Redding Mayor Jack Munns Refuses to Allow Council Member Audette to Use Her PowerPoint Presentation at the October 22nd Redding City Special Meeting to Review Budget Concerns

City Council Members Agree to Bring Back for Discussion Some Changes to the Way Budgetary Matters are Handled in Response to Questions Raised by Council Member Tenessa Audette’s Budget Findings Report

Finance Director Makes 70-Minute Presentation on the Budget in Response to Tenessa Audette's Budget Findings Report

Fees Increased, Positions Cut in Police and Fire Departments, to Balance the Budget

Finance Director and City Treasurer, Greg Robinett, made a presentation at a Special Meeting of the Redding City Council on Wednesday, October 22^nd, in response to Council Member Tenessa Audette’s 153-page report on the City’s Budget Findings which detailed discrepancies she had found when she did a 5-month investigation to find out why the City was facing budget deficits.  Mr. Robinett made a 70-minute presentation with a slide show and PowerPoint visuals throughout his speech.  He explained how the “Budget Document” aggregates revenues differently from the 10-year plan, how certain grants funded expenditures, and how certain actions were taken to balance the budget, including increasing revenue by increasing fees charged by the Planning and Building Department, increasing recreation fees, and increasing the cannabis tax.  Expenditures were cut in tourism and marketing, eliminating 13 police positions, 13 fire department positions, and eliminating two Assistant City Clerk positions, one Reprographics Technician, and one Marketing Coordinator.  

In 2022, Amazon changed the way they were allocating sales taxes.*  (See notes at the end of this article for more details on Amazon’s sales tax reporting.)  This cost the City’s General Fund approximately $650,000 per year. 

After the May 2024 meeting, the City Manager requested cuts to the budget, and the goal was to use attrition to fulfill the cuts.  Historically, over 10 years, there was 3.4% growth in sales tax revenues which is the largest revenue in the budget.  Currently, sales tax revenues are still trending below the adopted budget.  The City Council, for Budget Fiscal Years  (FY) 24 and 25, increased spending with MOU** modifications by $2.9 million.  He also stated there were increases in expenditures of $5.1 million due to resolutions. (No detail on the resolutions was given to the public during this meeting.)

Robinett stated that the approximate cost per police officer is $250,000 per year, which includes the costs of benefits and unfunded liabilities for the PERS (California Public Employees’ Retirement System).  Robinett stated that Ms. Audette’s Report was assuming a cost of $180,000 per police officer hired.  Nine police officer positions were funded by ARPA (American Rescue Plan Act) funds. 

Staffing Levels Increased in All Departments Since 2016

Staffing levels increased in all categories (Enterprise Fund Staffing, Internal Service Fund Staffing, and General Fund Staffing) from 2016 to present.  In total, 194 positions were added by the City, with the greatest increases coming in Enterprise Fund (+19 Electric, +11 Wastewater, +15 Solid Waste), and the General Fund (+5 Engineering, +9 Housing, +16 Fire, +26 Police, +21 Parks, +9 Building and Code Enforcement).  He explained that seven of the Parks Department’s new positions are for wildfire mitigation and eight are funded by grants.  He also stated that new parks are coming on line.  Robinett did not explain why nine positions were added for Housing nor why nine positions were added for Building and Code Enforcement. 

City Employee Wage Increases Contribute to 50% Increase in Unfunded Pension Liabilities

City employees pay a share of their benefits.  Robinett stated the goal of the City council is to have cost sharing by employees of 20% of their health insurance benefits, 50% of the CalPERS, and 50% of their PARS (Public Agency Retirement Services)***  He stated that our Police Officers pay a 19% share of their CalPERS costs which is much higher than in most other municipalities.  Total Unfunded Liabilities have increased by $40 million since 2020, however, PARS is over 100% funded.  Robinett stated he contacted the actuarial at CalPERS to ask “How much of the increase in unfunded liabilities is associated with pay changes?”  Robinett stated that the answer that was given was that the increases in unfunded liabilities are due both to the addition of new positions and to raises.  It’s the pay in total that drives unfunded liabilities.  The assumption is that increases in wages will not go over 2.785% per year.  If increases in wages go over that threshold, then there will be increases in unfunded liabilities.  Wage increases accounted for 31% of the increases in unfunded liabilities for FY 24 and 50% of the increases in FY 25.

Public Comments Mainly Support Audette's Budget Questions

Mayor Jack Munns then opened the Public Comment section of the meeting. 

