Measure D: Important Election Facts Sierra Madre officials claim that if passed, Measure D would force the City to cut critical municipal services, going so far as to consider shutting the city down if the $2.6 million tax is repealed. It is our opinion that the City requires this tax to keep up with out of control spending. According to the City’s audited financial statements, since 2006 General Fund revenues have risen 82% while expenditures swelled a whopping 89%. Even with massive revenue gains, spending continues to outpace income. In the Mountain Views News (3/17/18), Mayor Rachelle Arizmendi is quoted as stating that “This City Council has worked hard to keep our police and fire services here in Sierra Madre while still maintaining a balanced budget.” Balanced budget? The City’s silence on the $10 to $40 million pension debt and where it came from is deafening. Retired city employees can earn up to 90% of their salaries for the rest of their lives, plus uncapped lifetime medical benefits for themselves and their spouse.1 CalPERS grossly over-estimates the investment returns to generate enough funds to cover lifetime retirement payments. CalPERS bases their calculations on a 7% rate of return, but the ten-year average is closer to 3.5%. Sierra Madre’s Pension Debt CalPERS 2015 estimate: $10.7 million Stanford Inst. 2015 estimate: $40.4 million For example, Sierra Madre’s former Library Services Director retired in 2011 and as of 2017 was being paid an annual pension of $100,639. A retirement lasting 20 years would add up to a grand total of over $2 million. 1Stanford Institute for Economic Policy Research at PensionTracker.org
The Empire Strikes Back! City Attorney Provides Memo to Council Detailing Possible Dis-incorporation of Sierra Madre. A few weeks ago, we reported exclusively on Radio Free Los Angeles that the City of Sierra Madre is threatening to “disincorporate,” i.e., shut down the city if taxpayers repeal the Utility Users Tax. Apparently, the City Council decided that it just could not – or would not – deal with its spending problem or make the changes necessary to operate within a lower budget. The Council asked the City Attorney, Theresa Highsmith, to prepare a legal memorandum about what is involved in closing down a city. Ms. Highsmith, at the request and direction of the council, has prepared an extensive memorandum. Although the memorandum is several pages long, it boils down to these essential points: If taxpayers repeal the current Utility Users Tax, the city will lose $2.6 million dollars in revenue; has no way to replace those revenues; will not be able to pay its bills; and will have no choice other than to shut down. The police department will be shut down along with the fire department and the library. All current municipal functions will cease and will be taken over by LA County. Sierra Madre residents will continue to pay taxes, of course, but will pay them to the county. The pension obligations will continue to grow. The Real Bottom Line: Sooner or Later the City Will Shut Down Let me translate all of this for you. First of all, Ms. Highsmith’s memorandum is actually a first-rate piece of legal work. Her firm, Colantuono, Highsmith & Whatley, is one of the top municipal law firms in the state. She accurately [...]
Solutions to Sierra Madre's Fiscal Crisis Here are some common-sense steps to address and ultimately fix the fiscal crisis in the City of Sierra Madre. Admit You Have a Problem The first step in solving any problem is to admit that you have one. From all appearances, the City of Sierra Madre and the majority of its residents are either unaware they have a problem or are unwilling to admit it. Like most California cities, Sierra Madre spends too much on too many things, especially employee salaries, pensions and benefits. They have spent so much and incurred so much debt that the very existence of the City is now in doubt. The City Council and, more important, the citizens themselves must ultimately accept the blame for what has been done in their names. They must face up to the facts and admit they have a problem. Retain Experts to Establish the Real Pension Debt Appointing another committee is usually a bad idea for government because it is often a way to avoid responsibility for making a decision. The issues related to the calculation of future employment benefits are complex financial issues that are obviously beyond the ability of the City Council to understand. Otherwise, they would have already acknowledged that they have a pension, pay and benefits problem. The best way to deal with this problem is to hire a team of independent experts to review the City’s pension and OPEB (Other Post-Employment Benefits) obligations, calculate the real obligation and give the city its options. Hint: This number is not the fake $10 million number from CalPERS. The real number is more like the $40 million calculated [...]
