We're glad he's happy with things. But while he began preparing for a parade, he and his colleagues on the City Council had a new report on their desks.
In the Feb. 14 report, the City Council's independent budget analyst declares -- with uncharacteristic authority and alarm -- that the city is suffering from a "structural deficit."
"Unless clear, decisive, and long-term solutions are implemented, municipal services will continue to erode in the future," wrote Andrea Tevlin and her staff at the Office of the Independent Budget Analyst. She goes on to list the dozens of services that have already been shed in the last few years.
Tevlin's declaration, though not timely for the councilman, confirmed the basic premise behind the collective outrage this city's residents have felt about the pension scandal for years: It was never about the threat of the retirement system going broke. The employees' pension fund was guaranteed to receive as many assets as it needed to pay legitimate benefits.
What worried residents was the burden the city would have to bear in order to bail the pension fund out. It was, in fact, the same fear that motivated Peters years earlier when he and his fellow members of the City Council desperately sought a way to avoid the burdens of the city's retirement system by, bizarrely, adding to the benefits of employees in exchange for relief from the obligation to pay for them. Every dollar that went to shoring up the pension system couldn't go to streets, libraries, parks, or pet projects.
Yes, when the president of the City Council trumpets the incremental improvement in the health of the pension system, it may be a relief to the retirees and city employees. But residents can be excused if they don't share in the enthusiasm.
The burdens of those past decisions are becoming ever clearer.
As Tevlin and her staff found, the city has experienced chronic deficits over the past several years. This is "striking," she notes, because the last several years have seen robust revenue growth as the result of a strong local economy. Now as the economic cycle heads in the opposite direction, one can only wince about the possible implications ahead.
In an interview, Tevlin accentuated the point: "The community is able to understand budget cuts when you're in a down economy. But when you're still making cuts in a good economy, what's going on?"
What is going on? Tevlin refuses to pass judgment on the levels of city benefits for its employees -- "we have to stay competitive," she said. But she enumerated what she says are obvious signs that the city is simply unbalanced. All cities, for instance, must deal with occasional annual deficits caused by a slowing economy or an unexpected loss of revenue. The city of San Diego, however, has been persistently in the red.
"In general, a structural deficit is defined by a situation where ongoing expenditures consistently exceed ongoing revenues," Tevlin's reports reads.
To fix a structural deficit, you must structurally change the city.
The city's leaders somehow found a way over the last several years to take robust revenue growth and still leave the city reeling from persistent budget deficits. The mayor and council have finally begun addressing the looming liabilities of retiree health care and deferred maintenance.
While Peters did not return a call for comment on Tevlin's report, the Mayor's Office acknowledged her central finding.
Spokesman Fred Sainz said the mayor had done more than acknowledge it, in fact.
"If anything, not only have we added transparency and revealed the full extent of the structural deficit, but, by being as aggressive as we are in exploring it, we have more than likely increased it. It is now a reflection of reality," he said.
While it is refreshing to hear that some are acknowledging the reality with their rhetoric, it is one thing to recognize that you have a debt, a deep imbalance actually, and quite another to actually come up with money to pay it.
And this is where the mayor falls short. Again, he remains loyal to his plan to solve the chronic problem without either raising taxes or dramatically cutting services. Yet if Tevlin's report makes anything clear it's that the city is simply running out of
temporary solutions to the problem. She lists more than a dozen one-time budgeting tricks the city has used to stay afloat since 2003.
There's not many tricks left for the city's books.
The mayor might have been willing to acknowledge the problem but he has been decidedly unwilling to seriously communicate the consequences of it. And even when grappling with the structural deficit, the Mayor's Office left out the possibility of wage increases for employee groups when estimating how large deficits might grow in the coming five years.
The mayor, however, has clearly communicated that at least police officers if not other employee groups can expect some kind of wage increase.
As election season heats up, many claims will be made about the city's financial health. And it took courage for Tevlin's team report in no uncertain terms that no matter what is said, the city's burdens have left it fundamentally imbalanced.
