File photo by Sam Hodgson
City Councilman Carl DeMaio holds a copy of his "Roadmap to Recovery."
On a Friday morning in fall 2010, San Diego City Councilman Carl DeMaio unveiled his “A Roadmap to Recovery,” a comprehensive plan to fix the city’s finances that has since become the backbone of his mayoral campaign.
Fast forward to fall 2012: The Roadmap remains the centerpiece of DeMaio’s campaign, even though in the two years since its debut, the city has already attempted almost half of the 25 reforms to which DeMaio attached specific dollar values. They’ve resulted in hundreds of millions of dollars in long-term savings. Take those reforms off the table and just $35 million is left of the $87 million in annual savings DeMaio predicts.
This reality hasn’t affected DeMaio’s reliance on the Roadmap.
He has waved it at television cameras during mayoral debates, touting the document as the codification of not only his ideas, but his entire leadership style. Beyond the individual proposals it contains, DeMaio says the Roadmap — with its laminated cover and bound pages — represents his willingness to put policies in writing, a veiled jab at his opponent Bob Filner’s sweeping promises and aversion to formal plans.
“It’s not a political, rhetorical device,” DeMaio said. “It’s not grandstanding. It’s a real budget of 249 pages that shows us step by step how we get the savings and how we restore our programs.”
DeMaio says he would immediately push for the reforms the city hasn’t yet tried. He would also reopen reforms the city has already attempted to squeeze more money from them.
“We are fully committed to continuing down, and doubling down, and expanding the reforms in each of those categories,” DeMaio said. “I’m very confident that we’re going to see even more savings in each of these areas.”
Refighting the last two years of budget battles won’t be easy. And DeMaio can’t do it alone.
He will need to rely on both the City Council and labor unions to make the kinds of changes he wants. Many of the same council members who made all the money-saving deals over the past two years will have to unwind them and push for more. And DeMaio already faces resistance from even his closest ally on the council, Republican Lorie Zapf, on multiple reforms in the Roadmap.
The city’s labor unions, whose support is critical to several of the Roadmap’s cost-saving plans, are skeptical of DeMaio’s intentions and unlikely to appreciate do-overs.
If DeMaio doesn’t overcome these challenges, his entire platform is in danger of crumbling.
He’s pledged not only to balance the budget, but to restore services to levels not seen since before the pension and financial crises. But without the savings outlined in the Roadmap, DeMaio’s promised reforms won’t cover the costs of promises he made to voters.
Cut Pay, Save Money
While the city has already attempted many of the reforms laid out in DeMaio’s Roadmap, one big element of the plan remains untried: cutting city worker pay, primarily for white-collar employees and firefighters.
DeMaio wants to eliminate the extra pay that virtually all firefighters receive for obtaining emergency medical certifications. And he wants to get rid of extra pay for department managers. Those cuts would be equivalent to at least an 8.5 percent pay cut for nearly every firefighter.
For white-collar workers, DeMaio wants to eliminate about $2 million worth of other special pays, including the money librarians receive for having a master’s degree. He also proposes a straight 2 percent salary reduction for white-collar employees, deputy city attorneys and workers not represented by a labor group.
DeMaio would need the council’s support to win such significant labor concessions.
City employee pay has been under siege for years and salary cuts are never easy to negotiate. The Proposition B initiative already calls for a pensionable pay freeze on all city workers until 2019.
Under DeMaio’s plan, the council, including at least four Democrats, would have to agree to go much further than the initiative, by cutting pay instead of simply freezing it.
That’s not unprecedented. Mayor Jerry Sanders pushed pay reductions through the council in 2008.
But that was at the height of the financial crisis. DeMaio has said that the economy is improving. He cited the strengthening economy when he removed a proposed cut to arts and culture spending from his Roadmap. He would need to fight for the pay cuts without similar external pressure on the budget.
Re-Doing the City’s Big Retiree Health Care Deal
In spring 2011, the city and its labor unions agreed to a deal that could save more than $700 million over the next quarter-century.
