Economy is for Winners (Budget Part 3)

After public safety, economic development is the backbone and engine for growth in any city. Sacramento continues to sit in the shadow of such Bay Area greats as San Francisco and the entire Silicon Valley. One might suppose that the Council is interested in economic improvements city-wide with all of the investment in sports infrastructure, but that couldn't be farther from the truth.

Sacramento still relies heavily on government employees for its economic health. And jobs that aren't related to government are heavily biased toward low-wage and part-time work. Indeed, even jobs created by sporting entertainment will be among those two categories. Does the budget support economic development for full-time highly skilled employment?

If the Council's investment in economic development planning is any indication, no. The City will completely divest itself from economic planning, and instead give a mere $188,000 to Greater Sacramento - an organization of citizens and businesses who want to see the City's economy improve. We could probably all agree that any organization of leaders that aren't our City Council can do a better job of planning for Sacramento’s future - but then why are Council Members getting $790,000 more next year? Shouldn't this money be going to those that are actually doing the work to pull Sacramento out of the debt that the Council got into?

And even if you think that businesses should fund their own economic development, what about the city's 'rainy day fund'? Shouldn't Sacramento leaders be planning for the next economic downturn so we don't have to cut our police and fire by another 25%, or raise taxes on already struggling families? No, not in this budget. The proposed budget notes "recommendations for funding the [Economic Uncertainty Reserve] will be considered as funding is identified."

Basically, Council has no self-control when it comes to spending our money. Even though they have themselves identified a goal of 10% reserve, and they are still $1.5 million short of that goal, there are no plans to save for our future.

One might also hope that the City intends to directly help small businesses establish a presence in Sacramento, large businesses hire skilled workers (which we have many of that commute to the Bay or foothills), or new economic opportunities that want to establish a presence here. Instead of simple and important measures such as tax relief, permitting streamlining, and start-up incentives that are being used by neighboring communities, the Sacramento Council will spend its time and resources contemplating a better business climate.

The budget prioritizes finding "access to" foreign investments (but no assistance), pursuit of grant dollars for infrastructure (none of which have been secured), and enhancements to the city's website (yay, can we have emoji please?). Oh, and they save the best for last. The Council wants to "engage with the Greater Sacramento Area Economic Council" and "strengthen relationships with regional partners" - because this is a new concept and they haven't been doing their job over the last year.

How does that $25,000 raise for each City Council Member sound now?

City of Sacramento Budget

Budget Part 1: City Council Gives Themselves 6% Raise

Budget Part 2: Public Safety - Not A Priority

Public Safety - Not a Priority (Budget Part 2)

In the last post, we revealed that the huge taxes and fees the City is taking from you are going to fatten the budgets of your City Council Member. So, we should start examining what it is you'll be getting for the $5.6 million they are voting to pay themselves. The first responsibility of government is to protect the people - Public Safety is paramount.

But a review of the City's proposed budget shows that improvements to public safety are hardly a concern for the Council.

The proposed budget notes a desire to increase police staffing levels to two officers per 1,000 residents, but that such an increase would "require substantial new ongoing resources" which are not provided for in this budget. The Council is proposing to move away from a community policing model to a "geographic policing model". To hell with communities - they cost too much to provide adequate police resources anyway!

Oh, but the lack of officers is okay. The City will just purchase another ten cameras to install around Sacramento to record all of our movements and keep them in police files. It won't matter much the crimes that are happening in our neighborhoods, because police will be able to watch their televisions and find criminals after-the-fact. Your house may be trashed, your car smashed, or your neighbor murdered - but at least they can (maybe) figure out who did it!

The City Council is giving themselves each a 6% raise, so we should assume that the Police Department will also have at least as much , right? No, of course not. The proposed budget shows only one-half of one percent (0.5%) increase for the Police.

And the best is yet to come - other than body cameras and other recording devices, the City Council is putting police funding into hiring new staff at the Police Department. This should come as good news for those of us watching invasive property and non-violent crimes devour our communities. But none of these proposed staff will actually be helping to deter or combat crime.

Out of newly created positions, about 2.5 will go to running background checks on city employees. And the other 22.5 positions will be part-time jobs for police recruiters to go out and talk to kids about becoming police officers. Never mind the fact that even if they want to become officers there's no new money in the budget to hire them.

That's right. The Council's answer to crime in Sacramento is to hire part-time recruiters and buy cameras. But they really deserve that 6% raise, right?