Dennice Maxwell, former City Finance Director spoke in support of Tenessa’s findings stating the problems began at the February 17, 2022 meeting where an analysis provided to the Council by the City Manager for consideration for approval of new expenditures did not take into account that the increases in revenue were due to the one-time COVID bounce-back for sales tax revenue.  This inflated forecast was used as a basis to increase forecasted revenues in year three and beyond in the 10-year Budget Plan.  The same thing happened with the TOT (Transient Occupancy Tax) revenue forecasts.  Combined, the two revenue forecasts totaled $65 million over the 10-year Budget Plan that were not based on reality.  Ms. Maxwell had more to say, however, Mayor Munns cut her off due to the time limit imposed on all public comments.

Other notable public commenters included Mike Quinn, the former finance officer for McCloud, who noted, among other things, that the Council should review the balance sheet and not rely solely on income statements.  He said he was impressed with Ms. Audette and that she raises issues that we need to talk about.  He stated that there are ways to reduce the unfunded liabilities, which he was able to do in McCloud.  He advised that you can place money into a PERS Reserve Account which can earn the City a better discount rate and reduce the unfunded liabilities.

Pamela McNeil, a life-long citizen of Redding stated she objects to the sales tax increase stating that the City has not been transparent on the hefty salaries and pensions given to City employees.

Gary Peyrot, publisher of our new online news portal “Shasta Unfiltered” stated that our readers want transparency and that the Council should work as a team to provide transparency so that citizens can trust the process.

Four other citizens spoke in support of Ms. Audette, including her husband, Jeff, who has a Finance Certificate from the Wharton School of Business.

Two citizens spoke in opposition to further inquiries into the budget deficit.

Council Member Resner Makes Suggestions to Improve the Budget Process

After Public Comment, Council Member Erin Resner made comments on her review of the two reports (prepared by Audette and Robinett).  Resner said she read the reports herself, made notes, and found no corruption . She stated that multiple Councils made decisions in 2018 – 2022.  She believes that the actual issues that have caused the budget deficit are:  1) a change in the Presidency where we saw rapid inflation, and 2) Council Members passed out raises.  She is proud that during the time when the City had historical growth in revenue, the Council made a decision to increase reserves from 5% to 10%.  Raises were given to City personnel in order to increase retention and to compete with the private sector.  She believes in “paying people a competitive rate when we can afford it.”  She also noted that Ms. Audette was one of the Council Members who approved $4 million in raises at that time.

Ms. Resner made some recommendations to improve the process going forward which were to 1) Require the City Finance Director to be present in all MOU negotiations; 2) Require every department in the City to prepare an annual grant funding report; 3) Require department heads to present their own budgets at Budget Workshops; 4) Have a policy overview meeting for newly-elected Council Members so they can be brought up to speed on past policy decisions; and 5) Require a government finance basics course be taken by new City Council Members.  She stated she "will not continue in this 'charade' because we have actual work to do."

Council Member Dhanuka Wants to Improve the City's Economy and Wants Council Member Audette to Focus on Plans to Reduce the City's Expenses

Council Member Dr. Paul Dhanuka stated "I appreciate the smart questions that Ms. Audette raises because that is how we improve ourselves."  He believes that “1) Projections made were based on post-pandemic bounce of sales tax revenues that were unrealistic; 2) There was a delay in correcting those projections; and 3) There were raises which in some ways were kind of needed, but not something we could sustain in the long term.”  He asked if Ms. Audette would now focus on ways to reduce expenses for our City and take that on as a project.  He stated we also need creative thinking on how to grow the City’s economic engine and make us more attractive through improvements in public safety and services.  He said he is open to an external audit every few years.

Council Member Littau Upset by the "Noise" and "Terrified" About the Budget for Roads - Wants "Healthy" Conversations

Council Member Mike Littau stated that most people will not read the reports prepared by Audette and Robinette and that we need to reduce the “noise” which he said “has been really, really loud this year.”  He went on to state, “After every meeting, it is about five glasses of wine just to try to bring it down a little bit, and to rehash what the heck just happened here?”  He asked for people to ask themselves if they have some sort of agenda for themselves such as political ambitions.  He wants “healthy” conversations and wants to work together to solve problems.  He stated there is good content in the reports and encourages people to read the reports.  He is “terrified” about the future of the City’s roads and the $10 million shortfall to fix them.  He asked “How are we going to get the money for the roads – unless we cut police and fire?”

Council Member Dhanuka Wants Financial Oversight Committee

Dr. Dhanuka spoke again to ask if we can have a financial oversight committee on future budgets. 

