Pay It Forward
Published: Tuesday, September 15, 2009 8:08 AM PDT
The mayor's big speech to the Taxpayers' Association is today. If you can't make it, Liam Dillon will be tweeting from it and we'll obviously have full coverage.
Expect to hear a lot of lecturing about the how it's been such a horrible economic year. And, of course, how horribly the state is treating poor cities like San Diego.
But Sanders is promising a twist of hope. "Building for the Future Despite the Economic Downturn" is the working title.
I'm maybe reading too much into the word "building" but no doubt he'll explain why a new Convention Center expansion is necessary. We've heard this. What he should explain is what we'll have to sacrifice (new taxes, other infrastructure and services or an actual goat on Mount Soledad) to build it. And, he should throw in a bit about why that's worth it. This is not the mayor's forte -- he doesn't like talking about sacrifice and cost.
It is no small irony that the city is in perhaps the most perilous financial position it ever has been and yet leaders have been drawing up the most ambitious list of major building projects in our history. The city has never owed so much and at the same time had such a decline in revenues. Yet, we're talking simultaneously about building the most costly project in the city's history -- a new Convention Center -- a new main library ($200 million), a new City Hall and an ambitious sewage recycling system. Oh yeah, and the Chargers want a new stadium but they're not even bothering to ask.
Many of us are uncomfortable with this. Boosters like to say this makes us skunks at the garden party or just plain naysayers saying nay for the fun of it. Nay!
But what we say nay to is not ambition or vision. What we don't want is to continue to build debt we neither have the money to pay down nor any plans to raise the money to pay it down. What we want is to look holistically at the entire city and prioritize those projects that will make for a brighter future for the greatest number of residents.
We also see the steady deterioration of basic day-to-day services and wonder how that will stop if even more money is tied up in long-term liabilities.
In other words, if this is the time to build all of these things, be proud of that and be proud of how we should pay for them.
How should we pay for them? This is part of what is so frustrating about the city's pension crisis. Yes, it's still a crisis. It didn't go away.
Consider this:
In 2002, the city of San Diego had to send $49 million to its pension fund -- the reserve set aside for the retirement payments of all its employees.
This year, the mayor and others are working furiously behind the scenes to figure out what the bill will be. But it will undoubtedly be near or above $200 million. For several years, it has hovered around $165 million.
Breathe that in for a second. These are big numbers that don't mean much. But you can tell that taxpayers are now paying triple what they had in the past. And we're not raising triple the amount of revenue.
Study after study, consultants after consultants -- from the Pension Reform Committee, to Mercer, to Kroll, to Vinson & Elkins -- have concluded that the biggest reason we've had to shoulder so much more burden is not the stock market (over time, it's performed as we'd hoped). It's that we gave away benefits to employees we had no way of ever paying for.
Ten percent of the city's payroll used to go to the pension system. This is now at about 27 percent of payroll (look at the horrifying chart on Page 11 of this document).
Now think about it like this: The employees had a good pension benefit. Imagine if we hadn't decided to enhance it dramatically. Imagine if we'd seen the county supervisors do that and we thought, I don't know, we might be a bit more fiscally prudent than they were.
And imagine, instead of shoveling $100 million to $150 million more into the pension fund, we were using it to pay off a massive infrastructure bond and we were using that money to build up San Diego's most important facilities. You could have water reliability, first class streets, libraries (or internet for all), Convention Centers and any street lights, trash cans and sidewalks you needed.
Instead, we face a bill we can't pay for benefits we can't afford. Even if we're able to somehow wrest some of the benefits from employees, we'll have to cut services and raise taxes to make ends meet.
And we won't have anything to show for it.
This is the long legacy of the pension crisis. This is why you should force elected officials to agree to come back into office five years after they leave -- so they can clean up the mess they left.
The mayor will say we need to build things.
But here's to hoping he'll also make it clear how we plan to pay for them.
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