Fiscal Restraint/Responsibility

By Fred M. Whitaker

Government must be good stewards of the taxpayers dollar. Every dollar wasted is a dollar that is not being used by the taxpayer for their benefit and the economy as a whole.

Cutting Costs/Reshaping City Staff - When I took office at the end of 2010 the City was in the midst of the Great Recession. It had just passed three deficit budgets in a row, spending from reserves as it experienced a decline in revenues from the 2007-2008 year of $93mm to $78mm in 2008-2009. The Councils before honored the best of Orange's tradition in being fiscally prudent with exacting the least pain possible on the tax paying public and the staff that serves them. A hiring freeze was in place, furloughs kept City services closed every other Friday, and no raises were issued. Yet, that was not enough to keep spending under revenues. In 2011, I led the charge by advocating for the elimination of financial perks for the Council. You cannot ask others to sacrifice if you are not willing to sacrifice yourself. While it is small in the scheme of the entire budget, the elimination of our compensation, health and pension set the tone for what we were asking from the staff. The budget was then scrubbed for every excess we could find, cutting conference attendance and getting sponsors for community events. Whether it was sending the Computer IT, Towing, or even Street Sweeping out to RFP, we found ways to save money. In 2007 we had over 710 employees, now we have about 600 providing the same service. All done with no lay offs, just attrition and efficient re-organization of priorities.

Pension Reform - We then started the three year process of requiring all eight collective bargaining units to accept responsibility for the maximum payment toward their own pensions allowed under state law. The negotiations were difficult, but successful. By June 30, 2013, all employees were paying either 8% (non-safety) or 9% (safety) toward their pensions. We were the first city in Orange County to accomplish all employees paying the maximum and still the only city to do so without any corresponding raise. Most of the employees paid little to nothing toward their own pensions until the crisis. When coupled with the furloughs, since 2008 employees have a 13% annual decrease in their take home pay. As the City's budgets came back into balance we did not through money back into operations, we set aside $4 million dollars over the last three years toward future pension liabilities. In 2013 the City of Orange was awarded a Rose Award as a friend of the Taxpayer by the Orange County Taxpayers Association for our success in Pension Reform.

Revenues Without Raising Taxes/Encouraging Business - Many do not realize that the income into the City's general fund comes from only a few sources, most of which we cannot control + 1 cent of the sales tax for anything purchased in Orange, 14% of the property tax on properties in Orange, a small percentage of the motor vehicle license fees on vehicles registered in Orange, and business licenses/permits. Redevelopment Agencies previously provided funds for revitalization of the business community and long term infrastructure, and yet in 2011/2012 Governor Brown determined he wanted your local tax dollars to solve his own budget crisis and Redevelopment Agencies were eliminated. We had to send over $30mm of our cash reserves to Sacramento. Yet that was not enough for Sacramento who then tried to withhold over $7mm from current tax revenues claiming that the City owed more from the old Redevelopment. We sued the State of California and won + maintaining over $7mm in resources for you! Without Redevelopment, we looked at other ways to encourage the expansion of the tax base without raising taxes, so we developed a model sales tax sharing ordinance + where businesses that bring in new tax revenues either as a new business or growing an existing one, share in the increase received by the city. This ordinance and the subsequent addition of Volkswagen of Orange was recognized with the 2013 Orange County Business Council + Turning Red Tape into Red Carpet Award for Business Retention & Expansion. I was personally recognized with the 2013 Commerce Award by the Orange Chamber of Commerce for my leadership in repositioning the city after Redevelopment.

Balancing the Budget/Righting the Ship + While painful, all these efforts allowed us to get back to a balanced budget in the 2012-2013 fiscal year and every year since. One of the first City's in Orange County to do so. We have now passed our third truly balanced budget in a row + the latest being the 2014-2015. With the economy slowing coming back, we were able to restore city services every other Friday and bring the workforce off furlough for the first time in five years- providing better service to you. We were also able to acknowledge the sacrifice of all employees by providing a 3% cost of living increase, the first increase in six years. It was provided to all employees regardless of classification and without favoritism. Despite many efforts and pleas by the collective bargaining units, no one was favored with a "sweater deal". As a council we made the hard decisions so many others refuse to make, and we are much more stable city than others because of it. We could not have done it alone + we provided the leadership and the Department Heads implemented it throughout the City. In late 2011, seeing the tough decisions and reorganizing that would have to be done, these leaders met and created Together Enhancing, Advancing & Motivating ("TEAM") to take ownership of change- ensuring a better trained, informed, leaner, and more motivated workforce that will serve the city well into the future. Our Department Heads were named Innovators of the Year at the 2nd Annual Association of California Cities + Golden Hub of Innovation Awards in 2013.

Goals:

Cal PERS is raising our rates even further for the 2016-2017 fiscal year. The increase will likely be a little more than $2,000,000 or almost 3% of our entire budget. Under Governor Brown's pension reform PEPRA, we can only seek concessions from our employees to pay greater than the current law in 2018 + more than two years later. This will undoubtedly mean tight budgets and strain on services for the next several years. It will also undoubtedly mean difficult negotiations with our employee bargaining groups as we insist on more pay being dedicated to pensions instead of take home. My goal is to have a strong council that holds the line, so our services are not endangered by rising pension costs and we don't simply become a pension provider for senior employees. To have you the people help us make the right decisions, we will need to pass a form of COIN, the Civic Openness in Negotiations ordinance, passed by many of our surrounding neighbors and the County. The concept is that the economic effect of all our contracts whether it be tree trimming, street sweeping, computer services, trash pick-up, etc.. are negotiated and passed in open session with all the costs available for the public to understand. Historically, collective bargaining agreements with employees are kept secret until the final vote. COIN calls for every written proposal to first get an economic analysis that is disclosed to the public before any vote. It also calls for a first reading of any proposal up for vote, so that like all other ordinances that require first and second readings, the public have two opportunities to comment and hold us accountable.