Wednesday, November 18, 2009

Another take on the city's dire straits

In Saturday's column, I put most of the onus of the city's current financial woes on the housing meltdown/recession and outsized employee costs — dual plagues eating the city's balance sheet from opposite ends.

But at least one local activist argues there's a third reason that I neglected to mention: General incompetence.

The current impasse — a $9 million deficit and a $25 million reserve fund that's fast being depleted — is the result of a pattern of bad decisions by an entrenched status quo, which for too long was focused on building houses and nothing else. That myopic focus left Tracy especially vulnerable to the current bust. Or so the argument goes.

No doubt that Tracy was led far down a dubious path by leaders who saw residential expansion as a golden goose. (It sure didn't hurt that developers with significant clout benefitted from the situation, too.)

Of course, residential expansion can't float economic well-being forever. It's a one-shot boost. Once the house is built and furnished, the development fees collected, the sales tax directed into city coffers, the golden goose stops laying eggs.

That leaves a choice to either diversify the economic base or build more houses. Guess which one prevailed in Tracy? And guess one of the major reasons why this area was so hard-hit when all those adjustable-rate mortgages started resetting into the stratosphere?

This all rings true. So does the general charge that the city should have done much more with the economic boom than it did. But in all honestly, the city could be in worse straits that it finds itself in today. Much worse.

Also, in my analysis, even a more well-balanced Tracy would be flailing right now. The problems just might be reduced by some measure.

And recession or no, the city should still consider re-negotiating with its unions and other employees to reduce expenditures on benefits. City employees aren't the natural enemy of taxpayers, but the current level of employee outlays is not sustainable. Even the city's finance director has admitted as much.

Regardless of the cause, the concern now is how to get out of this mess. Though it would be a shame if we forget how we got into it in the first place.

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