Councilmembers Eric Lucan, Josh Fryday & Denise Athas Keep Novato’s Budget Deep in the Red

The annual “Paint the Town Red” party-goers include three Novato Councilmembers who do just that by adding to red deficit ink on the City’s financial balance sheets, i.e. Councilmember Eric Lucan, Josh Fryday and Denise Athas. It’s easy when you’re spending other people’s money.

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Novato is in deep financial trouble – very deep. How deep is very deep? Realistic projections by financial types familiar with Novato’s situation say multi-millions if City Manager Regan Candelario’s lack of financial discipline continues under the detached neglect of the 3-vote bloc on the City Council of Lucan, Fryday and Athas. City Manager Candelario continues to add to his administrative staff despite being very aware that it will further add to the operating budget deficit.

Simply put, City Manager Regan Candelario and the “financially detached” 3-vote bloc of Councilmembers have proven incapable of keeping City expenditures less than revenues. Unrealistic projections of “no increase in salary costs” and of tiny long-term 0.5% projected annual increases in expenditures are pseudo budgets issued merely to avoid attracting any unwanted public concern. Historical patterns in annual anticipated salary costs are self-servingly ignored.

CalPERS, the California Public Employees Retirement System, is making the situation even more dire with its increased demands for cities to bail out its administrators’ past irresponsible financial decisions. The projected annual increase by CalPERS is approximately $700,000 per year, adding to Novato’s deficit every year for the next five years.

Yet, no public resolution of objection by the City Council has been sent to Novato’s State Senator Mike McGuire and State Assemblyman Marc Levine. A Council resolution expressing the negative effect such CalPERS pension and health plan increases have on the quality of life in Novato is definitely in order.  The Council needs to develop some backbone and push back – not meekly comply and bail out CalPERS yet again.

The City Council continues to spend money it doesn’t have on projects for which there is no compelling need

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Downtown SMART Station – $9 million projected
No trains are scheduled to stop in downtown Novato. Only partially funded by grants, and by caving in to pressure from a Judy Arnold led SMART, Novato has sadly but deservedly been left paying for a station with no train service. This despite the Citizens Finance Oversight Committee and the City Staff recommending it not be built under the criteria set by SMART. But, the Council, in a 3 to-1-1 vote passed the measure anyway much to the delight of the Downtown Business Association and the Novato Chamber of Commerce strong advocates for the station benefiting them at no cost

If the decision is ever made to allow scheduled SMART trains to actually stop at the downtown Novato station, and if the ridership is subsequently deemed insufficient, SMART can unilaterally decide to cease using the station based upon SMART’s mandate as being primarily a commuter rail transportation system. This is just another expensive, unrealistic and speculative taxpayer subsidy for downtown business interests and their immensely powerful political lobbyist the Novato Chamber of Commerce.

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Novato Theater – $1.3 million
A nice but impractical project. The City has thrown away over a million dollars on this white elephant even though Novato already has a theater on Rowland Avenue. After years of very limited fund-raising, it is evident Novato residents don’t really support having a downtown theater – it is just not that important to them.

Now, the small group of theater proponents wants Novato to underwrite a construction loan reliant on a very risky business plan that even sympathetic banks have refused to endorse – unless Novato taxpayers assume the risk for the bank. It’s time the small group of theater enthusiasts look at other options not subsidized by the City.

Economic Development – $900,000
It sounds good, but the ill-fated Bio-Life Sciences program expenditures returned very little on the City’s investment despite continual contrary proclamations to the public by City Hall. The unqualified people (realtors) chosen to drive the program limited its probability of success right from the beginning.

If the Bio-Life Sciences program had never existed, Novato’s bio-tech business community would still be the same as it is today. Real estate professionals are not qualified to significantly influence bio-tech investment decisions. Basic arithmetic and digital bio-molecular modeling are two different worlds.

Central Administration
Novato had one Assistant City Manager position for decades. The Lucan-Fryday-Athas Councilmember bloc added a second very expensive Assistant City Manager for no compelling reason other than the current City Manager Regan Candelario declared he could not effectively function with only one Assistant City Manager as his predecessors had done.

A very optional expensive Sustainability Coordinator position was also added. A student City government intern program was funded, not because it was needed, but because it was thought to be a good idea and made Novato the “envy” of other Marin cities according to Councilmember and ex-Washington, DC political operative Josh Fryday.

Hairbrained ideas
Councilmember Josh Fryday presented to the City Council the naive proposal for a paid day off for City employees to vote, most of whom do not even live in Novato. Close to 80% of voters in Novato vote by mail.

How does adding another holiday for City employees, who understandably are very much in favor of the idea, benefit Novato? Fun publicity for Fryday – bad and wasteful idea financially for Novato.

