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Saturday, October 08, 2005 | The two attorneys who have most tenaciously hounded the pension system that’s at the heart of the city of San Diego’s fiscal woes threw their weight behind the opposing financial plans of the two mayoral candidates Friday.
City Attorney Mike Aguirre, a longtime political ally of City Councilwoman Donna Frye, announced at a morning press conference that he would not endorse in the race for mayor. However, he said:
“Donna Frye’s plan to correct the problems that we have with our San Diego pension in my judgment has the advantage of working on the totality of the fiscal problem. Stopping the payments on the illegal benefits, voiding those benefits in the courts and crafting a new system free from the corruption from the past is not just the better approach, it is the only one that can work in my judgment.”
In contrast, plaintiffs’ attorney Michael Conger joined former police Chief Jerry Sanders at a press conference to call Frye’s plan “irresponsible, immoral and illegal.”
Conger has represented retirees and employees in pension cases around the state. He represented city retirees in the famous Gleason lawsuit that was settled last year and forced the city to increase its payments into the deficit-laden pension system.
“Sanders’ plan is far superior,” Conger said.
The Rancho Santa Fe attorney blamed Frye for being part of the City Council that approved benefit increases and allowed the deficit that’s estimated to be more than $1.4 billion to grow.
A central theme of Frye’s campaign has been what she calls her “defining moment.” That moment came, she says, when pension whistleblower Diann Shipione first warned the City Council in Nov. 18, 2002 that an agreement between the city and the pension board to lower pension contributions and increase pension benefits was economically dangerous and possibly corrupt.
In a press conference following a Friday morning debate, Conger attacked the votes that Frye made between February and that moment, noting that Frye voted in closed session to give staff direction and approve labor strategies. The votes all led up to the deal – known as Manager’s Proposal 2 – that is at the heart of numerous state and federal investigations into City Hall.
The City Council was advised to alter its pension funding practices by former Mayor Dick Murphy’s Blue Ribbon Committee on City Finances in April 2002.
Ultimately, Frye voted against key pieces of the pension deal after hearing Shipione’s warnings. The councilwoman then became the dissenting council member when it came to pension issues and one of the first pension critics.
However, Conger wasn’t impressed.
“Donna Frye is factually one of the people most responsible for the pension crisis,” he said, suggesting that the councilwoman resign from office along with the other four current council members who served when the deal was enacted.
Frye defends her pre-Shipione votes by saying that city staff wasn’t providing the council with honest information.
“I wasn’t being told the truth,” she said. “… The moment, the second, the hour, the day, the instant somebody said this was a problem I immediately acted – despite the fact that almost everybody around me was saying it wasn’t a problem.”
Aguirre’s support of Frye’s plan is natural. In addition to being allies, Aguirre and Frye share common advisors: the husband-wife duo of attorney Pat Shea and whistleblower Shipione. Frye’s plan shares much in common with Aguirre’s recovery plan. If elected, she would ask voters for the unilateral authority to negotiate a recovery package with the help of the city attorney.
Frye also was on the receiving end of an attack by a local newspaper Friday.
Along with their early morning quiche and bagels, visitors at the San Diego County Taxpayers Association debate found a nice partisan surprise waiting on their seats at the Town and Country Resort: A personal copy of an inflammatory and factually questionable editorial that ran in The San Diego Union-Tribune, a local newspaper, Friday morning.
The editorial blasts City Councilwoman Donna Frye for using a $1.1 billion sales tax increase as the “first resort” in her financial plan.
“We’ll stipulate from the outset that a tax or fee increase of some sort may ultimately be needed once runaway retirement benefits are brought under control,” the editorial admits. “But Councilwoman Frye’s proposal to raise taxes on a massive scale as a first resort is fiscally imprudent and politically untenable.”
In reality, those familiar with Frye’s plan know that the first step of her recovery package is actually exactly what the Union-Tribune has said it wants to see: the cessation of payments on the allegedly illegal benefits.
Frye’s plan contemplates a temporary, 10-year sales tax increase to generate $110 million a year.
She claims she’s being honest with voters now, telling them that the true depth of the city’s financial problem – which extends beyond the pension system – may indeed require a tax increase as part of a larger package that would include labor and pension cuts.
Sanders’ original campaign literature says that it would insult the intelligence of voters to take anything, including a tax increase, off of the table. However, after being portrayed in television ads and mailers as pro-tax by a fellow Republican candidate in the primary, Sanders’ stance changed.
He has now ruled out a tax increase and criticized Frye’s refusal to join him in that stance.
“That tax increase would be used to pay for the mistakes of Councilmember Frye and her colleagues,” Sanders said.
Sanders’ plan includes issuing at least $200 million in pension obligation bonds, cutting 100 middle and upper management positions and reworking existing labor contracts to add mandatory work furloughs and further salary freezes.
Both candidates support Aguirre’s legal challenge to 1996 and 2002 pension benefit enhancements on the grounds they were created illegally.
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