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Stockton vs. Manteca

Stockton heads for bankruptcy while Manteca eyes recovery

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Stockton vs. Manteca

The 15-member Manteca citizens budget advisory committee at a February 2009 meeting.

HIME ROMERO/Bulletin file photo

POSTED June 26, 2012 1:56 a.m.

Ranks of sworn police officers cut by 25 percent.

Trained firefighters slashed by 30 percent.

Average compensation of employees rolled back 22 percent.

Those numbers tell the tale of Stockton’s financial woes.

Surprisingly, they almost mirror what happened in Manteca.

Manteca – just like Stockton – also has been hammered hard by foreclosures and unemployment.

But while Stockton teeters on becoming the largest United States city ever to file bankruptcy, Manteca appears to be on the road to economic stability.

Why the difference?

Manteca has five things going for it:

• An early admission the city was in trouble and could no longer do business as usual.

• Transparency from the outset of the budget crisis that involved enlisting a 15-member citizens’ budget advisory committee comprised of people who weren’t all exactly happy with how the city had been operated.

• Employee bargaining groups that early on read the writing on the wall and made concessions instead of refusing to compromise.

• A redevelopment agency that was operated in a fiscally conservative manner and didn’t have a razor thin gap between debt payments and property tax revenue.

• Municipal investments that were also conservative in nature.

 While City Manager Karen McLaughlin and others stress that Manteca isn’t out of the woods yet, the city has put in motion - largely on the back of employee concessions and streamlining operations through hiring freezes - a plan that is designed to eliminate the so-called structured deficit of spending more in a year than the city takes in through revenue by the end of 2015.

Back in 2009, Manteca Finance Director Susanne Mallory led a city hall team that took all salary contracts, retirement costs, benefits, day-to-day expenses and contracted services. What they found was sobering.  They found that the general fund that pays for vital day-to-day services would have an $11.3 shortfall in fiscal year 2009-10. If nothing was done it would be followed by a $14.2 million deficit in the 2010-11 fiscal year. Eventually, by 2015, the annual deficit would top $16 million.

Spending-revenue gap wasn’t an issue during the go-go days of growth

The structural deficit has been an issue for much of the past decade. However, as long as there was growth it didn’t receive serious attention. Sales tax, as an example, shot up 108 percent in the 10-year period ending in 2007 while property tax receipts rose 162 percent during the same time.

Part of the problem was the lack of political will by elected leaders, employee groups, and even citizens who demanded more services but didn’t want to pay for them. As long as the economy was on a roll, no one was overly concerned.

Also four-year municipal employee contracts with annual 5 percent pay raises negotiated by former City Manager Bob Adams accelerated the problem just as revenues started dropping.

Shortfalls throughout most of the years after 2000 were addressed though the use of one-time money that Manteca was flushed with primarily from bonus bucks of $7,000 to $12,000 per home paid by developers for sewer allocation certainty.

Something clearly had to be done

Believing they may have a trust issue with employee groups and city residents in general who may not take the word of bureaucrats and elected leaders alone that drastic measures were needed, the  City Council appointed a 15-member citizens’ Budget Advisory Committee.

Employee group representatives sitting in on the meetings were stunned. There was no appetite whatsoever for new taxes even if it meant a reduction in municipal services.

“They (the committee) was saying their friends and families were taking 20 percent pay cut hits, furloughs, losing their jobs, and losing their houses and that they expected city employees to be treated no differently,” recalled former City Manager Steve Pinkerton.

Making the message more poignant was the liberal sprinkling of Measure M boosters on the committee who had campaigned hard for the half cent public safety sales tax.

“That really hit home when your staunchest supporters were saying no to taxes,” Pinkerton said.

The furloughs and pay reductions put in place four years ago for most bargaining groups was the first step. Since 2009 through new contracts put in place, employee groups have basically agreed to reduce their compensation by around 22 percent.

Police ranks cut 28%, firefighters pared 14%

The ranks of police were cutback 28 percent from 72 officers to 52 compared to 25 percent for Stockton. Firefighters lost 14 percent of their front-line personnel, a number somewhat smaller than Stockton’s percentage because that city had four-man staffing per engine companies compared to three for Manteca. The cutback for firefighters in Manteca was less drastic as staffing had been stagnant for the better part of 15 years while police staffing had increased to keep up with population.

While Manteca’s public safety personnel were biting the proverbial bullet the Stockton Police union was busy launching a billboard campaign and buying the home next door to their city manager’s home.

The general fund in Manteca - just like in Stockton - is the only municipal  fund under severe stress. Just over 85 percent of the general fund goes to pay for employee compensation. The general fund covers public safety, parks, streets, and other general government day-to-day operations. It was pension and retiree benefits coupled with compensation that was the albatross around Manteca’s neck.

Stockton not only has pensions and retiree benefits as a budget breaking burden but they also are unable to pay bond debt. That already has prompted creditors to seize three downtown parking structures and the eight-story former Washington Mutual building Stockton purchased for a new city hall.

Manteca operated its redevelopment agency in a much more fiscally conservative manner and made investments that  tended to generate revenue.

The difference between Big League Dreams & Banner island as RDA investments

A prime example is the Stockton Arena and the Banner Island Ballpark. Both are true professional venues and aren’t used every day. Big League Dreams, on the other hand, is a recreational facility that is used every day and is having its maintenance and operations paid for by user fees.

The $28 million redevelopment agency funds invested in the BLD complex  is being returned to Manteca’s general fund in the form of $400,000 a year in lease payments from BLD.

“I hear from people all the time who think that BLD prices are too high and that the city should do something to cut rates for certain groups or that the city should run it instead,” Manteca Mayor Willie Weatherford did. “But that’s why it is doing as well as it is…. The city isn’t running it. It’s being run as a business.”

The set-up means the city-owned sports complex won’t cost Manteca’s general fund a penny to operate or maintain for at least the next 35 years while at the same time the general fund receives $400,00 a year.

In Tracy the sports complex is a hit on that city’s general fund as maintenance and operation costs come are covered plus they must make bond payments.

Weatherford noted a similar private-public sector partnership with the golf course has prevented it from suffering the same fate as courses in Modesto and Stockton that are facing the possibility of closure.

The mayor said the only real big mistake with the golf course was a past decision to go with a two-story clubhouse instead of a one-floor ranch-style building. The decision, the mayor said, saddled the golf course with too much debt. That obligation was paid off finally on June 30, 2010.

And while Weatherford believes Manteca has a ways to go and still has to put in motion more investments that enhance the economic vitality of the city that will strengthen Manteca’s ability to fund municipal services, he believes the city is headed in the right direction.

“Manteca’s employee groups and the city worked together to take the bull by the horns early on,” Weatherford said. “Stockton didn’t and neither has the state for that matter.”

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