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Wednesday, May 31, 2006 | The budget season that concluded Tuesday with the City Council’s finalization of the coming year’s spending plan also drew to a close an early public test of both the new strong-mayor form of government and the man who fills that beefed up post.
The City Council on Tuesday put the finishing touches on a nearly $3 billion fiscal year 2007 budget that, crafted in the first months of the strong-mayor experiment, avoids the cuts of the years past to basic city services, but also fails to address the historical underfunding of the employee pension system. Public safety received boosts, though not as large as they say they needed, and parks and libraries were able to avoid the cuts on the shoulders of high revenue forecasts.
The city’s depleted emergency reserves and its long list of deferred repairs will have to wait until later in the year to see the outcome of a proposed $374 million pension borrowing plan to see if they receive noteworthy boosts.
But equally important as the final result was the process, a month-and-a-half long budget season that provided a window into how new dynamics and systems in place at City Hall would play out.
When the new form of government was being packaged and prepared, it was originally going to be sold to voters in 2004 as the “strong-mayor, strong-council” form of government until private polling persuaded strategists to go with the simpler “strong mayor” moniker.
Quickly, this year’s budget season showed why the original name was likely more descriptive of the new government structure voters approved in late 2004 and went into place at the beginning of this year. The mayor was forced to withdraw the centerpiece of his budget upon the recommendation of the City Council’s independent budget analyst – a position created as the result of the new form of government.
The borrowing plan likely would have stayed in the budget if not for the budget analyst’s suggestion, as a majority of council members have signaled their support for using loans to attempt to tame a pension deficit estimated to be at least $1.4 billion.
However, there were few public squabbles over major funding initiatives. And, pension issues barely inspired a peep among council members, aside constant concerns from Councilwoman Donna Frye that the city is not paying enough into the fund and that numbers released by the pension board aren’t reliable. Such concerns have also been regularly voiced by pension hawks, but were barely a debate in between Mayor Jerry Sanders and the council.
The mayor’s budget underwent the following substantial changes after Independent Budget Analyst Andrea Tevlin reviewed it and presented recommendations to the City Council: $7.5 million in additional funds were funneled into the city’s depleted reserves, $1.1 million was allocated to staff new recreation facilities and other funding for anti-graffiti measures.
In the end, the council approved the budget Tuesday by a 6-1 vote, though questions lingered regarding the pension funding and a proposal to put more police officers on the street. Frye was the lone dissenter, while Councilman Ben Hueso was absent.
The Mayor’s Office proclaimed victory Tuesday. Spokesman Fred Sainz said that, excluding the loss of the borrowing plan, the changes made by the City Council were minimal.
“I’d say overall that is a pretty sizable victory for a mayor’s first budget in a hostile environment,” he said.
Norma Damashek, a local activist, served as chairwoman of the community advisory on the strong-mayor transition. She said that although the structure of government has been altered, she saw few changes in city government through this budget season.
“I think it went backwards. I think we were led to believe that this mayor would stop the subterfuge of past city governments,” she said. Damashek said the council is no different.
“They are doing exactly the same thing the mayor is doing, which is to avoid owning up to the fact that we are on the brink of insolvency.”
Once the borrowing plan – which Sanders said he will bring to the council separately at a later date – was cast aside, the majority of attention among City Hall observers focused on police funding and the amount the city would plug into its pension system for the fiscal year.
The pension system this year presented the city with a bill of $162 million, an amount the mayor and majority of City Council chose to pay into the pension system. The payment has inspired outcry among close watcher of the pension system who say new mayor’s payment continues previous pension funding practices. Although it covers the city’s legal obligations, they say, the payment doesn’t cover the true cost of the pension system and will only allow the deficit to continue growing. It is estimated that at least $40 million would need to be drummed up to cover the true costs, a sum that would require great cuts among city services and other funding priorities of politicians.
“The budget we’re being asked to adopt tonight continues the underfunding of the pension,” Frye said at the council hearing Tuesday, noting that accounting methods at the pension system hide a considerable portion of the city’s annual pension costs.
She complimented the budget overall, saying it was a major improvement on years past. However, she was disappointed in the pension funding.
“That for me over the last couple of years has been the No. 1 priority – to make sure that we stop the backsliding,” Frye said. “This does not stop the backsliding.”
The number dispute sparked outcries that the true reform promised by the mayor on the campaign trail isn’t evident in his first major financial statement since taking office in December.
Sainz deflected criticism that real reform hasn’t been enacted by the Mayor’s Office through this first budget.
“Change at this kind of Herculean level that we’re talking about isn’t going to take place overnight,” he said.
This year’s general operating budget, by all accounts, was seen as somewhat of an anomaly because it benefited from a number of unique circumstances that likely won’t be around next year, such as a salary freeze for labor groups and one-time revenue bumps. Barring revenues that far exceed expectations, next year’s budget will be hamstrung by increased pension costs and employee salary increases that go into effect on the last day of fiscal year 2007.
Several council members Tuesday credited the Mayor’s Office for avoiding the cuts and layoffs of the past, and complimented the mayor and his staff for putting together a budget quickly under a new form of government.
Perhaps the largest polemic that remained was over how the Mayor’s Office enacted a proposal from the Office of the Independent Budget Analysts to put 30 police officers onto the street. The mayor originally highlighted a plan to add 30 civilian community service officers to the Police Department when he announced his budget.
Tevlin, the budget analyst, later proposed adding 30 new civilian staff to the police department to free uniformed officers from desk jobs. Sanders embraced the idea, but when it returned to council Tuesday, a number of council members expressed concern that 16 of the jobs that civilians will fill are those of community service officers, who oftentimes serve as cultural liaisons in the city’s immigrant neighborhoods.
The council returned that part of the mayor’s plan back to him for changes, with some members saying they didn’t want to lose valuable community officers. But when council members first turned to police Chief William Lansdowne to see if their proposal was doable, Council President Scott Peters reminded them who had final budget say in the strong-mayor form of government:
“This council has budgeting authority.”
Council members and city finance officials also embraced Tuesday a common desire to boost the city’s dwindled emergency reserve, which was tapped repeatedly in fiscal year 2006 in order to cover the cavalcade of bills from accountants, attorneys and consultants working on a number of audits, investigations and lawsuits related to the city’s financial crisis.
The reserves are a key indicator of financial stability and a yardstick used by rating agencies to measure the creditworthiness of municipalities.
A number of council members also expressed concern that no money had been budgeted to finance a police officer recruitment and retention plan that is being formulated and is slated for release by the end of June.
Councilman Brian Maienschein praised the work of the independent budget analyst, saying that for the first time the council received advice on the budget from someone who hadn’t proposed it. Under the old form of government, the City Manager’s Office both proposed the budget to the council and provided advice on it.
The councilman said he was willing to forgive the Mayor’s Office for what he didn’t like in the budget because of the newness of the government structure.
“This has been a unique process in the history of the city of San Diego,” he said.