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Tuesday, May 02, 2006 | More than a week after they proposed a $3 billion city budget, staff members with the Mayor’s Office were found last month making substantial changes to the budget within the city’s computer system, according to a confidential memo from Independent Budget Analyst Andrea Tevlin.

Altering the numbers in the budget proposal midstream would have negated the IBA’s two-week review of the budget and made it “extremely difficult to move forward,” according to the April 24 memo. Both Tevlin and the Mayor’s Office chalked the timing of the changes up to confusion over the city’s new management structure, which took effect Jan. 1.

“Under the new form of government, once the Mayor submits his budget to the City Council, it is in the hands of the City Council. … All changes to the Mayor’s Proposed Budget need to be openly discussed with and reported to the City Council and the Independent Budget Analyst,” Tevlin wrote to council members.

Chief Financial Officer Jay Goldstone agreed to remove the additional work done on the budget in the city’s shared budgeting software, but said it was merely clean-up work that would’ve been explained to the City Council.

“We were trying to pull this budget together pretty fast,” Goldstone said. “We discovered the following week that some money didn’t get put into the proper accounts.”

In an interview, Tevlin said she believed the incident was a misunderstanding.

“It was something that would have significantly impacted our work, but I believe it was (part of) working out the kinks in the new system,” she said.

At the beginning of the year the city moved to the new government structure, as approved by city voters in 2004. The mayor now oversees the city’s executive branch, essentially giving up his role as the chairman and a voting member of the City Council to pick up what were once the city manager’s duties. As such, this year is the first in modern San Diego history in which the mayor has prepared and proposed the annual budget – and the first year in which an independent budget analyst has existed to comb through the budget on behalf of the City Council.

“To me, the issue was more why the memo was made confidential. And when given the opportunity to make the memo public, the IBA refused on numerous occasions until pressed into it. Enough secrecy,” said Councilwoman Donna Frye.

Frye said she wanted to know which numbers were changed significantly, and she said the memo raised concerns for her regarding the independent budget analyst’s independence.

Tevlin said she made the memo confidential because that’s the way she handled such matters at her previous job with the city of Phoenix, “instead of the world having to know about it.”

Mayor Jerry Sanders has made transparency and honesty paramount in this opening budget season, though many City Hall regulars have found his condensed budget tougher to understand than previous budgets, which were criticized for being voluminous and illegible.

The mayor had a little more than four months to prepare the budget after taking office in early December. The press conference unveiling the budget was delayed numerous times on April 14 as mayoral aides waited for copies of the budget to roll off the printing press. The fact that changes were being made without notifications to the public or the City Council raised questions for some of the transparency accompanying the budget and could also be testament to the rushed nature in which it was put together.

The memo states that Tevlin and her staff were in the office on a Saturday, April 22, when one staff member received an e-mail from Dean Roberts, acting financial management director, saying his department was inputting changes to the proposed budget.

“While some were minor technical corrections, others were significant dollar amounts and/or issues that changed the budget substantially,” Tevlin wrote.

Tevlin declined to detail the changes in an interview, saying the situation had been quickly remedied.

Sanders last month proposed a $3 billion spending plan for fiscal year 2007, including a $1.3 billion budget for the city’s general, day-to-day budget. The general fund budget included a controversial $374 million borrowing plan to stabilize the troubled pension fund.

The budget was noteworthy because, unlike years past, it didn’t include sizable cuts. Instead, it offered injections into basic infrastructure needs long ignored and emergency reserves. It also included sizable boosts to police and fire departments.

However, the mayor agreed to remove the $374 million borrowing plan from his proposal total after concerns arose regarding its viability considering the city’s two-year exclusion from competitive borrowing on Wall Street and other legal questions. Without the borrowing plan, the cash freed up for deferred maintenance repairs and emergency reserves will instead go into the pension system. The Mayor’s Office said it is not giving up on the borrowing plan, but will instead make the proposal on its own later in the year apart from the budget deliberations.

Goldstone said the only significant alteration that was being made to the budget was removing assumed proceeds from the $374 million loan.

“It’s probably not a proper characterization as far as numbers being changed. What’s happened, and I guess because it’s a new process, a lot of it was just cleanup,” he said.

The City Council would have ultimately been walked through any changes in the budget, Goldstone said.

“What we’re proposing to do is no different than I’ve been accustomed to in every city I’ve worked in,” Goldstone said.

In a budget analysis released last week, Tevlin also raised concerns regarding the mayor’s plan for police and fire department budgets, saying in her analysis that not filling a large number of positions accounted for $24 million of the proposed $37 million in boosts to the public safety. She said it would be more accurate not to count such so-called “vacancy savings” as part of the boost in funds for the public safety departments.

The Mayor’s Office said that considering recruiting problems nationally and locally, such high vacancy savings were reasonable.

In order for Sanders to bring the borrowing plan again before the City Council, the city will need to regain its credit rating, which has been slashed and suspended in the last two years because of questions surrounding the veracity of its financial reporting to investors.

City leaders have been awaiting the completions of related investigations and audits for two years in order to issue bonds for the pension system. The investigations and audits have been beset by consistent delays and cost overruns.

andrew.donohue@voiceofsandiego.org

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