Monday, Nov. 20, 2006 | The mayor released his five-year financial recovery plan this week. I’ll have more on this in a subsequent post. For now, one item of interest is the amortization schedules for the pension deficit which show the entire deficit being paid off rather easily over both 20 and 30 years. These numbers are way smaller than those prepared by sdCERS former actuary Rick Roeder. So, we’ll need to take a better look.
Not “So Sorry”: When important apologies are made by Japanese business officials, they are usually accompanied by a public waste deep, full-on bow of humility. Apologizing is something of an art form in Japan. Without the right balance of humility in your words and physical presence, its clear the apology is insincere and the participant risks being treated with contempt. Recently, Sony had to recall about a million of their batteries used in computers when it was determined about 25 percent of them had the bad manners to ignite, causing burns and various degrees of other inconvenience to their users. But, in making their public apologies this time, Sony execs only bowed slightly from a seated position. Said they “just wanted to put the matter behind them.” The world knew immediately that the apology was disingenuous and worthless. Which brings me to San Diego. This past week, the city “settled” the SEC’s securities fraud claims in an inclusive document detailing the intentional financial misrepresentations made to the capital markets over the years. We got “slammed” was reported by the U-T. Another U-T analysis went on regarding the “ugly truth” of it. No big surprise as we have lived this stuff for over four years.
But, not so fast. In a moment of surprising chutzpa, Council President Peters, at the city’s press conference with Mayor Sanders and other city officials, basically declared that the settlement was really a sham. As the whole world was watching our badunkadunks publicly paddled, the council president commented that it’s not clear that any city official were culpable of anything! He basically suggested the city could have challenged the SEC in court and whooped them. So, we settle with the country’s federal securities agency, and then essentially deny the substance of the settlement within seconds of its announcement. Perhaps this was our collective demonstration of just deeply anti-social behavior, but what we as a city get from this approach escapes me. Perhaps a “no comment, or a simple “we’re sorry,” would have been more appropriate.
Dirty Deeds and They’re Done Dirt Cheap: We are about to embark on a campaign to aggressively increase all fees and costs that can be passed on to taxpayers. “Taxes” are not being openly promoted yet. Fact is, completely apart form the massive pension stink, (the SEC repeatedly describes the pension obligations as “enormous”), basic “core services” like water and sewer, are a major mess. Even though we have paid dearly for these services through fee increases over the past decade, whatever needed to be done did not get done, and the remediations of these systems needs to be paid for again. By you, again.
So you will soon hear, I think, that San Diego taxpayers are a bunch of “cheapskates” as a way of justifying the imposition of massive fee increases for basic services. You will hear that “San Diego is a low revenue city” and “San Diegan’s are cheap.”
Is that so?
Maybe. But, check this out:
- San Diego taxpayers pay for one of the most expensive/”richest” pension plans in the nation.
A. So said former pension system administrator Larry Grissom. In fact, it’s so rich that it had to be subsidized with a pension tax from 1961 to 1978. Once the pension tax was stopped with the passage of Proposition 13, the “rich” pension plan had to be stopped. And it was (for a brief period of time) and voters approved a new “cheaper” pension plan that the city could actually afford. This included a 401k, and several other supplementary defined contribution plans (SPSP, SPSP-M, and SPSP-H) and a deferred comp program. But, city employees were quietly rolled back into the rich unaffordable pension plan without voter approval resulting in the huge increase in the existing pension deficit disguised by funny accounting tricks like the conversion from EAN to PUC, the restarting of new amortization periods – “just to lower contributions” according to V&E and Navigant, and the now all too well understood illegal backloading and underfunding gambits of late.
- San Diegan’s pay some of the highest water and sewer rates in the nation.
According to the Nov. 11 U-T article by Matt Hall, San Diego “already charges some of the highest water and sewer fees among large U.S. cities.”
Water rates were increased 6 percent a year from 1997 through 2007 – that’s a 60 percent increase in your water rates in that 10 year period. And the mayor’s five year plan now recommends that be increased to 6.5 percent a year from 2008 through 2012. That’s and additional 26 percent. So from 1997 through 2007 your water rates will have increased just under 90%! And, we still have E-coli in our drinking water
Sewer rates are even worse! They’ve been increasing at a rate of 7.5 percent a year for the past decade (that’s a 75 percent increase) and the mayor’s five-year plan proposes an annual increase 8.75 percent! And our sewers and storm drains still drain into the big blue toilet bowl to the west.
- San Diegan’s are right up there in payments for Per Capita Sales Tax Revenues. The following numbers are sourced from the “City of San Diego Facilities Financing Study” Prepared for the “Strategic Framework Citizen Committee Finance Subcommittee” by Kelling, Northcross & Nobriga 8/28/02. (Compare our 2003 unaudited CAFR numbers with other cities and its getting even worse!) We’re higher than LA, Oakland, Fresno, Anaheim and Santa Ana to name a few:
Long Beach $75
Los Angles $87
Statewide $93 (According to a 5/26/06 report from the City of San Jose):
Santa Ana $119
San Diego $141
San Francisco $168.
And, in absolute Sales Tax Revenues in dollars:
Long Beach $35mm
Santa Ana $41mm
San Diego $173mm
And, in per capita Property Taxes:
Santa Ana $52
Santa Clara $53
San Jose $78
Santa Barbara $88
Long Beach $93
San Diego $118
Los Angeles $139.
And, our Permit Fees:
El Centro $22.50
Encinitas & Solana Beach $55
La Mesa $69
San Marcos $100
County of San Diego $100
San Diego $115.
And, our Transient Occupancy Taxes a.k.a. TOT:
Irvine 8 percent
Santa Ana 9 percent
San Jose 10 percent
Santa Clara 10 percent
San Diego 10.5 percent
Los Angeles 14 percent
San Francisco 14 percent.
And, our Franchise Tax/Fee Revenues (these are extra fees charged for cable TV, utilities, waste and the like n they normally get passed along to ratepayers). As the following table shows, most of San Diego’s peer group cities comply with the statutory limit of levying no more than 2 percent of gross sales. San Diego obviously exceeds that statutory limit and claims it’s exempt because it’s a “Charter City.”
Santa Barbara $1.6mm
Santa Clara $1.8mm
Santa Ana $4.58mm
Long Beach $9.05mm
San Francisco $9.4mm
San Jose $30.3mm
San Diego $38.9mm (there may be an additional $45mm? more levied on SDG&E ratepayers for “under grounding surcharge fees”.)
San Diego’s higher charges are imposed on citizens with smaller Median Household incomes:
San Jose $68,194
Santa Clara $67,269
San Francisco $49,818
San Diego $44,089.
But, San Diego charges Big Business less for Business License Taxes:
Los Angeles $319mm n per capita $83.95
San Francisco $267mm n per capita $336.65
Oakland $35mm n per capita $89.14
Fresno$11.9mm n per capita $27.85
San Jose $11.5mm n per capita $12.52
Long Beach $7.75mm n per capita $16.37
Santa Ana $6.6mm n per capita $19.02
Sacramento $5.4mm n per capita $12.92
Anaheim $4.8mm n per capita $14.38
San Diego $4.7mm n per capita $3.83.
So, as we enter into the “you gotta pay more” season because “San Diego doesn’t put out the money necessary for the services it needs,” make certain you see numbers that back that up.