La Cañada Taxpayers Are Winning Sierra Madre has a fantastic opportunity to lead the way for other cities facing similar financial crises. Not all cities are in as bad shape as Sierra Madre. For example, nearby La Cañada-Flintridge models a thriving community living within its means. Rather than talk bankruptcy and disincorporation, why doesn’t the Sierra Madre City Council consider spending cuts? According to 2016 payroll data from Transparent California, Sierra Madre employs three full-time Fire Captains (w/ annual pay and benefits of $123K, $233K & $150K) and a full-time Fire Chief (at $160K). Why does a city of approximately 11,000 residents need three full-time Fire Captains? A few years back, the LA County Sheriff’s Department offered Sierra Madre the opportunity to contract its police services with increased security and patrol hours at a projected annual savings in excess of $700,000. Unfortunately, the City declined the offer. With double the population, La Cañada contracts with LA County Sheriff and, as a result, has half the payroll and enjoys a lower crime rate. Higher payroll means faster growing pension debt of which La Cañada has relatively little. By not repealing the UUT, residents will only enable the City’s profligacy and further aggravate the debt problem. We strongly recommend an immediate intervention.
Measure D: A Step in the Right Direction In a few short days, taxpayers in the City of Sierra Madre will have the opportunity to do something both rare and necessary: reduce taxes and say “NO” to Big Government. Sponsored by local residents Earl Richey and David McMonigle, Measure D would end the obnoxious Utility Users Tax and reduce taxes by $2.6 million a year. Even though City revenues have grown 82% since 2006, spending has kept pace. Obviously, Sierra Madre does not have a revenue problem. It has a spending problem. The City continues to hire and pay its employees more than it can afford while ignoring growing taxpayer anger. The Utility Users Tax issue has come before the council repeatedly. In frustration, taxpayers qualified the current repeal initiative for the ballot. After using every excuse it could find to delay it, the Council finally put it on the upcoming April 10, 2018 ballot. Sierra Madre is Broke The City’s first order of business, of course, was to predict the collapse of Western Civilization if they had to reign in spending and face the harsh reality that the City of Sierra Madre, like almost all cities in the state of California is broke. There is no other way to put it. I will say it again: Sierra Madre is broke. Like its sister city to the south, San Marino, it is a fiscal illusion. It cannot hope to pay what it owes. Sierra Madre Pension Debt Bomb: $10 - $40 million The main culprits in the City’s insolvency are high salary and benefit packages for public employees combined with unfunded pensions and Other Post Employment Benefits(OPEB) [...]
Sierra Madre Voters Misled in 2014 The Fair Political Practices Commission rained on the Sierra Madre tax hikers’ parade with a $241 fine last September because the 2014 Yes on UUT campaign failed to report a large contribution before the April, 2014 election. What was the large contribution? Why, it was for $1,500 (definitely large by Sierra Madre standards) donated by none other than the Sierra Madre Police Association. And the address is listed as Sierra Madre City Hall! Yes, the Sierra Madre Police Association spent the big bucks. Why? Were they genuinely interested in saving Sierra Madre? No, they wanted a raise! Little Bird was also amused to see that the other contributors on the page were: Another union – Sierra Madre Classified Employees Association Toni Buckner, recently retired Sierra Madre Library Director Steve Heydorff, Sierra Madre Fire Chief Want to see how much other contributors, such as current Council Members John Harabedian & John Capoccia, gave to the Yes on Measure UUT 2014 campaign? Ask at City Hall for the City Clerk. Oops, they fired her! Ask at the City Hall front counter for a copy of the Yes on Measure UUT Form 460 filed for the period of 3/07/2014 through 12/23/2014. Or you can ask CTLC, they have a copy. Perhaps the Capitol Morning Report (1/25/17) put it best: “In the Matter of Yes on Measure UUT and Amy Putnam; . .Yes on UUT was a local primarily formed ballot measure committee. Amy Putnam was the Committee’s treasurer. The Committee and Putnam failed to timely file one pre-election campaign statement covering the reporting period of January 1, 2014 through March 23, 2014…Fine: $241” Can [...]