Having pored over the city’s newly released Plan of Adjustment – Stockton’s proposed post-bankruptcy budget — a respected University of the Pacific analyst breaks ranks.
“This is the first time where I think it is appropriate for the City Council to dissent with the City Manager’s bankruptcy plan,” writes Jeff Michael, head of UOP’s business Forecasting Center. ”If they don’t and this plan is unchanged when the sales tax comes up for a vote, I can see cause for taxpayers to vote down Measure A (sales tax increase) this year.
In fact, he can see five reasons. Read them here.
His main objection: “Measure A has another promise written directly into the ballot question stating “it shall sunset in ten years or when economic recovery occurs.” This isn’t an advisory measure, it is clearly stated in the tax measure. The City Manager’s plan of adjustment ignores this promise, and presents a budget projection with a razor thin fund balance in 2024 if the tax is extended, and will fall to a $38 million deficit if the measure expires as planned. ”
Deis supposedly said at today’s press conference that the budget projections are conservative. They expect higher revenues as the recovery heats up.
Michael anticipated this defense. “If questioned on this, I suspect the City’s staff response would be that their projections are really conservative, and they think positive surprises to revenue are more likely than negative. The projections did not look overly conservative to me, but maybe I missed something. Regardless, the City ought to go back and make reasonable revisions to their revenue and spending projections that show a balanced budget when the tax expires in 2024.”
A very serious point. A $38 million deficit is the sort of deficit that threw Stockton into bankruptcy in the first place, as Michael also points out. City fiscal experts need to be pressed to answer all Michael’s points.