City of Sacramento Budget

Budget Part 1: City Council Gives Themselves 6% Raise

Budget Part 3: Economy is for Winners

City Council Gives Themselves 6% Raise (Budget Part 1)

Last week Sacramento's proposed 2015-16 budget was released for public comment. The contents of that budget tell an interesting story about the priorities of the City Council - A story that doesn't support the rhetoric coming from our elected officials.

The proposed budget "reflects adopted Council priorities" and amounts to almost $1 billion - that's almost $2,000 for every man, woman and child in Sacramento. Think for a moment ... what could you do for your family, and what kind of amazing vacation could you take, if you had $2,000 extra for each person in your family?  But I digress.

So what exactly is the City proposing to do with all of that money taken from you in taxes and fees? Well, to start with, each Council Member will increase their own budget by 6%, or about $25,000 over last year's approved amount. That's right, you're paying more in Measure U taxes so that they can fatten their own budgets. Between the Mayor and City Council, there is a proposed increase of over $790,000 from the last approved budget.

When was the last time you got a 6% raise at work? And what exactly are the City Council doing to deserve such a pay increase? That is what the rest of this series intends to answer.

City of Sacramento Budget

Budget Part 2: Public Safety - Not A Priority

Budget Part 3: Economy is for Winners

Other Cities Lead While Sacramento Just Pretends

Sacramento Leaders Don't Understand Simple Math

Sacramento is the capitol of the most productive state in the United States. Within the last 10 years, California was the 6th largest economy in the world, surpassing developed countries of global significance such as Italy and Russia. One would think that the capitol city of that powerhouse should be strong and vibrant, a beacon of hope and prosperity.

However, Sacramento's leadership over that time has done an abysmal job of investing in city infrastructure, building safe communities, and promoting an inviting environment for job creation. What's worse, city leaders continue to ignore the voice of the people and pursue a losing strategy. Not only should Sacramento voters get more engaged in City planning, the City Council and Mayor should consider it their duty to reach out to the public ... not ignore them.

Other effective City Council Members are doing just that - asking residents what they need. In the City of Long Beach, Rex Richardson has taken a portion of the city budget, dedicated it to infrastructure investment, and held community meetings to set priorities for these expenditures. There are countless other strategies that can help local governments encourage citizen participation. The Municipal Research and Services Center (MRSC) researches, compiles, and provides for free packages of strategies and materials for use by local governments.

MRSC notes, "formal city hall and courthouse settings can be intimidating, and hearings can sometimes be dominated by those who are more comfortable with public speaking. Such hearings may not be the best way to encourage comment from a wide cross-section of community residents and may not fit into citizens' busy schedules. The format of hearings often leaves little, if any, room for reasonable discussion, give or take, or response to prior testimony. Instead, it is important to conduct a thoughtful public process in advance of the public hearing."

Would You Feel Intimidated?

 Oddly, Mayor Kevin Johnson is the current President of the United States Conference of Mayors (USCM) - an organization that itself gathers and provides best practices for local governments. So, one would wonder why he and his city don't follow many of them...

A myriad of other sources of information are also available to City Leaders, if they could just get past their own egotistical self indulgence. For instance, a survey of more than 13,000 small business owners was conducted, asking what policies make a city business friendly. Sacramento was ranked #82 on the list of lowest rated cities in the country. A thoughtful City Leader should consider its business environment, particularly when Sacramento faces higher unemployment than cities both to the East and West - higher than the state average, even. One vital finding of the survey was that the effects of poor licensing regimes (at all levels of government) were twice as important as taxation, and that easily understood tax regimes were at least as important as low taxes.

If City Leaders listened more to what residents need, and small business owners want, maybe the 2035 General Plan Update would have been more on point.  There's still time to change direction.

Low Income and Jobless Forgotten as City Leaders go Pinky-Up

Last weekend, Sacramento City leaders shut down the Tower Bridge to host Sacramento elite at a dinner to celebrate their self-designated "Farm to Fork Capitol" of America. This gala dinner, which cost between $175 and $625 per person (depending on how close to the King you wanted to sit), capped off two weeks of self-indulgent faux service to the Sacramento community. Sacramento's leading couple, Kevin Johnson and Angelique Ashby were in attendance.

The inappropriateness of this event was noted in the Sacramento Bee and Sacramento News & Review, among other places. Each recognized that with a median household income of $55,000, farm to fork groceries are a stretch on the budget, and this event was just over-the-top.

