The Morning Report
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Thursday, February 17, 2005 | Written off. The write-in candidacy of the sort that brought City Councilwoman Donna Frye within a few thousand filled-in ovals of the mayor’s office likely won’t be legal in San Diego again. Four of Frye’s council pals, including her opponent Mayor Dick Murphy, voted unanimously at the council’s rules committee Wednesday to cross out the write-in option from the municipal code. “It was a bit of an embarrassment,” said Murphy, apparently speaking of inconsistencies between the municipal code and the city charter, and not of the election results. The underdog Frye was given little chance in beating the incumbent Murphy and County Supervisor Ron Roberts during her last-second, five-week campaign, and made national news when the results came in. Lawsuits continue in the case, and Wednesday’s committee vote now goes before the full City Council. The move would allow write-ins during the primary election, but not during the general election.
If the city could actually borrow money right now, it would be more expensive. That’s because one of the three major financial rating firms, Fitch Ratings, downgraded the city’s bond rating Wednesday. The reason: Ongoing political and managerial turmoil has failed to address solutions that will require “strong leadership, fiscal discipline and political cooperation.” Also, the continued delay of the 2003 audit means the city’s finances remain a bit blurry. There’s been a lot of blaming, a highly-contested mayoral election and federal and city attorney investigations, said Amy Doppelt of Fitch, but not a whole bunch of planning for the future. “They don’t have any consensus or direction on any united front,” she said. It’s not all bad news, as the city has strong revenue sources and a strong ability to pay back obligations, the Fitch report added. But then again, the firm doesn’t have the same confidence it used to without audits to confirm previous years’ possibly inaccurate reports of strong health. Standard and Poor’s, one of the other big three raters, suspended the city’s credit rating last September, making it nearly impossible for the city to borrow money after faulty financial disclosures were revealed. Now, if and when they do go back to Wall Street, it will cost the city more to borrow money. Investors in city bonds will get the same returns from their bonds, but they won’t be worth as much if traded, Doppelt said.
Pulling out of Port. Out loud, officials at the San Diego Unified Port District say they’re not pulling out of the troubled San Diego Employees Retirement System. They only want their more than $100 million removed from the accounts and controls of the city system and placed in a separate Port trust with a separate Port board, according to a letter sent Tuesday from Port Commissioner William Hall to retirement administrator Larry Grissom. “If San Diego CERS has financial problems, we would be protected,” said a port spokeswoman. The Port’s investments are currently commingled in the city’s system, which carries a $1.37 billion deficit. The Port has maintained the practice of paying annually what is recommended into their portion of the pension plan, leaving it considerably healthier than the city’s side. However, if SDCERS were to hit a crisis point financially or if the city were to file for bankruptcy, the current arrangement could leave the Port’s funds vulnerable because of the commingling. By state law, the Port must be wrapped into the retirement system of either one of its five member cities or the state, so it couldn’t legally pull out unless it went to the state plan. San Diego is the only member city with its own pension plan, and port officials are exploring ways to change that. City officials have until Friday to respond.
Labor pains. Mayor Murphy went on the offensive Wednesday, offering up a lengthy list of wage freezes and benefit cuts he wants to negotiate out of labor during the upcoming contract talks. The winner in the last decade or so of contract talks, organized labor has promised to be part of the solution in the city’s financial crisis. While the guys in thick glasses and short-sleeve, button-down shirts who handle the numbers are still poring over their calculators, preliminary estimates released by the mayor’s office could knock $600 million off of the $1.37 billion pension deficit in two years, significantly reduce the $500 million to $700 million deficit in future retiree health liabilities and erase $40 million from next year’s budget gap. “The changes we need to make are harsh medicine in the short run but will be for the good of the city in the long run,” said the mayor.
– ANDREW DONOHUE, Voice Political Writer