Monday, July 28, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Fresno finds itself in trouble, despite frugality

walters column sig

By
From page A11 | February 13, 2013 |

A couple of years ago, as many California cities were struggling with budget deficits that eventually sent several of them into bankruptcy court, Fresno appeared to be a shining exception.

The city and its mayor, Alan Autry, had kept a tight lid on spending, enjoyed a healthy surplus and had been rewarded with a sterling credit rating.

No more. Fresno, the state’s fifth-largest city, is now in deep fiscal distress.

Autry’s successor, Ashley Swearingen, wants to privatize the city’s trash collection system and counts on an infusion of upfront cash from the private contractor, plus monthly franchise fees, to keep the city afloat.

The city manager warns that without that infusion and some service cuts, the city might not make payroll in a few weeks.

However, the city’s unions are stoutly resisting the trash contract awarded to Mid Valley Disposal and have turned in ballot measure petitions to overturn it.

Moody’s Investors Service, which less than two years ago gave Fresno an Aa2 credit rating and declared the city’s finances to be “very strong,” has since downgraded the city’s bonds step by step, culminating in a recent drop to a subpar level. Moody’s cited a big general fund deficit, high payrolls and other fixed costs and a struggling local economy.

Nobody’s uttered the B-word – bankruptcy – yet in Fresno, but clearly if it cannot meet all of its obligations, that becomes an alternative, just as it did in Stockton and San Bernardino.

The key to Fresno’s immediate future obviously is the trash collection franchise, which promises the city $1.5 million in immediate cash, plus $200,000 a month. But Fresno is also becoming ground zero for public employee union opposition to privatization of public services at any level of government.

Assuming the referendum to overturn the franchise makes the ballot, which appears likely, the local union campaign will be supplemented by cash and other resources from public employee unions elsewhere.

As a test of Swearingen’s political talents, it could affect her status as one of the few Republican politicians with potential for statewide office.

Fresno thus joins distressed municipalities that range from tiny hamlets to Los Angeles. And while the circumstances differ somewhat from city to city, the high fixed costs and moribund revenue that plague Fresno are a fairly common feature.

Property and sales taxes from the housing bubble encouraged cities to loosen their purse strings, and when the housing bubble burst, those costs remained while revenue stagnated or even declined.

Even Fresno, which had boasted of its frugal ways, found itself in trouble.

And if the referendum succeeds, what then?

There’s no free lunch, and other city workers may lose their jobs to protect those of trash collectors.

Dan Walters is a columnist for the Sacramento Bee. Reach him at dwalters@sacbee.com.

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Discussion | 3 comments

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  • Rick WoodFebruary 12, 2013 - 11:44 am

    "Despite frugality." Note that. People are starting to realize that it's almost all a revenue problem at this point. Between the recession and state takeaways, cities really can't be blamed for the mess they are in. The evidence that people are coming around is the passage of local sales taxes and the like for general city services. It's a shame it's come to this. Fairfield would actually be in good shape but for the state takeaways. Local sales taxes aren't the whole answer, nor are they a sustainable answer or a particularly good answer, but it's what we have. I think more use of benefit assessment districts needs consideration. They are the fairest way to go for some things: Beneficiaries pay for the benefits they recieve, and they get to vote in proportion to the amount they will pay.

    Reply | Report abusive comment
  • Mr. PracticalFebruary 13, 2013 - 10:11 am

    Rick, I agree whole-heartedly. The biggest factors affecting Calif. cities are the economy ,the loss of redevelopment agencies and other state initiatives that have attempted to balance its budget by requiring municipalities to should financial responsibility without appropriate funding.

    Reply | Report abusive comment
  • Rich GiddensFebruary 13, 2013 - 7:13 am

    Its never the fault of California's city governments. They, like the state aren't responsible for their spending and unions. Instead, its the people's fault---especially those people who complained and warned you about all of this.

    Reply | Report abusive comment
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