Payton Perspective: Facing does not mean filing for or in bankruptcy, but Antioch Council needs to take action to avoid it

Chart from city staff report presented to the Antioch City Council on Tuesday, April 11, 2017.

I was informed this week that there is some confusion in the community about the City of Antioch’s finances due to the headline for an article published on the Antioch Herald website, last week.

The headline read “City Council learns Antioch again facing bankruptcy” which is accurate, based on the staff report at the Council meeting on Tuesday, April 11,2017. The chart included with the article shows that in the 2021-22 fiscal year, without the city’s half-cent sales tax Measure C being re-approved by the voters, the city’s General Fund balance will cross the line from zero dollars. Even if Measure C is renewed that financial event occurs two years later.

I have since updated the headline to reflect that bankruptcy will occur “within five years.” But, the original headline was accurate and we stand by it. Folks, let me be frank. First, you need to understand the meaning of words and their use in a sentence. Second, you have to read the article to understand what’s going on, not just the headline.

When a government agency or a business is facing bankruptcy, it doesn’t mean it has filed for or is in bankruptcy. It means it has to make some changes to avoid it.

That’s exactly what needs to be done at City Hall and they have five years to do it.

Two things have caused this. As the article states, “Antioch’s $52.7 million General Fund budget is projected to begin deficit spending by $2.6 million in July of next year due largely to increased police staffing, pay and benefit hikes for all city employees and increased payments to the California Public Employees Retirement System.” (PERS)

The recent approvals, by the previous council and the current council majority, of the city employ contracts with increases to pay and benefits will cost the city over $9 million over the next five years. Those contracts extend one year beyond the sunset of Measure C in 2021. That council majority does not include current Mayor Sean Wright and Mayor Pro Tem Lamar Thorpe who both opposed the new contracts, but couldn’t do anything to stop them once they were on the council.

PERS is now requiring cities to pay more towards the unfunded liabilities of the pensions of past employees. That’s because for years, PERS has been projecting an overly aggressive and unrealistic return on their investments, and now reality has hit them in the face. The result is each city and government agency in California has to contribute more money to PERS to make up for the difference in what they projected and what is needed to pay for the pensions of current and future retirees.

At the end of Tuesday night’s meeting on April 25, Mayor Sean Wright said “Antioch is in fine financial shape. For those who ask if we are filing for bankruptcy the answer is no.  We have $25 million in reserves with no debt.”

His second sentence is correct, as I’ve pointed out, above. Wright’s first sentence is also correct – today. But, he’s aware and we all are, now with the staff report, that just because the city has $25 million in reserves, today doesn’t mean it will be in fine financial shape, just a few years from now. Wright is also aware that action must be taken to keep the city in “fine financial shape.”

As the city staff report on April 11, and above and below charts show, that even if we vote to renew Measure C, the city’s half-cent sales tax passed by voters in 2013, the city’s General Fund balance will be zero dollars in less than seven years.

City of Antioch General Fund Projection Chart from city staff report to council on 4/11/17.

If the Council doesn’t do three things over the next few years, Antioch will run out of those reserves and be upside down financially, which means bankruptcy.

First, the council needs to reopen and renegotiate the employee contracts. The City of Richmond just approved new contracts for their police and firefighters without a pay raise. (That city is facing the same financial challenges as Antioch, also because of PERS and even with a new tax increase. See related article, here.) Antioch should have done the same, at least until they had hired the 22 additional officers we were promised “immediately” in 2013 if we passed Measure C. Plus, all the other city employees enjoyed 13% in pay raises just a few years ago when the council ended Furlough Fridays. The council majority must have forgotten about that.

Message to the council majority: we didn’t give you two tax increases, including Measure O, to give pay raises to city staff. That was nowhere in the ballot language of either measure.

Second, the city needs to fulfill its promise and hire the 11 additional sworn police officers. So far, they’ve given us a net 11 additional officers out of the 22. They need to start budgeting for 111, not 102 like they’ve been doing. There were 89 sworn officers on the force when that promise was made.

That will result in crime being reduced which will help Antioch be able to attract business, as well as an increase in property values, which gives the city more tax revenue, without raising taxes.

Third, the city needs to more aggressively pursue new businesses to locate in Antioch. Now that the eBART extension and Hillcrest station will be opening next year, that area should be prime for attracting new businesses.

That will result in more sales and property tax revenue to the city, and possibly without having to either renew Measure C or increase other taxes – and to be frugal and responsible, the council needs to plan for and base their budgets on the expectation that it won’t be renewed.

The time to develop a plan to implement these three actions is now. I trust and hope that with the new leadership on the council and inside City Hall with a new city manager, it can and will be done.

the attachments to this post:

Payton Perspective logo 2017

7 Comments to “Payton Perspective: Facing does not mean filing for or in bankruptcy, but Antioch Council needs to take action to avoid it”

  1. Marty Fernandez says:

    This council is in denial. Those of us who have followed this city and its budget for many years know this has been coming for years. The irresponsibility of the majority on this council, and you know who you are, is beyond belief. The writing was on the wall and none of you read it. Nor did you listen to any of us trying to talk reason into you. Contracts have to be renegotiated only because of greed and irresponsibility. This never should have happened. Starting with the mayor you have to open your eyes and speak the truth. Avoiding the truth will only get us in deeper.

    At this point in my life I have a tough time supporting the City of Antioch. My 50 years here should be worth something but it sure doesn’t seem like it.

    • Loretta Sweatt says:

      Marty, I am sure there are many people who listen to you and respect you. You probably need to calm down, that’s all.

  2. Loretta Sweatt says:

    I can read words and understand them just fine; it’s not an extremely high level vocabulary. It sounds like a ‘yes we are’ and ‘no we’re not’ debate on comments; whatever the words, I get it. I’m glad to know nothing serious is happening tomorrow regarding bankruptcy and I have to trust the Mayor and Council to do the right thing for the future.

  3. Skip says:

    I think its a little optimistic to assume that they can attract businesses when antioch establishments are closing left and right. The best fish in town Olivers closed a month or two ago, i know of another bbq joint that recently shut down near the grocery outlook. Even Antiochs oldest pub seems to have closed after almost 80 years in business. Forget about courting new businesses, the mayor should be supporting the ones that are here.

    • Publisher says:

      Thanks for reading and for your comment.
      You’re referring to a couple restaurants, and those come and go all the time. The BBQ place was in a bad location, in the back corner of the Grocery Outlet shopping center and rarely did any advertising to let people know they were there. Restaurants have a very slim profit margin. I know because I tried to help and work with them. The bottom line in business, especially restaurants and retail, if you don’t advertise, you die.
      The businesses I’m referring to that the city needs to work to attract are employers, and maybe the larger retailers. But that entire sector is having challenges nationwide with the advent of so much online shopping, such as with
      As more police are hired and crime is reduced, and eBART opens, more businesses will locate here. Then as the new, upscale and senior housing communities are built and sold in the Sand Creek area, even more will open in Antioch.
      But, the city needs to mainly focus on hiring the police we were promised and we need, and getting reducing crime in Antioch.
      Allen Payton, Publisher.

  4. Marty Fernandez says:

    One of the biggest complaints with existing businesses in Antioch is lack of support from the city and Chamber of Commerce. I know the Chamber will dispute that but it is very cliquish and if you are not a member of the in crowd you get nothing. Several friends of ours moved to Brentwood with their businesses because of lack of city involvement. I do not see how the city can claim an increase in sales tax when they have run our auto dealerships out of town. We depend on taxes from cars and Costco.

  5. RJB says:

    There is no hope for a disgusting city that caters to criminals. Period.

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