City officials may be "shipshape" but somehow, the ship is sinking.
voiceofsandiego.org
Comments so far on this story:
1. JF wrote on February 26, 2008 9:06 PM:
"Hmmm... and the mayor wants to appoint the auditor?The city of San Diego has been upside down for years.Taxi medallion scandals, monkeying with tax rates (Wilson), election fraud (Hedgecock), Faberge eggs (O'Connor), Republican National Convention (Golding), absolutely nothing (Murphy), more of the same (Sanders).Did I leave anyone out?Various city managers have used trick after trick to keep the city in the black and appease the true leaders of SD -- none of whom are elected.Several studies have shown that San Diegans are taxed less than residents of other large CA cities.At the same time, SD gets back less of it's tax money from the state.Meanwhile, the city must pay competitive salary and benefits to retain employees.Something' got to give.Sorry, but SD has to create more income for itself."
2. La Playa Heritage wrote on February 26, 2008 10:18 PM:
"Thank you Ms. Tevlin. You cannot solve a problem until you acknowledge its existance. Your independant candor is refreshing. Maybe there is hope for San Diego yet."
3. So close wrote on February 26, 2008 11:04 PM:
"Voice is so close to finally offering a solution. How about finally getting the requisite revenue you need to run a healthy city government? It was on the tip of your lips, but you just couldn't say it. Come on, I know it would SOOOO unpopular to just come out and say we need to charge residents to recover the cost of picking up trash -- just like EVERY other city this side of Bedrock -- or to charge realistic business, franchise, utility or real estate transfer tax. Just do it. Do it."
4. Joe wrote on February 27, 2008 12:17 AM:
"Stop blaming city employees' pensions and go after the underfunders. All these deals were offered to city workers in lieu of salary increases! City workers were told they were helping the city by forgoing raises and accepting the bump in benefits. Now the mayor and council want to blame their own deal on the employees, forget promises of raises and threaten outsourcing of jobs. Find another whipping boy! What is so obscene about people earning a reasonable pension(Yes Billy Bob, it is a reasonable pension)? No pensions, no middle class. I want city cops, fireman, librarians, building inspectors, etc. to be fairly compensated. I want them to be able to afford to live in the city they work for (this is commonly not the case). Just because the Mayor and Council are inept, don't disparage those who are doing the nuts and bolts work to keep our city running."
5. cheeky wrote on February 27, 2008 12:42 AM:
"If politicians were not so fixated on reelection campaigns, they might be able to utter the "T" word without shrinking in fear of taxpayers' wrath. The Mayor and Council need to raise taxes and charge for trash pickup. That is just a start. It's not realistic to expect city employees to go year after year without raises when the cost of living is going through the roof. Miss Tevlin has the pesky habit of delivering unwanted news, albeit the truth. Her suggestions are valuable; I hope the Mayor and City Council are listening."
6. Howiek wrote on February 27, 2008 6:59 AM:
"JF, the yellow cab scandal was on mayor Frank Curran’s watch!"
7. jorgeelgato wrote on February 27, 2008 8:47 AM:
"well one thing that has to happen is that city funds and city assets have to be used for public rather than private purposes. Take the Golding sponsored expansion of Qualcomm in the 1990s -- the city is still paying off the $80 million in bonds on that one and stadium revenue isn't even close to meeting the cost of the bonds. Or take University City developer fees. Smelly Cat Peters and Mayor Sainz want to use $46 million of the fees to build a road that will destroy a regional park but greatly enhance the value of a shopping center owned by the well-connected Evans family. This in the face of report after report which has shown that what the area needs are new fire stations. Not to put to sharp a point on it, but this is a scandal."
8. Norman wrote on February 27, 2008 8:55 AM:
"Peters lives in La La land! His wife should hire him since he's so smart."
9. RD wrote on February 27, 2008 9:20 AM:
"In reading Ms. Tevlin's analysis I note one discreptancy mentioned briefly in the text but not footnoted in a graphical table. I refer to the percentage of the General Fund attributed to Public Safety costs. The percentage has shown a sharp rise but, one must remember when looking at the table, in the past budgets were kept artifically low by not budgeting TRUE overtime costs. In other words, they hid it. In the last couple of budgets, give Mayor Sanders credit for making these complex budget documents a little more transparent and accurate. A majority of the rise is attributed to true reporting of OT. Nevertheless, I agree with all of JF's comments above. With San Diego earning 57 percent of comparable tax dollar and fees than other cities, something has to give."
10. jr wrote on February 27, 2008 9:40 AM:
"Could it be the pension program is the problem? When will we update this charity program like the Federal Government did 20 years ago. We need to stop paying 80 to a 110% as a pension."