What this celebration highlighted most of all is the low wages and poverty that pervades significant portions of Sacramento. In the City of Sacramento, more than one-fourth of residents live below the poverty level, compared to one-fifth statewide. Local farmers markets throughout our communities have been a welcome staple of Sacramento since long before City leaders decided to politically capitalize on the backs of local growers. However, fresh fruits and vegetables, grass-fed beef, and ranch-made cheese and butter are normally too pricey for struggling families to eat more than a couple times each month.

Promoters of "organic" produce and locally grown products tend to brush aside this simple economic fact, saying, "sure it's a little more expensive, but it's better for you". For families who know exactly how much money is in their bank account - to the penny - because they need every penny to eat and survive, eating "better" just isn't part of the equation. The struggle is to survive, and City leaders aren't helping ease that struggle.

If City leaders are going to go through the time, expense, and public inconvenience of holding a two-week festival and shutting down a major thoroughfare in Sacramento, shouldn't that event focus on creating jobs and economic opportunities for the 40,000+ Sacramentans unemployed and looking for jobs, or the 58,000 Sacramentans out of work and collecting social security disability? City leaders regularly extol the virtues of Farm to Fork, a new Entertainment Sports Complex, and recently a new MLS Soccer Stadium, but when was the last time you heard them talk about the rest of us.

The rest of us are those that are taking care of our families and making ends meet. The rest of us are the 125,000 that are struggling with a wage less than $24,000/yr for a family of four (25.6%). The rest of us are the 40,000 that are out of work, but desperately looking for a job (8.4%). The rest of us are the thousands of college graduates that must spend two hours of their day (that could be spent with family) commuting to the bay area, because there are no opportunities for them in Sacramento.

The rest of us aren't paying for the privilege of sitting next to the man who wants all of the power (http://yesonmeasurel.org/), and the rest of us aren't developers making billions on large City-promoted projects. The rest of us are voters and taxpayers, though.

The Future of Sacramento Development - General Plan Update 2035

Another key component to Sacramento's future success is planning for development.  This is the second article discussing the 2035 General Plan Update released in August 2014.

According to city leaders, the city intends to "encourage compact, higher-density development..." (LU 1.1.1).  Throughout the city, they intend to build up - not out.  The premise behind such a proposal is that not enough Sacramentans live in multi-unit apartment buildings.  Among the stated purposes for this requirement to increase density are:  supporting transit, reducing vehicle trips, promoting pedestrian/bicycle friendly neighborhoods, and increasing housing diversity.

Sacramento's Big City Skyline

Now I, personally, want to see Sacramento make the transition into "big city" status.  There is currently estimated to be more than 475,000 residents in the City of Sacramento.  There are only a handful of cities in California bigger than Sacramento, as reported by the California Department of Finance.  This places Sacramento as the 7th largest city in California, following:  Los Angeles (3,904k), San Diego (1,345k), San Jose (1,000k), San Francisco (836k), and Fresno (515k).

A whole different "cowtown" world

But, in order to break into big city status alongside northern California giants like San Francisco and San Jose, there must be fundamental change - change that has long been met with less-than-enthusiastic response from residents who like to think of Sacramento as a "cow town" (see Here, Here and Here).  There's something to be celebrated about having a reputation for nice people, slower pace, and urban farms and livestock.


When you get down to it, here's the crux of the argument for greater infill development and higher housing densities.  The percentage of buildings with five or more units in Sacramento is about 22.5% - Now, compare this with Los Angeles (45.5%), San Diego (35.5%), San Jose (25%), and San Francisco (45.5%).  It simply can't be said that the City's skyline rivals that of San Francisco, San Jose or Los Angeles.

City leaders have a schizophrenic vision of shedding Sacramento's cow town reputation in favor of tightly-packed residents, robust transit and non-motorized transportation options, while still promoting agriculture (lately with the "Farm to Fork" fad) and open space (LU 2.3.1).  It makes one wonder whether they're trying to appease the voters (who like the "small town" feel), while still pushing a big city agenda.

City Leaders Miss the Mark with General Plan Update

Last Thursday, the City of Sacramento released its 2035 General Plan Update.  This article is the first of several to be written over the next month delving into details of the City's long-range planning.

Everyone in Sacramento is still concerned about the economy.  Sacramento still has one of the highest unemployment rates in the state at 8.4%.  With a population of about 500,000, this means that 42,000 people in Sacramento are looking for work and unable to find a job.  This doesn't include those of you that are working part time, but would prefer full-time employment.  Residents of Sacramento are far worse off than the average Californian (7.3%), and should be in shock of our close neighbor San Francisco (4.5%).

