Logical?
The Council made its November decision based on data presented on September 23, 2020, a month and a half earlier. The Council received no updated data on which to decide. If they had, the decision might have been different.
What’s Happening With The General Fund?
The $1.657 million General Fund surplus presented in September 2020 was misleading. Yes, sales tax revenue was higher, but that didn’t account for the excess. Two unique, one-time events inflated the figures.
The General Fund received $2.0 million from the CARES Act funding. The city also received a donation from the Marion Schwab Trust.
Without these two rare revenue infusions, the city would have had $2.4 million less revenue than the city staff led the Council to believe when deciding to award the raises.
What’s more, the city staff failed to mention the City Council’s risks to the General Fund. Player’s Casino Card Room sales taxes, parking violations, and Parks & Recreation programming were below budget. Mr. Coon’s November 2020 report shows revenue fell more than $5.2 million below budget in those three areas.
The Result Of Their Actions
In June, Councilmember Jim Friedman warned of an “absolute financial disaster” in the coming years if the city doesn’t continue to cut spending. Yet, the City Council awarded over $719,000 in pay increases to city employees.
What Can We Do?
Every budget cycle, our City Council makes long-term decisions based on the short-term data they receive from city staff.
Staff isn’t always right. No one has examined the budgeting process recently. Periodically, it would be a good idea to have independent, outside consultants provide an unbiased analysis of Ventura’s budgeting.
We believe the City Council made the November decision to award the step and merit increases on flawed forecasts from staff. The Council decided based on a September bump in the sales tax revenue for the first four months of the fiscal year 2020-21. And the data didn’t include the all-important Christmas season sales tax revenue.
At a higher level, citizens should be concerned about this process. The same people who prepare the reports used to decide salary increases are the same people who get the raises.
Our concern isn’t with the exact budget numbers. We question using numbers provided by the very people who enjoy the increases.
And we’re disappointed by the elected officials that failed to question staff’s rosy projections in the middle of a pandemic.
We hope that the new Council will be more rigorous in asking questions when preparing next year’s budget.