Is Lodi Heading for Bankruptcy?

By Steve A. Jarrett

In the year 2020 the City of Lodi's CALPers pension liability will equal 35 - 40% of it's budget.

COULD LODI BE FACING THE SAME FUTURE?

This budget year (2014-2015) the CALPERS pensions make up 17% of the total City of Lodi budget. If our City budget is not increased in any amount during the next four years, the CALPERS pensions cost will make up 35 - 40% of the City's budget in 2020. Since currently our police and fire departments make up 64% of our City budget, there will be no money to run the City and the City will be forced to declare bankruptcy.

I believe our City Council and City Staff has done a very good job at managing the City finances through the last five years of our economic recession. We now need LEADERSHIP to move our City forward to address this major issue.

THE THREE OPTIONS FOR THE CITY OF LODI

1. DO NOTHING

The easiest and least painful solution is to do nothing. Simply wait for 2020 to arrive and suffer whatever the consequences of non-action brings.

2. COUNT ON THE STATE TO SAVE US

If we could rely upon the State to pay our CALPERS bill it would be a great thing! Unfortunately, I do not believe that will happen and here is my reasoning:

A. No only is there s shortfall in funding for CALPERS retirement system, there is a 73.7 billion dollar shortfall in CALSTIRS, the teacher's retirement system. Who will get the money? Lodi, which has no leverage in Sacramento, or the CTA, the strongest lobbying agency in the State?
B. The State will not have the money to be able to help Lodi. The projected State income is based on extremely favorable income estimates. Any slowing of the economy, another year of drought, or any number of unforseen events could find the State back in the red.
C. The issues of the pension liability is a Lodi issue. Lodi made the agreement to accept the new CALPERS formula that eventually led to this crisis. The State had nothing to do with it and thus can truthfully declare it is not their problem.

3. INCREASE REVENUE INTO THE CITY BUDGET The only action within our control is to increase revenue to the City of Lodi. In order to meet the budget requirements of 2020 without declaring bankruptcy or severely cutting or eliminating City services, the City needs to generate an additional 1.5 million dollars in each year until 2020.

The City receives revenue from three sources: PROPERTY TAX, FEES AND SALES TAX.

PROPERTY TAX - Our property values and the building of new houses is determined by the housing market of which we have no control. Last year our property values increased by 4%. Hopefully this increase will continue. Very few houses were built in the last three years. We have recently approved three large subdivisions of new houses. This will benefit us by bringing new residents to Lodi who will increase our sales taxes but will also require City services. We need to encourage the new growth but it will not generate large amounts of additional revenue. New housing benefits in the long term.

FEES - I would expect all of us to say the fees that we pay to live and work in the City of Lodi are high enough. Whether you are thinking about your electrical bill or the cost of the permit to improve your home or business. I believe that fees need to cover the cost of providing the service you are requesting, but no more. Raising fees to increase revenue to the City will actually stifle the natural growth that we need.

SALES TAX - Lodi has experienced a growth in people coming to our City and spending time and money to enjoy our events, our wines and our shops. This is great revenue for us because the people come, spend and then go home. There are no additional services the City need to provide. Increasing our sales tax revenue is an important aspect of meeting our increase income demand. More effort will be required to do more to let the world know about the benefits of visiting Lodi. The City, the Chamber of Commerce and the Visitor's Bureau will need to form even stronger alliances and develop a strategic plan to grow our tourism. We may need to think outside the box, but is must happen. Increasing the number of retail establishments within Lodi is also necessary. The City will be required to become "business friendly." Ensuring that the City does all it can to help facilitate new business growth or expansion of existing businesses. More businesses means more property tax, more people moving to Lodi for the new jobs and more people coming from outside of Lodi to shop.

​JOBS - Another aspect of generating the needed revenue is the development of new, higher paying jobs here in Lodi. This will also require the City to become "business friendly." The new Business Development person the City is currently hiring will need to be business savvy and pro-active, reaching out to any and all businesses that voice a need to move or a desire to investigate Lodi. This person will need to be a liaison between any new business and the City so that obstacles are removed to facilitate new businesses and jobs coming to Lodi. The City will be required to provide the needed infrastructure for new businesses in or Commercial/Manufacturing zoned areas. New Jobs means houses bought, new property taxes and new sales taxes.

Leadership is needed to accomplish this goal Which will keep our Loveable, Liveable Lodi out of bankruptcy.