Mayor Munns Refuses to Allow Audette's PowerPoint Presentation to be Used During the Meeting, Upsetting Ms. Audette Who Went On to Criticize the Finance Director's Report Without the Visuals She Had Spent Hours Preparing

Council Member Audette wanted to speak with a PowerPoint presentation that she prepared; however, Mayor Munns promptly told her that he would not allow her to use it.  Ms. Audette stated that she never accused anyone of fraud, cover-up, corruption, or misuse of money in her report.  Her intent was to find out how we got to a budget deficit of $8 million.  This led her to review eight years of audits and budgets, and after doing so, she prepared her “Redding Budget Findings”.  She has reviewed Robinett’s response to her questions, which she received about a week ago and has found 48 points in his response that she wants to address.  Since Mayor Munns is not allowing her to present her response, she believes that this is creating less clarity.  This is tantamount to the Finance Director grading his own test and makes no logical sense.  She has spoken to or emailed the Finance Director many times and she stated “The fact that I can’t talk about the substantive issues of our budget is incredibly frustrating and it demonstrates that you [Munns] are not interested in fixing our budget.”

Nolda Short, Shasta County's Auditor-Controller, is Willing to Be on a Proposed Independent Committee to Review the City's Budget Reports

Ms. Audette went on to state that there are many things that have not been addressed in Robinett’s report including the fact that the advisory committee that is supposed to meet every year, has not met since 2022.  There are several financial reports that have not been given to the Council for two years.  She wants to see corrective action taken and would like to make a motion to have an independent committee review both of the documents.  She also agrees with all of the changes requested by Resner and Dhanuka.  Audette stated she contacted Nolda Short (Auditor-Controller for Shasta County) who has agreed to be on a proposed committee to review the reports.

Dhanuka Wants to Allow Tenessa to Use Her PowerPoint Presentation Either at the Council Meeting or For Her to Present it to a Grand Jury

Dr. Dhanuka then stated he would like to allow Tenessa to present her PowerPoint presentation.  He said if that is not acceptable, he would want to give it to the grand jury and let Tenessa present it to them.  For the future, he suggested the City have a financial oversight committee. 

Some Council Members Agree to Improvements Suggested and Will Agendize Them for the Next City Council Meeting

Resner made a motion to bring back the suggestions she made to the next Council meeting and it was seconded by Dr. Dhanuka.  City Attorney Christian Curtis stated that a vote is not needed to bring these items onto the next agenda.

Mayor Munns Indicates He Doesn't Have a Problem With Unfunded Liabilities

Mayor Munns indicated that he appreciates City staff by paying them.  “As for unfunded liabilities, if you have a problem with them, it’s a part of business we have to go through.”

Audette Wants an Independent Review of the Two Reports

After the meeting, Ms. Audette made a statement to Shasta Unfiltered: “Prolonging scrutiny of the budget by not allowing me to point out obvious discrepancies is why no one trusts our Council.  They want the appearance that they are doing something while doing nothing.  We need an independent review of the two reports.  It’s time.”

Footnotes: 

*Specific Allocation for Amazon Sales to Redding Residents

Redding has no operational Amazon Fulfillment Center (FC) (one is under construction, opening ~2026), so sales to Redding are fulfilled from nearby FCs like SMF3 in Sacramento, CA. The 1% Bradley-Burns portion from these sales is allocated to Sacramento (not Redding or Shasta County), while the 0.25% transportation fund goes to Shasta County.

Tax Component	Rate	Allocation for Amazon Sales to Redding	Recipient
State Base	6.00%	Retained by CA state (general fund, education, etc.).	State of California
Local Transportation	0.25%	To county of delivery (destination-based).	Shasta County (for roads, transit)
Bradley-Burns Local	1.00%	To city/county of "place of sale" (Amazon's FC).	Sacramento (SMF3 FC host); none to Redding
Total	7.25%	N/A	N/A

• Redding's Share: $0 from the 1% Bradley-Burns for Amazon sales, as it lacks an FC. Redding receives no direct city sales tax (its rate is 0%), relying instead on a shared county pool for non-origin-sourced local taxes (e.g., in-store sales). Shasta County's 0.25% transportation allocation benefits county-wide projects, indirectly aiding Redding.

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** MOUs establish negotiated terms between the city and groups like police, fire, or public works unions. They cover salaries, overtime, pensions, health benefits, and other labor-related expenses.

*** PARS stands for Public Agency Retirement Services.

PARS is a private, non-profit trust administrator that helps California public agencies (cities, counties, special districts) create and manage supplemental retirement plans to reduce long-term pension costs—especially for CalPERS unfunded liabilities.

Key Role in City Budgets (Redding Example)

Purpose	How It Works
Pre-fund pension obligations	City contributes money into a PARS trust (a Section 115 trust) instead of paying CalPERS directly each year.
Earn higher investment returns	PARS invests the funds (typically 6–7% long-term target vs. CalPERS’ ~6.8%), potentially lowering future costs.
Reduce budget volatility	Locks in contributions now to avoid sharp CalPERS rate hikes later.