The Gavel

By Katy Miessner

8/24/08

Friday August 22............

The testimony continued on Friday, August 22. When I arrived, the unflappable Assistant Finance Director Susan Mayer was on the stand.  In my last report, I called Roger Mialocq Vallejo’s star witness, because his testimony and his Rose Report were so lame.  But Mayer is really our star and deserves a huge THANK-YOU for going above and beyond the call of duty.  Even with Mayer’s spot-on accurate analyses—no $2 million dollar errors like Mialocq’s—I can’t imagine how stressful it must have been to be on the stand, defending one’s complex financial statement to incredibly antagonistic lawyers in this historic and precedent-setting case. 

Mayer explained that Flosden has a $7 million commitment to Six Flags Marine World; part of the transfer agreement, to build more parking.  The agreement is also with the County.  It is up to these entities to determine when the parking is built—the City has no say in it.  Hence, the city can’t just move the $7 million to the general fund, since they have this obligation and they better have the cash.  And (this is my comment) the Flosden Redevelopment Fund Balance is to enhance the Flosden area, not to pay employees. 

The Redevelopment Agency (basically the City Council with different hats on) also earmarked $1.7 million of Flosden funds to build the North Vallejo senior center.  But Gloster claims the Flosden owes the City money with interest for a loan some time back—it wasn’t clear to me if the documentation on this loan has even been identified. Gloster says the City should scrap the senior center, and move these funds into the general fund. WOW. Cut the North Vallejo Senior Center—funding one of the neediest areas in Vallejo (why they were deemed a redevelopment area)—to pay for salaries that on average are more than 300% higher than Vallejo’s median income.  Seems our Public Safety Unions and their lawyers are interested in balancing the City budget on the backs of Vallejo’s poorest? 

Gloster also insinuated that the loan made to the Empress should be paid back, and if there isn’t the cash to do it, then assets should be transferred.  I can’t remember if it was Thursday or Friday, but the Judge made a remark that maybe City Hall (built with Redevelopment Funds) should be sold? Based on comments like this and others, the Judge certainly understands the complexity of our situation.  Gloster picked on Mayer about other capital funds: he wants the money for Vallejo Station (sorry, Dean and Kurt, these funds are almost exclusively Federal and State grants).  Gloster, as Henke’s representative, wants to take away all the capital project set-asides the city has created for development intended to generate revenue.  And Henke et al keep complaining the City isn’t generating revenue.  So what is it?  Do they want to strip Vallejo bare of any assets that are earmarked for improvements?  Regardless, the bulk of these assets are restricted, as Mayer proved over and over again.  They can’t simply be used for the General Fund expenses.  There is no money hidden, just money that’s restricted: by law. 

Gloster—asking the City to start budgeting on a wing and a prayer—suggested the offset the City budgeted for, in case the State makes cuts to funds for Vallejo be removed.  He said the State Democratic Caucus is “attempting” to have cities not be affected by the State’s budget crisis. Good luck to them and us.  And our dear Senator Wiggins is asking that Vallejo be made exempt from cuts.  Thanks Pat—friend of IAFF—Wiggins.  Had you been a true representative of Vallejo’s, you would have helped us not get here in the first place.  Where were you two years ago, lady? 

In his closing remarks, Gloster made some really wild assertions—out of both sides of his mouth.  Gloster chastised the City for going to arbitration on the fire fighter minimum staffing, and yet Gloster was very clear that he thought no city—including Vallejo—should ever be allowed to file for bankruptcy. Gloster went on to suggest the City should continue to cut expenses.  But how is the City supposed to cut contractual expenses to balance their budget with binding arbitration on the books?  Certainly Gloster knows the rock and hard place our City is between: it’s either go into arbitration, or just cut salaries and benefits and then face a lawsuit from Henke and the IAFF.  

