Friday, March 17, 2006 | San Diego City Attorney Mike Aguirre on Thursday asked a Superior Court judge to rule within the next three months on the legitimacy of pension benefit enhancements he is challenging in hopes that he can lessen the burden of the city’s payment into the troubled pension fund come July.

The city attorney argues that the city’s pension obligations are unsustainable and has filed two lawsuits seeking to roll back pension benefits granted to employees between 1996 and 2002 on the grounds they were created in illegal and corrupt deals. If successful, the suits, Aguirre says, could wipe out as much as $700 million from a deficit Aguirre and Mayor Jerry Sanders estimate is approaching $2 billion.

The move comes as city officials are bracing Friday to hear exactly how much of their fiscal year 2007 budget must be set aside to cover pension costs, as pension consultants will unveil an annual report detailing the pension fund’s health at a morning meeting of the San Diego City Employees’ Retirement System board.

“It’s like the Academy Awards. We’re all waiting for the envelope,” Council President Scott Peters said.

Superior Court Judge Jeffrey Barton is scheduled to hand down a decision in the pension-benefit case on June 23, one week before the city is slated to make its annual payment into the pension system. Aguirre told Barton last week that the contribution would break the city’s already-brittle budget.

If a judge rejects Aguirre’s complaint, the case could go in front of a jury Oct. 6.

If the city cannot make the contribution, the retirement system is owed city property that is being held as collateral as part of a 2004 settlement between the city, SDCERS and a group of retirees. The settlement requires the city to pay an actuarially sound amount into the fund, or the fund will hold onto the $125 million real estate, such as portions of the parking lot at Qualcomm Stadium, that was put up as collateral.

Because the Mayor’s Office and the majority of council members have ruled out bankruptcy as an option for dealing with the city’s mounting pension debts, Aguirre said the only way to keep the city running is to scale back its pension payments. He believes the deals that created the benefits were illegal, and that proving that would relieve the city of some of its pension debt.

The city attorney alleges that deals the retirement board struck with the city in 1996 and 2002 are illegal because several retirement trustees voted to allow the city relief from its pension bill in exchange for new pension benefits that they and other employees received.

Using similar legal theories, the district attorney and U.S. attorney have filed criminal corruption charges against several former pension officials for their roles in the 2002 agreement.

Aguirre said Thursday that even if he prevails, the city will have to raise the revenue needed to keep the city afloat. Rolling back the benefits is the only way to convince taxpayers that there is “no fat” left to trim, he said.

“By taking away [the challenged benefits] we are strengthening our position to go to the taxpayers and give them bad news,” Aguirre said.

Peters and several other council members have said they disagree with Aguirre’s case, but last year they authorized him to file the lawsuit against the retirement system anyway.

“I think it would be wrong for us to have negotiated benefits in 2002 at the City Council and then take the position in court that they’re illegal,” Peters said.

Mayor Jerry Sanders said Thursday that he wants a “speedy resolution” to the dispute over the benefits Aguirre is challenging. Sanders has also asked the city’s employee labor unions to mediate the dispute through a retired federal judge, although union leaders have largely balked at the proposal. The benefits are non-negotiable, labor leaders have argued, claiming that they are constitutionally protected.

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