Measure F Funds – $23 million8 - 82516 Measure F - Summary - revenues, allocations & expenditures - ending 2016-17

The 2010 Measure F five-year sales tax was presented to Novato residents as a temporary tax enabling the City Manager and Staff to to recover from the effects of the great Recession in 2008-2011. Over five years, the sales tax increase added almost $23 million additional funds to the City bank account.

Measure F was never presented to voters as a long-term funding vehicle for City operating expenses beyond 2015. The expectation was Measure F would relieve the City’s short-term (2010-2015) finance issues while the City Manager and Staff learned how to operate without Measure F funding. They didn’t bother to learn!

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In November 2015, the temporary Measure F expired. Measure C with its ¼% sales tax increase was then passed to provide additional long-term revenue for the City’s general operating funds. Remarkably, by 2018 there remained on the payroll ten so-called “temporary” limited-term employees (LTE) funded by “allocated” Measure F funds, yet the Measure F ended in 2015!

Unspent or unallocated Measure F funds should have been allocated to long-term projects such as road repair and much needed recreation facilities when it ended in 2015 – not spent on City operating funds three years later in 2018.

Councilmembers Lucan-Fryday-Athas – Refusing to face reality
Rather than face reality and restrain spending within revenue limits, the City Manager and the 3-vote bloc have continued their undisciplined financial practices by periodically approving increases in staffing and frittering away scarce funds with the foolish goal of becoming “a leader in Marin” on trendy social issues. On a daily basis, Novato taxpayers face paying increased sales taxes as a result of the lack of fiscal responsibility shown by the City Manager and by the Lucan-Athas-Fryday bloc on the Council.

The obvious way to eliminate this dilemma is to vote them out of office at the next opportunity and replace them with people who are willing to occasionally say “no” to optional or frivolous spending that drives the need to increase taxes and fees upon Novato’s already financially stretched residents. City Hall should be forced to deal with the same lack of sufficient available funds as Novato’s families face with every paycheck. But again, it’s so easy when you’re spending other people’s money.

The Lucan-Athas-Fryday 3-vote bloc has proven incapable of financial restraint and living within a balanced budget based upon revenues and expenditures. Instead, they remain passive while City Manager Candelario uses stealthy, opaque and undefined “transfers in” and “transfers out” budget line items “to be defined later” – meaning it could be anything.

A new reference to an accounting initiative vaguely described as “developing new one-time revenue sources” elicited little concern by the Lucan-Fryday-Athas bloc. What is being hidden from taxpayers? Why are these three Council members not looking out for Novato taxpayers?

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City Manager Candelario is pursuing so-called “revenue growth strategies” that include selling off City owned ass

 

ets such as real estate, raiding the Risk Mitigation Reserve Fund, and maximizing sales of recreational marijuana/cannabis within City limits. All to pay for wasteful and unnecessary feel-good spending.

And While We’re on this Topic – Why Novato should not promote the sale of recreational marijuana

Many Novato residents understand the benefits of medically prescribed cannabis/marijuana. There are good reasons for that use.

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Proponents of the stronger, sometimes hallucinatory, THC-laden marijuana buds conflate in the media and public discussion and push the deception that ethically prescribed medical marijuana and recreational marijuana are essentially the same – at least in the unaware public’s perception. The reality is they are two very different products with very different end purposes and effects.

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Novato parents are very uncomfortable with the prospect of recreational marijuana loaded with tetrahydrocannabinol (THC) medically categorized as a depressant, stimulant and hallucinogen, being made increasingly accessible to their children by tax revenue-hungry City Halls and store-front sales outlets. Marijuana/cannabis supermarkets are typical where recreations cannabis products are legally sold.

In 2018, the Canadian government’s Centre on Substance Use and Addiction published an “Evidence Review” of the negative impacts of cannabis use on mental health the major one of which is manifested as psychosis. Its conclusion was “research has shown that regular use of cannabis impacts both psychosis development and the course of psychotic illness…characterized by hallucinations, false beliefs (delusions), impaired thinking…”.10 - Canadian Medical - Evidence-Review-Fomatted-V2-emphasis added

The sale of recreational marijuana is where most tax money is made and is a “new revenue source” the Novato City Manager is looking to use to balance the books.  The additional cost and impact on non-users is apparently not a worthwhile consideration at City Hall that is singularly focused on the tax revenue potential.

15 - Changes in Cannabis Potency over the Last Two Decades (1995-2014) - Analysis of Current Data in the United States
The higher the level of THC in marijuana, the quicker the “high” – just like the alcohol level in liquor, wine and beer. The 1970’s “old” marijuana had 0.5-3% THC. Todays “new” marijuana may have 28% or more and THC levels are trending higher. Higher THC level products generate more social problems.