With such low prospects for the talent and workforce that exists in Sacramento, one would hope that City leaders would be aggressively developing and promoting policies that bring more business and jobs to our doorstep.  Other than the Entertainment Sports Complex, what business, jobs, economic proposals have been touted by the City Council?  Perhaps there is an underlying reason that we aren't seeing appropriate activity from Sacramento's leadership.

Cue the General Plan.

I'll be looking only at the part entitled Economic Development today.  On the very first page (2-85), city staff write:

"Businesses are an important source
of the city's economic well-being..."

Wait, what!?!?  Businesses are the (1) central, (2) most important, (3) imperative, (4) required source of economic well-being.  One might say that I'm arguing semantics here in suggesting that a different word should have been used, but this is absolutely a distinction that reveals the nonsensical thinking of Sacramento's economic development plan.

I will acquiesce that a significant portion of Sacramento's economic activity is tied to state government (27.6% in 2011), but the likelihood that Sacramento will add jobs through state government is low, and Sacramento's leadership can't affect change that will improve those odds.  Let's focus on what we CAN change, and not what we CAN'T.

A simple economic principle is that wealth can only be created by building or doing something - it must come from business.  It matters little whether the production is by small business or multi-national corporations.  This is why the choice of words used in the planning document are so ... well, wrong.

What kind of "supportive business climate" are City leaders planning on using to bring business to Sacramento?  Let's look:

1. The first element of the plan is to develop an Economic Development Strategy to "identify priorities, support prosperity, and improve long-term fiscal competitiveness" (ED 1.1.1). What does this mean to you?  To me, it means "we don't have a clue what to do, so we're going to hope something lands in our lap."
2. An equal portion is to develop the City Image to "promote Sacramento among its citizens and the wider business community as a livable community and an excellent place to do business" (ED 1.1.2).  I think we've all heard the idiom actions speak louder than words.  It's true - and especially true in the business community.  Simply telling them that Sacramento is a "livable community" does absolutely nothing to build a better business climate.
3. Alright, how about Economic Development Partnerships to "partner with economic development organizations and business to improve and advance Sacramento's economic development climate" (ED 1.1.3).  This sounds like we might be getting somewhere.  But if you read it closely it says that the City Council will abdicate their responsibility for economic development to outside organizations, so they can shift blame and point fingers when five years down the road we're still stuck in the same rut.
4. The best element of this plan is the Small and Startup Business Assistance to "assist small and startup businesses with resource referrals and financial and technical assistance" (ED 1.1.4).  I am hopeful that this proposals receives all of the attention, time, and consideration from the City Council that it certainly deserves.  I would also be hopeful that the City Council would consider extending similar assistance and relief to ANY business which might open doors and employ our neighbors in Sacramento.
5. Fifth on the list of priorities is Tourism and Related Business "to work with the Sacramento Convention and Visitors Bureau... to expand local amenities and to market Sacramento as a tourist destination and convention venue" (ED 1.1.5).  Sacramento is a wonderful place to live, and a great place to visit.  Consider, however, how many people from San Francisco or San Diego come to Sacramento for a vacation.  Now, compare that with the number of Sacramentans that choose to go to San Francisco or San Diego for vacation (or sometimes just a weekend journey to the Bay).  Tourism revenues are highly volatile, and without a national or global profile this seems like a policy that was produced when the "spaghetti was thrown against the wall".
6. Moving down the list we find Environmentally Sustainable, Green Technology, and Clean Technology Businesses to "attract and retain environmentally conscious businesses that contribute to long-term economic and environmental sustainability" (ED 1.1.6).  There is a clear and obvious lack of focus in this objective.  Taken in concert with other initiatives of late, such as "farm to fork capitol", it demonstrates an unfortunate lack of vision from the City's leaders.  This policy appears to have been composed by an intern that has been reading newspapers about new business initiatives across the nation and wants one of them to come to Sacramento.  One of these industries might be a good fit, or we might find a better fit with biotech, financial, goods movement, or other industry sectors.
7. Finally, the City proposes a Small Business Program to "support ongoing efforts of the Business Environmental Resource Center efforts to advance sustainable business programs" (ED 1.1.7).  Well, let's start by saying (again) that BERC is not a City program.  It is built and run by the County.  Once again, City leadership is abdicating their responsibilities to another outside group - and in this case, one that does not necessarily have the City of Sacramento as its core concern.  BERC is a portal for businesses to learn about and comply with regulations and licensing ... hardly an "attractive" resource for developing a vibrant economy.

