On July 12, a San Diego Union-Tribune editorial basically conceded the city’s legal case against the massive billions of pension debt. The U-T instead seems to believe that the billions in deficit can be addressed by doing little more than changing around the labor paperwork along with freezes, furloughs and imposing a new different pension plan for new hires.

I’m not convinced the U-T is right in its assessment of the city’s case in Superior Court. I do, however, think the city would be better off in a federal bankruptcy court, with universal jurisdiction among other benefits, if it is really serious about resetting its financial condition. But, since none of the electeds, nor our most widely distributed daily newspaper, nor our powerful municipal union organizations will consider that option, it’s time to take a hard look at the real consequences and options.

Certainly we will be selling off our stuff, and we have done some early selling of our tobacco revenues for the next 20-plus years. Those funds would have gone into city services, but now will not. And, we are still $2 billion-to-$3 billion short. So, we will be selling other stuff, too. “Excess Land” will be one (I love the concept that we have a bunch of land that is an irritant to us – it’s excess – so we can improve our well being by getting rid of it into the pension hole). But, in fairness, everybody knows that won’t come close to being enough either.

The U-T thinks that a five-year salary freeze for municipal employees is a good idea. The cops have been frozen for some time, and I’m not sure that is working out so great. And, a general accounting course would suggest this might not be enough to really solve the billions of dollars problem. Besides that, the separate assumption of the “freeze” concept is that after the five-year period, there will never be a “catch up” for the five years lost in sub-liquid temperatures. Not certain how realistic that suggestion is. And, of course, there is the “new cheap” pension system for new hires with no defined benefit element. Exactly what was implemented in 1981 and failed a few years later. We don’t learn a lot from history down here.

No my friends, what is coming at you is a tax.

I know, I know. We don’t talk about taxes.

But, if we don’t talk about real fixes, we need to be talking about real taxes.

Fortunately, we have some folks willing to help us in promoting this approach. Tony Perry of the L.A. Times regularly demeans San Diego for its anti-tax sentiments and implies that if a more worldly approach were adopted, we could pay this monster off by just raising taxes and “spreading the problem out” over an undisclosed number of years. I’m not saying he is wrong. But if it’s a rational period of time like the 15 year period passed last year as Proposition G, it is going to cost an additional several hundred millions in taxes every year for the next 15. If it’s the “15 year rolling” plan we hear so much about, it will take about 300 years. So that might not be the best option either.

Ann Smith, representative of the MEA has come up with a good idea. That is to impose a “pension tax” on all real and personal property in San Diego. That way, no matter what pension promises the politicians make to the municipal unions, the assets of all San Diego citizens will automatically be obligated to pay for it. She believes this could be done without a vote of the people. And, she believes a court will compel the city to impose this tax even if the people would be otherwise unwilling to do so. That would, of course, be ideal as any effort inclined this way from an elected official would likely be seen as a resignation speech.

But, I don’t think we want to cut this off too soon. The idea is at least genuine, and unlike “other ideas,” including those above and the Gleason underfunding settlement, Smith’s idea would actually work if it were imposed.

So, I suggest that we at least run the numbers of what each citizen would have to pay under this tax proposal. What would it cost to finance out $2.5 billion dollars over 15 and 30 years? And how would that be spread out among homeowners, renters and businesses? You would want to know that, wouldn’t you? It can’t be that much, can it?

I think when we see what the real cost of actually dealing with what this deficit is, we may be able to refocus our collective wisdom toward the right path. And, if that happens, it will be Ann Smith that will have done everyone a great service.


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