11. Rocky wrote on February 27, 2008 9:49 AM:
"Its the "GREED" the whole "GREED" and nothing but the "GREED" pure and simple. As one example, maybe it will come to an end when city retirement benefits don't exceed the pensioners normal salary when employed. Maybe then San Diego can lift its head above the shadows of corruption and start to rebuild its infrastructure starting with the water pipes, sewer pipes, streets, and roads. However that seems quite doubtful. One way to raise a few coins for the city coffers is traffic citations. Speeders would be a great revenue. When was the last time you tried driving the speed limit and nobody passed you, Right, our freeways have become the Autobahn of America. Its time to write some tickets and fix the roads. I can remember San Diego when it was "America's Finest City," but that was so long ago its becoming difficult remembering just exactly when."
12. David Little wrote on February 27, 2008 10:45 AM:
"To continue your good article, first admit that the Council - City Government - acted illegally to create this "structural deficit." Second, if it was illegal, it should have been prosecuted in court. But if you admit this, then it is difficult to beat up on Aguirre and thus deny us all that fun. That is why Aguirre's name does not appear in such articles as this one. Finally the police deserve a raise from the Mayor. After all it was the Police Chief that stood between the Mayor and the courts when he refused to serve a court order against Sun Road. Am I the only person that took 7'th grade civics? And where is judge wimpy who did not insist his court order be exercised? Let's just blame the messenger and continue to beat up Aguirre."
13. Rocky wrote on February 27, 2008 11:16 AM:
"Before the city raises taxes and starts charging for trash pickup (is that not already included in our taxes?) then correct the overpayments on the pension fund. It seems to me the pension rewards they now receive far exceeds the raises these employees forfeited."
14. Cheeky wrote on February 27, 2008 2:18 PM:
"F you listen to Aguirre, you will believe all the lies about over-inflated city employee pensions (110% with 20 years, etc). But if you get EDUCATED on the pension issues, you will find that current city employees are capped at 90% (with a FEW exceptions), although most retire with a lot lower percentage. An employee retiring with 30 years service will receive 75% of current salary for pension. Any additional will depend on whether the employee saved HIS or HER OWN MONEY in 401K, SPSP or DROP. Yes, DROP is the employees OWN money, not the city's (or the taxpayers') money. Remember that most city employees will not receive Social Security, and if they do, it is greatly reduced because of their pensions. Citizens need to visit link and do a little research before soaking up all the propaganda lies of Aguire et al."
15. LM wrote on February 27, 2008 5:03 PM:
"Until the retirements are brought into line with private sector retirements I am not willing to pay more taxes. The former and some current politicians and Union bosses screwed the taxpayers and the average City workers. If you folks notice the housing market is in a downturn, so far jobs are still there but maybe tommorow will bring job loss. For San Diego to survive we need to curtail spending. Pay raises will not be there. Mayor Sanders has not done a thing. He is a nice man but where's all those campaign promises. None have been fulfilled."
16. Mike L. wrote on February 27, 2008 6:29 PM:
"When I started reading this, I thought you were running for mayor or that Steve what's his name had written it. I think it's okay to be critical; but, it would be a good thing if you, and others, could say you had a way to help support the Mayor who probably would welcome some honest support."
17. JF wrote on February 27, 2008 6:48 PM:
"LM, are you aware that the city retirements only cost about 7% of payroll more than Social Security?Look at the 2006 SDCERS CAFR -- page 57. link The weighted average cost of retirement is 13.65% of salary.Social Security is 6.2%.The issue is that politicians have raided that fund -- trading pay raises for pension perks and then failing to fund the pension.Too much pork.Not enough income."
18. JUST PAY THE BILL wrote on February 27, 2008 6:57 PM:
"Everybody, quit whining & blaming the city employees. ALL - REPEAT ALL - big cities have to pay competative wages and pension costs to put a work force of police officers, fire fighters and other city workers on the streets every day. So why is San Diego in more trouble than most other cities? The answer is: NOT ENOUGH TAX REVENUE COMING IN. People in this city have been paying "Volkswagen" taxes and getting "Cadillac" services for YEARS! Times have changed now, folks, so - GET OVER IT! There's no such thing as a free ride in San Diego any more."
19. jorgeelgato wrote on February 27, 2008 8:58 PM:
"The serious problem here is that given the record of our current council and political leadership, nobody with a brain is going to want to give them another plug nickel. And I say that as pretty much a Verdigo Blue Big D Democrat. But these guys are nothing more than kleptomaniacs. I would do the public more good just dropping any spare cash out of a helicopter. A closely related problem we face is the media in this town. The real scandal of Duke Cunningham was not his theft, but that the media abetted it for so many years. I mean jeez you guys couldn't just take a look at where he was living and ask, where did he get the $$ for the nice yacht and the Rancho Santa Fe house? And it took the FBI taping Inzunza to figure out that he was a crook?"