It took only two pages of the six in the Economic Development section of the 2035 General Plan raise serious questions about the competence of City staff and the ability for City leadership to bring economic prosperity to Sacramento and help bring our deplorable unemployment under control.  What's worse, none of this economic plan recognizes, supports, or promotes Sacramento as the hub for coastal goods movement, and a gateway between California's ports and the rest of the Western United States.  Sacramento has key infrastructure for air, rail, waterway, and roadway intersections.

I will leave you with the comments of three local leaders ... all of whom seem to be echoing (in part) my comments above.

A look ahead: Sacramento’s five-year forecast

City Leaders Focus Too Much on Downtown

Everyone in Sacramento knows that K-Street and the Downtown Mall have been blighted and in need of revitalization for several decades.  I think we all agree that something should be done to help bring the centrer of our city back into positive repute.

However, the immense focus on building an Entertainment Sports Complex (ESC) has come at the detriment of the rest of the city.  The city will spend at least $250 million in taxpayer dollars on this project.  We can (and have) debate extensively whether this expenditure of public funds is in the best interest of the city, but let's set that conversation aside for a moment.

Do you live along Franklin Blvd. or Florin Road?  How much do you think the city could revitalize your community, bring business investment, and create high-wage jobs with an investment of $250 million into your neighborhood? How about your community schools ... are they in good repair?  The state might owe schools money, but that doesn't mean our communities should have to wait for Darrell Steinberg and Roger Dickinson to pony up.

How about those of you who live in Del Paso Heights?  How much community service, gang intervention, improved transportation and employment assistance could the city provide you with $250 million?  What if local entrepreneurs were given economic incentives to open and renovate small businesses that would employ young community members?

And even the less impoverished neighborhoods of Sacramento have been left in the dust.  Consider the rising crime and business failures in South Natomas and North Natomas.

Parks for the local community have gone untended and without repairs or improvements.  Community leaders renovated one park in the region and congratulated themselves extensively for this minor accomplishment.  Storefronts continue to sit empty, despite announcements that Sacramento's economy is recovering.  And now that redistricting has occurred, this part of the city is "divided and conquered" between the downtown interest (Councilmember Steve Hansen) and the East Sacramento elite (Councilmember Steve Cohn).

And then there's North Natomas - a relatively new community in Sacramento, but with great strategic and growth opportunities.  North Natomas will be the biggest loser when the ESC is completed, with all entertainment benefits moving from Arco Arena (Sleep Train), and no substantive plans for developing an economic engine to replace it.

All throughout the community, office buildings like this one stand empty.  No businesses are being courted to fill these spaces, and no strategic plan is in development to bring a significant economic engine to this prime land, located between the International Airport, City and State Government Buildings, and along three of the main economic corridors on the west coast.

It bears mentioning that Mayor Pro Tem Angelique Ashby is begging Kaiser Permanente to put a facility at the Arco Arena site.  More on this plan in another post.

So, what's a city to do?  There's little use in complaining that the rest of Sacramento is being left behind if we don't offer solutions.  But ... of course ... solutions cost money.  And now that Sacramento leaders have mortgaged the near future (to the tune of $250,000,000), money would seem to be a problem.

Government investments in infrastructure always have the highest return on the investment.  Whether this infrastructure is roads, transit, schools, high-speed internet, electricity and water improvements, sewer, libraries, or any other such community need.  I think we could say that at least the Sacramento City Council got something right when deciding to use the money to build something, instead of pour it down the drain into "re-branding" Sacramento without providing any new incentive to live, work, or play here.

Beyond investments to maintain and improve Sacramento infrastructure, investment in business of all kinds is imperative to building a world-class economy.  A very quick Google search shows that the cities of Philadelphia, PA; Dallas, Tx; Baltimore, MD; Lousiville, KY; New York City, NY; San Jose, CA; and San Francisco, CA all have local tax incentives to attract business investment.  Sacramento, however, does not, relying exclusively on whatever state and federal opportunities might be available.  Opportunities that could be had anywhere else but here.

It's clear that city leaders need to shake off the starstruck veils pulled over their eyes by the NBA, and get back to tending to the whole city.  The ESC will move forward according to a schedule established by legal, environmental and other barriers.  We need the Mayor and City Council to make the rest of us a priority too.


I'll close this out with a little reading material.

Investing in the Future:  An Economic Strategy for State and Local Governments in a Period of Tight Budgets

February 2011

http://www.hamiltonproject.org/files/downloads_and_links/THP_Strategy_Greenston_Feb2011.pdf