Why Is Sacramento Paying City Manager Howard Chan $493,655?

Why do city managers receive such exorbitant pay? Across the state, city managers receive significantly larger salaries than the governor. While city managers of any city are responsible for managing multiple departments, employees, budgets, etc…, the governor is responsible for the entire state – state agencies, state employees, state budget, state retirement system, state public school system, state parks, and much more.

I’m not advocating paying the governor more – I am questioning why a manager only responsible for a city is making more than the governor, as well as many business founders and CEOs of their own companies. CEOs take the risk to start the company, and take daily risks in keeping the company viable. What risk do government city managers take?

This is a long winded way of addressing Sacramento’s City Manager Howard Chan, who recently was granted a $20,000 raise by the Sacramento City Council, as well as 10 weeks of leave time (which he can cash out), on top of his actual $493,655 salary of 2022.

It was a done-deal before members of the public learned of it.

The city has a $1.5 billion budget, with 5,075 full-time employees, for a city population of 518,161 residents.

Opportunely, it appears the Sacramento City Council violated the Brown Act when it closed the four-hour regular meeting and reconvened later in the evening for a “special meeting” to approve new contracts with two city unions, the Sacramento Bee reported. “But the city violated state law when it then voted to award Chan and other city officials raises right afterward.”

California’s open meeting act, the Ralph M. Brown Act, passed in 1953. According to the League of California Cities the crux of the Brown Act is that it is the people’s business, and the people have the right to access:

“The people of this State do not yield their sovereignty to the agencies which serve them. The people, in delegating authority, do not give their public servants the right to decide what is good for the people to know and what is not good for them to know. The people insist on remaining informed so that they may retain control over the instruments they have created.”

You’d be correct in questioning how and/or why the City Manager didn’t catch the council before they made this illegal move. And doesn’t the council have a parliamentarian?

“Special meetings in California require less public notice — 24 hours instead of 72 hours — or offering a public comment period. For that reason, the state’s Brown Act — the law that assures transparency in government meetings and records— prohibits raises for city managers (or any department heads) during special meetings.”

Paying city managers too much money opens a can of worms – other department heads demand parity – whether they are worth it or not, and it sets in motion a tsunami of labor negotiations.

Additionally, the City of Sacramento has a budget deficit. Sacramento claims the budget is “balanced,” but also claims it is facing “future deficits.”

The city claims it has increased services offered over the past years — not really except redirecting funds and staff to the vagrant homeless population. And they admit “the City projects that expenses will surpass available funding in fiscal year 2024/25.”

And the city is hiring, which they call “investing in staffing” – “This Budget reflects investment in staffing and programs to reflect community needs.” Residents didn’t ask for additional city employees – hiring new employees reflects what the city wants.

Despite receiving $200 million total  of COVID Relief Funds ($89.6 million) and the American Rescue Plan Act ($112.2 million), which the city says it is still spending, the City Manager admitted to the City Council, “the City projects that expenses will surpass available funding in fiscal year 2024/25.” Federal COVID funding was used by the city to make up for lost revenue… one time funds.

So. it appears that because the city is adding employees (labor) and paying out salary increases for existing employees, there will be a bigger budget deficit next year.

The city reports:

“Sacramento has continued to recover from the financial challenges caused by the COVID-19 pandemic, and we are pleased that the worst of the pandemic’s fiscal impacts are behind us,” Chan said in his transmittal letter to the Mayor and City Council. “However, economic headwinds persist due to rising inflation and interest rates and the overall slowing of economic growth.”

Chan’s salary increase is part of that inflation.

The Sacramento City Council has made it clear to the people of the city that the salaries and benefits of city employees are the priority over providing city services, which have been dwindling for some years.

“In addition, the City in the coming months will be negotiating new labor contracts with its recognized employee organizations, and the Council has stated publicly it expects to approve salary increases to support the City’s workforce and address issues with hiring and retention,” City Manager Chan said. “These new contracts will have a significant impact on the City’s ongoing financial outlook and are not reflected in the proposed budget.”

“As the City looks to address future deficits, the City Council will be asked to further prioritize funding for programs and services.”

What does the city say are the city’s budget “challenges?”

And where will this magic funding come from?