20. City Slickers wrote on February 27, 2008 9:35 PM:
"Just think of all the money that is so desperately needed to fix this city that is quickly being exhausted through an illegal pension fund. That why San Diego's infrastructure is in the dumper. The streets are full of pot holes, water pipes breaking, the sewers are coming apart while all those lucky clowns are taking home more bucks in retirement they when they were sitting behind a desk all day. No wonder they couldn't wait to retire, they were LOSING MONEY BY GOING TO WORK EVERY DAY. Next time you hit a pot hole in your new Honda and the front end suspension ends up in your front seat think of all those folks that got in on the DROP program. I say reelect Aguirre and let him continue his probe on these outrageous pension benefits."
21. emessess wrote on February 28, 2008 12:35 AM:
"JUST PAY THE BILL is correct. The city must continue with an austere budget AND find ways to increase revenues. User fees and taxes will have to be increased. With the ability to make reasonable income projections City can borrow the money needed for infrastructure improvements and pay the fire and safety salary increases, along with all other operating expenses, from current income. Then, perhaps we will at least get back to the level of "Volkswagen" services. I doubt that I am the only resident who is sick of crumbling roads and bursting pipes. A more apt slogan right now is "America's Frailest City"."
22. City Slickers wrote on February 28, 2008 4:44 PM:
"JUST PAY THE BILL is probably a recipient of the fabulous pension plan. Our infrastructure is failing because of CORRUPTION and the pension plan is a part of it. Residents of San Diego are taxed beyond belief now. America's Failing City is doomed because of mismanagement in to many sectors of its government. Squeezing more money out of the public will just find its way into another special interest project and your Honda's will continue to come apart on streets that were once as smooth as glass."
23. mel wrote on February 28, 2008 8:32 PM:
"What's missing from all the comments.. Redevelopment. The news media won't mention it even though they spend $300 million a year.The reporters don't understand it,so they don't write about it. But Malin Burnham and John Moores understand it very well and have made millions from downtown redevelopment. Whilethe council and the mayor cut the dept budgets, they never, never cut CCDC.CCDC is the Holy Grail."
24. Dick wrote on March 1, 2008 8:59 AM:
"City pension levels are an easy scapegoat. By comparison to other comparable public agency pensions, the City falls right in line. The structural buget issue has been in the making for over 20 years and is due to a lack of effective political leadership. When faced with extraordinary one-time expenses (ie., Republican Convention, downtown ball park, etc.) the Council did not have the will to effectively reprioritize spending, to 'just say no.' Instead, the Council took the easy, short-term way out and demanded staff to use one-time budget tricks instead of lowering the level of service or raising revenues. The result was a major hole so big that even during good economic times the City could not catch up. (Continued..)"
25. Bruce wrote on March 1, 2008 9:22 AM:
"Mel in comment #23 is correct. Moreover, there is only one elected official who has the will and the background to force the City to confront fiscal reality and that official is Mike Aguirre. As City Attorney he can force the City to follow the mandates of the Charter to balance its budget and obtain voter approval of debt. Mike Aguirre has been doing just that. The community needs to rally around him to support his efforts."
26. Dick wrote on March 1, 2008 9:29 AM:
"(continued...) The result was major deferred maintenance and the proverbial 'pay me now or pay me later.' Fire apparatus' were not replaced; buildings were not maintained; etc, etc. resulting in major unmet needs. This was compounded by using one time revenues to pay for ongoing operations and using budget tricks to push off current costs to future Councils. THe underfunding of the pension system which started in 1996 (MP1) was a major example. When faced with the bill some years later, the City still did not have the discipline to reprioritize spending and/or raise revenues and this led to MP2 in 2002. Until our leaders stop scapegoating the City's employees and face up to the real problem, I fear no solution is in sight."
27. Rocky wrote on March 1, 2008 1:50 PM:
"Great story in the VOSD today about Matt Wong the kid from La Jolla High School who got suspended two days for displaying his entrepreneurial talents. Now these are the of kind skills we need to run the city of San Diego. The kids is a self starter, is not hindered by rejection, is young and not tainted by political pressure, and can come up with alternative ideas. This would be a whole new approach to solving San Diego's failing economy and ills."
