Monday, November 07, 2005 | A little more than a week ago, in a sprawling tome on the state of pension systems in the United States, The New York Times Magazine broke some news about San Diego. It reported that the city’s pension problems had “effectively bankrupted the city.”

That’s some pretty interesting placement of the word “effectively.” And though I’m not quite sure what writer Roger Lowenstein meant with it, I’ll go ahead and infer that he has signed on to the notion that the city is marching inexorably on a path toward actual bankruptcy proceedings.

And I’ll also infer that he simply dismisses the arguments of those who still fiercely contend that the city is not on said path, or at least, that it has a few months to jump off the train that is.

But, forgetting for a moment whether the city is “effectively” bankrupt, we learned something else last week about when actual bankruptcy proceedings may begin.


Yep. April showers might bring more than May flowers.

At a debate and again at a press conference on Friday, mayoral candidate Jerry Sanders said he would know by the month of May whether or not to initiate bankruptcy proceedings.

Why May?

Sanders said he plans to meet with the city’s labor unions in January. If they choose to not meet, or if they refuse to make the kinds of concessions he says are necessary, then, well, I’ll let him tell it:

“If they do not come back to the table and we have to conclude labor negotiations without an agreement to put us on a sound basis, then we would know that by May and that may be when the bankruptcy option has to be triggered,” Sanders said at the press conference.

At a debate earlier in the day, Sanders said “the only way” he’d support bankruptcy right now is if the city’s employee unions refused to come back to the table and negotiate with him.

His rival in the race for mayor, City Councilwoman Donna Frye, said she would know “within one year’s time” whether the city would need to go into bankruptcy.

And to questions about what would provoke her to support bankruptcy, Frye said it’s simple: On the first day she takes the mayor’s office, she’s going to stop recognizing employee pension benefit levels she said were arranged illegally. If a judge later tells her she was wrong, she’ll take the city into bankruptcy. And by that time, according to her plan, city voters will have given her sole power to do so.

So there you have it. No matter who wins tomorrow’s mayoral election, both candidates have now identified specific circumstances that would provoke them to lead the city into bankruptcy.

For Sanders, the circumstances are simple: The employees will have to come to the negotiating table and agree to a longer salary freeze and a mandatory work furlough.

Those measures, apparently, could derail the bankruptcy train.

But the largest union of city employees – the Municipal Employees Association – has already signed a three-year deal with the city as have other unions. The MEA has already agreed to a salary freeze for two years. If only one or two more years of a salary freeze, a work furlough and a couple of other tweaks are all that stands between the city and bankruptcy, doesn’t that mean the city is extremely close to being insolvent? Isn’t Sanders implying that the city is on the cusp?

After all, Sanders hopes to save $6 million annually with the work furlough and $35 million annually with the continued salary freeze (you can’t get much more out of just negotiating with employees). Are we really only $41 million a year away from bankruptcy?

And Frye is saying that she must save $50 million a year by immediately ceasing recognizing the “illegal” benefits. Without that, she says, we’re bankrupt.

Holy crap! The next San Diego mayor will be someone who believes City Hall is, at most, a mere $50 million a year away from being a candidate for bankruptcy.

It’s worth pointing out that many in the city’s current management structure openly say that’s just simply not true. But those people may not be around for long. The next mayor will also be someone who has promised to do something else: Fire people.

(Just an aside, but for the real wonks among loyal readers of SLOP, Lowenstein is also the author of a lengthy, insightful, yet readable analysis of the “crisis” in the nation’s Social Security system, which appeared in The New York Times Magazine in January. Look it up and pay the few bucks to download it or e-mail SLOP staff for a synopsis of that very nerdy read.)

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