Friday, December 16, 2005 | Voters last fall approved switching the city government to a “strong-mayor” system in hopes of curing the city’s myriad ills, but questions have been raised about how effective the city’s financial watchdog will be under the new structure.

San Diegans at the time knew the city had disclosed bogus numbers and put off paying its bills, but some say the auditor who was hired to better enforce the city’s fiscal practices will be less independent when the new system takes hold.

Proponents of the strong-mayor form of governance, which takes effect Jan. 3, say they generally approve having Mayor Jerry Sanders’ chief financial officer supervise the Auditor and Comptroller’s Office, however some are concerned that the increased oversight may also limit the office’s independence.

Previous occupants of the auditor’s offices have been probed for possible wrongdoing in investigations involving errors on the city’s financial statements. They have also been implicated in a pension funding deal where the city allegedly traded employee benefits for relief from its retirement bills.

Critics have alleged that the city’s creative bookkeeping is why its financial statements haven’t been certified by outside auditors since 2002 and overstatements totaling $642 million have since been found in that year’s records.

“My problem is a question of checks and balances,” Councilwoman Donna Frye said. “The last city auditor pretty much kept information away from the public, and my concern is always the role of the public. Anything we can do to enhance that role is the proper way to proceed.”

The Auditor and Comptroller’s Office currently reports to the City Council and is separate from the executive authority of the city manager – similar to the City Clerk’s Office. Under the new government structure, which voters approved last November, the auditor will be supervised by Sanders’ new Chief Financial Officer Jay Goldstone.

The strong-mayor initiative authorizes Sanders to hire and fire the auditor, with the condition that the auditor can appeal the decision to the council.

Experts say the relationship can create hypothetical situations where the mayor, under political pressure to put out healthy financial statements, places inappropriate demands on the auditor he supervises.

“You want a watchdog who is independent of the mayor,” said Steve Erie, a University of California, San Diego political scientist who helped author the language of the strong-mayor initiative. “It’s OK when you have a good mayor, but what if the mayor is crooked?”

Erie said he urged supporters of the switch to the strong-mayor system to allow the auditor, fire chief and police chief to appeal a mayor’s decision to fire them. He referred to the experience of other cities. The independence of the voter-elected Los Angeles controller, whose role is similar to the auditor’s, enabled her to recently expose a pay-for-play scandal that was linked to that city’s mayor, he said.

Sanders spokesman Fred Sainz said the new structure will allow balance between the desire to keep the mayor accountable for the municipal government’s finances and to keep a check on the city’s ethics.

“Voters wanted a mayor who is holistically responsible for all the facets of the city’s financial health, of which the auditor is one component,” Sainz said.

He said there will be an “ethical wall” separating the auditor from the fiscal matters he inspects, which are under the chief financial officer’s purview.

“There is a way of working through those issues,” said Sainz, who noted that the county of San Diego’s auditor reports to its chief financial officer.

Auditor and Comptroller John Torell, who was hired this spring to improve the city’s internal controls, said he is being paid to provide a detached and impartial opinion and shouldn’t be influenced by his superiors.

“The essence of my value to the organization is directly dependent upon my objectivity and willingness to speak up on controversial issues,” Torell said. “If I can’t be objective, why are they paying me?”

Torell and some of his staff members will present a report they conducted on internal controls next month, and will include a section on why the auditor’s independence is key to the government’s fiscal accountability

Two of Torell’s predecessors, former Auditor Ed Ryan and former Assistant Auditor Terri Webster, have left the city and played key roles in the issues now under investigation by the Justice Department and the Securities and Exchange Commission.

Carl DeMaio, president of The Performance Institute, a conservative-leaning think tank, said he plans to place on the November ballot a proposition that would make the auditor an elected position. DeMaio said the auditor’s past loyalty to the council has contributed to the city’s problems.

DeMaio provided another alternative that he said would create more independence: hiring an auditor for a long-term contract that can only be voided by a unanimous vote of the City Council or the auditor’s resignation.

“The auditor has to be independent from the management side of the enterprise,” DeMaio said. “It’s not a wise reporting relationship. It’s far too easy for the auditor to bow to the wishes of his superior when he should be independent.”

Erie and Frye said they would prefer an elected auditor, although Erie said that making changes to the government’s structure before the voter-approved strong-mayor form expires in 2010 is “ludicrous.” Citizens need time to evaluate the new structure, he said.

Sainz, the mayor’s spokesman, agreed.

“We are quite literally reorganizing here a form of governance that has been in place for decades,” he said. “It’s a work in progress.”

Extending the strong-mayor structure past 2010 will require another public vote.

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