28. josil wrote on March 1, 2008 1:51 PM:
"The city of Vallejo, east of San Francisco, is facing bankruptcy largely due to lavish safety and firefighter salaries (some in excess of $200K p.a.), and pensions to match. It is reported that if the city goes bankrupt "...the prospects are grim: Potholes left unfixed. Trees not trimmed. Longer waits for police to respond to calls." I guess we are America's Finest City because we've managed to reach that condition without bankruptcy."
29. BeneFit wrote on March 1, 2008 7:21 PM:
"Perhaps the author of this article didnt look close enough at what Mr. Peters said. He declaired that the City Employee's RETIREMENT SYSTEM was in "shipshape conditions". I didn't hear him say the City's FINANCES are in shipshape. SDCERS is an independent organization whose finances are in "shipshape". If you believe the Administrator/CEO of SDCERS David Wescoe,(and I do) the retirement system funding ratio is 78.8%, a number that many other systems would envy. He also stated that "SDCERS is 107% funded to the present value of benefits accrued and vested to date" I encourage everyone to read Wescoe's Feb21 report to the Mayor and Council. It is an accurate, legally proven document and not the GARBAGE HEARD HERE."
30. Rocky wrote on March 3, 2008 10:06 AM:
"Hey BeneFit, When I stop having to dodge Potholes then maybe I will believe some of the Garbage the city is dishing out. Until then the info here pretty much tells it like it is. Happy Motoring."
31. JF wrote on March 3, 2008 1:29 PM:
"Rocky, ever heard of the Republican National Convention, Faberge eggs, Qualcomm or Petco stadiums, the Chargers ticket guarantee?There will always be pork projects for politicians to spend money on rather than fixing your potholes.Even if there were no retirement system, the politicians would fund more public art work, or some such.In 1991, firefighters took a 5% pay cut to help bail the city out.The city ended up with extra money and did exactly that -- they spent it on art work rather than paying back firefighters.Sorry, but the retirement system isn't the reason for your visit to the auto shop."
32. Rocky wrote on March 3, 2008 11:00 PM:
"JF, I think your wrong on that count. When retirement recipients can collect more in retirement then on the job then potholes are part of the results. Your right on the pork, but its all cumulative. So while I'm waiting at the alignment shop for another estimate thinking of those items you mentioned and several more the one that keeps popping up its ugly head is the pension fund. BTW, there not all my Potholes. I left a couple for you."
33. Steve K wrote on March 11, 2008 10:27 AM:
"What's crazy is that in 2002 the mayor and city council increased retirement benefits, so the pension board would go along with underfunding, because the city was broke and couldn't afford the to make the payment."
34. Ann wrote on April 10, 2008 11:21 PM:
"The City underfunded the pension system for years, just like it failed to put money into deferred maintenance. Now that they are fully funding the pension, that is being blamed for the shortfalls in other area. Aguirre calls it illegal debt because it was unfunded. I'd like to know what debt the City ever funds. If the City builds a new library, but doesn't budget for the maintenance of it, i.e., does not have the money to maintain the property, does that make that library an illegal library because it caused an obligation to the City that is unfunded? Who decides which of the obligations are the unfunded ones? The deferred maintenance issues started way before the pension issues did. The City has never budgeted for the long-term. That's why the underfunding occurred -- to fund unbudgeted projects."
35. Ann wrote on April 10, 2008 11:25 PM:
"Rocky mentions that trash pickup is included in property taxes. That's the mantra of Roger Hedgecock, yet I don't see where that is written. Do you think the 1919 people's ordinance anticipated a city of over a million all getting free trash pickup almost 100 years later? Do you think in 1919 they envisioned that we'd be generating so much trash, recycling, landscaping recycling, etc. I live in the County and pay about $50 for two months of trash pickup and I also pay property taxes. Is there a line in the City tax payers tax bill that covers the trash pickup? The way people talk, it's like we're guaranteed the right to life, liberty the pursuit of happiness and free trash pickup!"
36. Steve wrote on May 8, 2008 1:54 AM:
"Aguirre lost the pension lawsuit. What he should have done was gone after the people's ordinance of 1919 and proven the charter DOES NOT afford residents with free trash services. The city could relize saving of more than $100 million per year. However, I'm pleased Aguirre didn't take this on because only he could have found a way to lose this as well. Let's wait for the new City Attorney and then inform residents they will be paying market rate for trash service."
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