The deal reformed retiree health care, a benefit long promised by the city but never paid for. Sanders called the plan, “easily the largest cost-savings measure ever implemented by the city.”
But because the city had never planned to pay the full retiree health care bill anyway, the pact didn’t provide any immediate budget relief. DeMaio believes the city could have eliminated the benefit entirely for existing employees, saving the budget $21.5 million in the first year. He voted against the plan, saying it didn’t go far enough.
As mayor, DeMaio said he’d try again. Reforming retiree health care is the largest cost-saving measure in his plan.
Labor groups aren’t excited about the idea.
“With Carl as the mayor, we are very fearful going anywhere near that deal,” said Alan Arrollado, an official with the firefighters union.
Without agreement from unions, the pact can’t be modified until mid-2014.
After that, DeMaio still would need a supermajority of the council to reopen the deal. At least two of the council members who voted in favor of the original deal would have to flip.
A More Attractive Landfill Sale
Over the past two years, the city has spent $500,000 trying to sell its stake in the Miramar Landfill, only to find out that no one wants to buy it.
DeMaio’s Roadmap counts on the city getting $10 million in savings from a landfill sale.
He still thinks that money is there.
The city’s process for selling the landfill was bureaucratic and difficult to navigate, DeMaio said. He said his planned streamlining efforts will make a landfill sale more attractive.
That idea has some backing from private consultants who examined the original Miramar proposal. They concluded that companies might have taken a shot if the terms were different.
But any deal likely still would need the council’s approval. Here, even DeMaio’s main council supporter is opposed.
After the Miramar sale failed, the city competitively bid landfill operations, saving nearly $3 million a year. Zapf is satisfied with those results and doesn’t want to pursue a sale again, said Job Nelson, her chief of staff.
“We don’t think there’s a deal to be had there,” Nelson said.
A Better Deal on City Services
The process of competitive bidding, or managed competition, pits city workers against private-sector companies to do the same work for the lowest cost.
When DeMaio’s Roadmap was released, managed competition was untested in San Diego. Since then, the city has successfully bid five services, all won by city workers. It has also outsourced its information technology functions to a private company.
The Mayor’s Office estimates the resulting savings at roughly $12 million annually. DeMaio wants to go much further.
His Roadmap calls for bidding out six more city services immediately, and he said he’ll expand the list as part of his first budget.
And, DeMaio said he plans to take another look at the services that have already been bid to find even more savings. He’ll likely need the council’s help on that one, too.
The Bottom Line
The city has spent the last two years attempting many of the reforms laid out in DeMaio’s Roadmap, and it has realized tens of millions of dollars in annual savings as a result.
That’s not good enough for DeMaio. If he wins November’s election, he wants to see the remaining reforms from his plan implemented, and he wants to reopen several of the deals the city struck over the last couple of years.
Doing so won’t be easy. He’ll have to convince a council that championed prior efforts to do the same reforms again. He’ll have to compromise with organized labor, which has spent the election campaign reviling him at every opportunity. Without more savings from prior deals, DeMaio doesn’t have enough money identified to pay for all his promised service improvements.
But even if DeMaio reopens prior pacts, he needs another premise to be correct.
DeMaio argues the city can squeeze tens of millions of dollars more from the deals it made over the past two years. Sanders, a DeMaio supporter, contends those same deals saved more money than any other mayor has in the city’s history. He doesn’t seem to think he left much on the table.
“If Carl believes that more savings can possibly be eked out,” Sanders spokesman Darren Pudgil said, “we certainly wish him well.”
Clarification: This story has been clarified to reflect that DeMaio lays out reforms beyond the 25 in the Roadmap to which he attached specific savings.
Liam Dillon is a news reporter for Voice of San Diego. He covers San Diego City Hall, the 2012 mayor’s race and big building projects. What should he write about next?
Please contact him directly at firstname.lastname@example.org or 619.550.5663.
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