There currently is no universally accepted and in-place federal government standard of measurement and verification of THC content of marijuana products sold today. A universally accepted standard metric of measurement critical for establishing and fairly enforcing rules of behavior while under the influence of THC does not currently exist – a dangerous safety situation for consumers and society.

Not all cannabis products contain THC. But, cannabis products with THC are the most profitable. High quality hallucinogenic marijuana sells very well and is especially attractive to younger users interested in “experimenting”, while ignoring potential negative consequences.

16 - Marijuana-and-Driving - Nevada Safety Summit - 5_16-1
The City of Novato should not be indirectly promoting the marijuana equivalent of “drunk driving” as verified and described in Pharmacist Phillip Drum’s presentation at the 2016 Nevada Safety Summit.

After 4 years of legal recreational marijuana sales in Canada studies reveal that recreational marijuana can have a very long-term negative effect on frequent users’ health and on the pocketbooks of non-users.

11- Canadian Substance Use Costs and Harms in the Provinces and Territories (2007-2014)
12 - Morneau Shepell Study
13 - Canadian Cannabis Mental Health Issues

 

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Financially, recreational THC-laden marijuana is costly to society in many ways. Those purveyors of “weed” who create the problem by selling THC-laden products walk away with their profits leaving taxpayers to live with and pay for the mess the profit-makers created.

Novato should not become reliant on THC-laden cannabis drug sales and its potential for increased psychotic disorder development to balance its budget. Alcohol is bad enough. Abuse of that substance is already subsidized by taxpayers today. There is no compelling need for another substance abuse drug becoming easily available. Novato should not indirectly contribute to potential psychosis development among its residents.

Why Novato should not sell hard City-owned real estate to developers to cover City operating budget deficits

The City of Novato owns real estate it can sell, most of which is in the Hamilton Field area. Selling City property, that could be better used down the road to enhance the quality of life for Novato residents, but instead gets sold as an act of financial expediency is short-sighted and foolish.

It reflects a lack of financial discipline by elected City officials, i.e. Councilmembers Lucan, Fryday and Athas, and also the one person singularly responsible for maintaining that financial discipline, City Manager Regan Candelario. The prospect of selling City assets to satisfy short-term operating financial deficits reflects poor financial management skills.

Selling City property without careful community-based assessment is like rearranging the deck chairs on the Titanic to keep from getting wet, i.e. a very short-term “fix” for a long-term problem. Financial Band-Aids are not the answer to problems created by unnecessarily spending money faster than revenue growth.

Why Novato should not raid its emergency reserve funds or use Measure F funds

The Novato economy is the best it has been in years. City tax revenues are healthy and growing. History has repeatedly shown that sooner or later there will be another economic downturn. The last Great Recession caught the City of Novato with insufficient rainy-day funds in reserve and was a painful lesson in the need for prudent City financial policy and practice.

Novato taxpayers should not permit the irresponsible depletion of the City’s emergency reserves. Self-serving gimmicky tinkering with reserve funding levels to fill short-term operating deficits is reckless and asking for trouble in coming years.

Should Novato resident taxpayers bail out the free-spending 3-vote majority bloc of Lucan, Athas and Fryday and their accomplice City Manager Regan Candelario?

Do not bail them out, as they have refused to restrain spending when the operating budget was and is structurally in deficit. Actions and votes speak louder than words.

Councilmembers, Eric Lucan, Denise Athas and Josh Fryday refuse to deny themselves trendy spending opportunities when there is “feel good” photo-op publicity to be had. Proclaiming shameless self-aggrandizing and self-ingratiating platitudes, while simultaneously playing to any and all video cameras present, frequently replaces cogent commentary on important issues before the Council.

It has become boring. Apparently, their future re-election is more relevant to them than developing any in-depth understanding of the City of Novato’s serious finance dilemma.

Only Councilmembers Pat Eklund and Pam Drew regularly attend the all-important Citizens Finance Advisory/Oversight Committee meetings. They publicly pose the piercing financial questions clarifying the options to be considered on the public’s behalf. Because they are informed, they are proficient enough to debate financial issues before the Council while the other three Councilmembers do their best to avoid any revealing substantive debate.

Today, Novato is facing very serious long-term financial problems. Realistic projections by financial experts based upon current City budget figures available say City Hall’s lack of financial discipline, backed by the approval of the 3-vote Lucan-Fryday-Athas bloc majority, indicates a long-term substantial structural Operating Budget deficit. City Manager Regan Candelario is intensely under the microscope as the situation has deteriorated since he arrived.

Stay tuned for a plea for more of your hard-earned money in the form of an increase in sales taxes, just to bail out these free-spending politicians and their accomplice the City Manager. It’s so easy to do when they are spending your money.

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