Thursday, April 13, 2006 | Phoenix’s appropriations ordinance is nine pages long. Santa Barbara County’s has two pages, as does Pasadena’s.
In the city of San Diego, the document that gives city staff the authority to spend public money is 81 pages long.
The city’s top financial officials say the broad discretionary powers that are doled out within this voluminous document have contributed to the city’s famed budget ills by allowing staff the ability to significantly shift and spend funds within the city budget without the council’s approval.
“I told the council that this thing is almost 100 pages worth of loopholes that defeat the intent of the budget they pass,” said John Torell, who was hired as the city’s auditor and comptroller last year after holding a similar position in Santa Barbara County.
Although it is reviewed and approved by the council annually, critics say San Diego’s appropriations ordinance allows the city’s financial officers to keep some of the city’s financial decisions – such as hiring employees and funding certain programs – out of the public eye.
“There seems to be great latitude for city managers to have the authority to transfer funds and make different expenditures,” said Andrea Tevlin, the City Council’s independent budget analyst. “Normally, I would think that would take City Council authorization.”
As Mayor Jerry Sanders proposes to the council a spending plan for the coming year, city budget officers say they are also working behind the scenes to fix the document they say helped hide the city’s real financial picture from the public budget process.
“One of the things we’re doing is looking at some of the authority that is granted in the appropriations ordinance and see where we might need to tighten that,” said Chief Financial Officer Jay Goldstone.
He said it’s something he plans to work on before the budget is adopted in June.
“I love that authority and flexibility, but if we’re going to talk about transparency, it’s not serving anybody’s interest” to allow the mayor and his administration so much leeway on how to manage the city’s money, Goldstone added.
Torell, Tevlin and Goldstone have all come to City Hall from other municipalities within the last 13 months.
Sanders is the first mayor in modern San Diego history to propose a budget. Until this year, city managers have controlled the city’s day-to-day operations and expenditures and the mayor has been the head of the City Council. That all changed on Jan. 1 with the voter-approved switch to a strong-mayor form of government.
There is no longer a city manager; the mayor has assumed those powers and been removed as a voting member of the City Council.
The new mayor has pledged to draw up a budget that included “real numbers,” implying that past budget officers presented spending plans that were either dishonest or inaccurate.
Sanders has been slowly unveiling parts of his budget this week, and will release a complete version Friday. The council will begin reviewing the spending plan for fiscal year 2007 next week.
The mayor’s proposed general budget is nearly $90 million larger than this year’s, which expires June 30. Mayoral representatives say the extra money is partly due to past city administrators’ practice hiding costs and expenses from the council and public – underestimating revenue and then spending it outside of the budget process with the authority given to them in the appropriations ordinance.
At least 250 city employees are paid with money not included in the council-approved budget for the current year, Goldstone said. The Mayor’s Office has said that tens of millions of dollars of revenues and expenses have been excluded from previous budgets.
Under the appropriations ordinance as it currently stands, jobs in one section of the city can be paid for by unrelated budgets, said Rudy Graciano, the Auditor’s Office’s reporting manager.
“It’s misleading,” Goldstone said.
The city’s engineering department, an agency covered by the city’s day-to-day operating budget, could hire an employee that is not listed in this general fund budget, but the auditor or city manager could transfer money into that fund from a wholly separate budget – such as wastewater or water – without asking the council first.
In another example, a city manager could ask the council to hire a police officer with the money the city accepts from a law enforcement grant in one year, but never have to report that position again in budgets that followed. So neither the money received nor the position is reflected on the city’s rolls.
Goldstone said that both of those scenarios would not play out without council approval in Pasadena, where he handled the city’s finances before coming to San Diego in January.
“[San Diego’s ordinance] gave a lot of latitude to the city manager and staff under previous administrations. I have to believe that these practices were in play for a long time,” Goldstone said.
Calls placed to San Diego’s last city manager, Lamont Ewell, were not returned as of press time. Ewell left San Diego to become the city manager of Santa Monica last November.
Graciano said that some discretionary authority should be afforded to the mayor and auditor in crisis scenarios, such as if a court ordered the city to pay a fine while the City Council was on recess.
“But that emergency situation is different than the general operation type of expenses,” he said.
San Diego County Taxpayers Association President and CEO Lani Lutar agreed that the ordinance should shift more decision-making power to the council so it can be reviewed publicly. She noted that there will likely be more accountability in how the mayor uses the discretionary authorities because he is an elected official. The city manager was appointed by the council.
Please contact Evan McLaughlin directly at