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Thursday, April 13, 2006 | What a great week for the mayor! He’s going to give $38 million more this year to the police and fire departments. He’s going to budget more money for parks, libraries and cultural projects.

Next thing you know, he’s going to announce a free ice cream day at City Hall.

How’s he able to do it?

It’s pretty simple. As we’ve discussed time and time again, every year, the city gets a bill from its employee pension system. It is supposed to pay the bill so that the pension system can invest money and have it available to pay the retirement benefits of city employees.

The problem these last few years has been this: That annual pension bill is getting really big. So big that, to pay it, we were facing the possibility of losing services and cops and firefighting capability.

So why is it not a problem this year? How do we have all this extra money to throw around?

Easy, the mayor just decided that he doesn’t want to pay the whole pension bill this year. He’s going to ask for a massive loan to make the payment.

It’s the American way. When you’re in a tough financial situation, all you have to do is stop paying your bills and ask someone to pay them for you. Then you can go buy a new truck.

And what about the financial crisis? What happened to the severe underfunding of the retirement system, which forced the previous mayor to resign in disgrace and gave Sanders and others fodder to kick that former mayor for months and months over the campaign trail?

Not so much of a big deal. More the media’s thing, the mayor’s chief financial officer said.

I was wrong earlier in the week to say that kind of rhetoric sounded as if former Mayor Dick Murphy had returned to power. This is worse. At least Murphy actually planned to pay the annual pension bill.

I vividly remember a press conference in 2004 when Murphy rolled out a plan to borrow $200 million from Wall Street that he would then invest in the beleaguered pension fund. His own Pension Reform Committee had told him weeks earlier that he needed to actually borrow $600 million from Wall Street. But he could do it over three years, the committee said.

I asked him how soon he could reasonably think to get a big loan like that given the fact that the city had just lost its credit rating and did not have audited financial statements.

He said it would be a few months.

It’s almost been two years.

I digress. Murphy’s big loan extravaganza was only going to be in addition to the city’s regular payment, which that year was $130 million and the next year was more than $160 million.

This coming year, Sanders plans to pay about half that into the pension fund giving him the pile of cash he is now bestowing on struggling city funds. Sanders only plans to put $85 million of the city’s assets into the pension system. Another $30 million he’s going to give to a willing group of investors in exchange for a big fat check of $300 million that he’ll send to the pension system. For the indefinite future, we’ll have to pay those investors off. The mayor has plans to ask for even more loans, and more loans and more loans.

Hold with me here. Add the assets that the mayor is actually planning on squeezing out of the city’s budget this year to pay for pensions and you come up with $115 million. The retirement system asked for $163 million – which wasn’t even as much as some of the pension trustees believed they should demand in order to keep the struggling system from bleeding anymore.

The mayor decided he couldn’t come up with that $163 million. Admirably, he doesn’t want to see city services suffer. He’s not willing to make the kind of cuts necessary to make the payment asked of the city.

So he’s going to make a deal to put it off onto future taxpayers. He’s going to save city services and pay these side debts off in the future. And even the big loans aren’t enough to right the wrongs of the pension system.

“It’s quite a bit short of what’s needed,” said pension trustee Bill Sheffler.

This is not the tough love Sanders promised. This is a cop out. This is a massive loan that allows Sanders to do politically positive things like protect libraries and “cultural programs,” hire cops and do all of it without raising taxes.

It’s Candyland. Free ice cream for all. Cue the marching band.

The only problem with it is this: Those of us who are younger are going to have to pay off these loans. To do it, we’ll have to cut our own “cultural programs” and we’ll probably have to raise our own taxes to do it. All of this years, if not decades, down the road.

Jay Goldstone, the city’s chief financial officer, was asked recently how he knew the city wasn’t in need of declaring bankruptcy.

He said he knew it wasn’t because the city could pay its bills.

But what this new financial plan from the mayor shows is that the city cannot, in fact, pay its bills. The only way it can pay its bills is if it’s able to take out massive loans. And, of course, nobody is quite sure if and when the city will ever be able to take out loans like that again.

If the mayor and City Council cannot make the required payments to the pension system without seriously cutting city services and thereby endangering the public’s safety and vital infrastructure, and if they’re not willing to raise taxes, the city is broke.

It’d be nice to talk about that sincerely. Which is what we thought we’d be doing after the election.

Scott Lewis oversees voiceofsandiego.org’s commentary section. Please contact him directly at

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