--courtroom sketch of IAFF 1186 President Kurt Henke by Katy Miessner

The real laugh was Gloster’s suggestion that the City should go into the 2008/09 budget based on the lower fire-fighter minimum staffing and two closed fire stations.  And yet he referred to the Casa De Vallejo fire and suggested that Vallejoans don’t want any more “charred bodies” due to too few fire stations (Judge McManus slapped him for that comment—not brought up during testimony).  And what McManus hopefully knows—he must have read it—is the Fire Fighters, in their offer to “balance the budget” suggested that if the City wants to continue to keep two stations closed in 2008/09, they can take the issue to mediation.  And we all know what mediation means: arbitration (and then bankruptcy).  I hope Gloster and the IAFF’s hypocrisy is not lost on Judge McManus. And of course we have Jon Riley in the papers blaming the Casa De fire on the closed stations as well.  Does Riley realize his very well paid lawyer Gloster is suggesting the City keep the stations closed?  Ah, the sickening hypocrisy of it all… 

What Gloster and the Unions really want the Judge to do: and Gloster made this very clear in his closing statement—is not allow the City to go bankrupt.  He suggested to the Judge that the City should cut services so deeply—to the bone (we think they have been already)—so that citizens will be forced to vote for a tax increase.  In my humble opinion, that is the definition of extortion.  McManus continued to ask thoughtful questions of Gloster throughout Gloster’s comments.  He asked Gloster how the City could expect voters to approve taxes for increasingly less services.  McManus brought up the fact that so many services have already been cut: Meals on Wheels, the Library, the Senior Center…McManus also questioned the assumption that a tax increase would get passed, and cited a recent report regarding Jefferson County, AL.  They are apparently facing bankruptcy but leaders abandoned discussion of tax increases based on virulent opposition from its residents. 

Gloster cited the purported 70% support of taxes from last year’s City poll, and McManus stated Gloster was “stretching it a bit”: that people wouldn't be willing to raise taxes when “the other side”—the unions—isn’t willing to make concessions.  Gloster wasn’t pulling anything over the judge. Gloster then turned the left side of the courtroom, where I and other “hatters” were sitting, and stated that if we were polled, we’d all vote no to new taxes: Hi, Dean! 

Other highlights: Norm Hile, the City’s lawyer, wrapped up with closing arguments and rebuttals to Gloster’s, and reminded the judge of Mialocq’s lack of accounting credentials, spreadsheet errors, and sloppy analysis that went into the Rose Report.  Hile reminded the judge that even though Mialocq stated “I can balance any budget”, Mialocq was not able to balance Vallejo’s, even with three tries, and that even Mialocq would concede that the City could not budget in the liberal manner the Rose Report suggested. Hile reminded the Judge that the City always acted in good faith and the Unions did not: Mialocq’s testimony showed they broke their good faith agreement. 

I failed to mention that Hile had another one of the unions’ ads in court—which the unions did not take ownership of (of course), but the trail to them is quite clear.  Although the Judge didn’t allow it into evidence, he did read it. 

At the end of the hearing, the judge gave each party’s legal representation until next Friday, August 29 at 4:00 pm to file their final report and conclusions.  Monday after is Labor Day, so most likely the hearing will be reconvened on Wednesday or Thursday for a decision.  In the meantime, the judge suggested the two sides continue to negotiate, and asked that if the two parties happen to come to a settlement, and they both contact the court saying so, then the case will be dismissed. Gloster did make some noise about them all going back to the table. Maybe the unions will finally agree to something the City can actually accept? Doubtful based on what led the City to the current situation, and while Henke’s huge ego is still in the mix.

To sum it all up, if the parties don’t settle and the decision is left to the Judge, his conclusion will ultimately have to come down to: how much should the City cut services before we are allowed to file for bankruptcy?  The Unions have vacated their claim that the City is hiding money.  Gloster didn’t even bring that up in his closing.  He actually admitted to the reality of City’s current situation: any funds that could possibly be transferred into the General Fund are all one-time, and if the City does transfer them, they will simply be in the same bankrupt situation next year.  But Gloster still insisted the City should never be allowed to file for bankruptcy: expenses should be cut and cut, and any fees the City can increase without a vote should be raised and raised. Eventually the voters will be forced to raise taxes.

The City states they have cut all they can without jeopardizing the health, safety and well-being of Vallejoans.  And it is highly doubtful Vallejoans would vote to increase taxes regardless of service cuts, especially now that the unions have spoiled the “well” with their claims of hidden money. 

It is a government’s duty to provide services to residents in return for the tax dollars we pay and it is the City Council’s fiduciary responsibility to ensure services provided by City Staff are at a reasonable cost.  Is what we are paying in Public Safety Union salaries, benefits and retirement reasonable? Or should the contracts be nullified to make necessary cuts? 

The ball is in the Judge’s court now.