Last Thursday, Chula Vista City Manager David Garcia opened a marathon meeting about the city’s potential budget cuts. I’m trying to watch the whole thing now between tasks but I wanted to point out two things that I found pretty surprising.
As I’ve already written, Garcia is not mincing his words about the city’s financial position.
But he used some pretty striking language Thursday night. Check out his main point as he was trying to drive home the severity of the budget crisis:
What we’re dealing with today is nothing less than the fundamental solvency of the organization that is the city of Chula Vista. We cannot continue our current expenditure level and expect to remain solvent as an organization. We will be insolvent. We will have exhausted our reserves.
Now I know Garcia is going to try to pressure the Chula Vista employee unions to accept a smaller pay raise than they were expecting. And I know his rhetoric about how serious the situation is could be handy when, in the future, Mr. Garcia needs to show how good of a job he did “turning it around.”
But I watched the city of San Diego “delay, deny and deceive” everyone about its financial troubles and I watched a new mayor come in promising to fix the financial crisis, and no one — aside from the fiery city attorney — ever seriously uttered the word “insolvency.”
Even the city attorney, who’s been accused (and lauded) as being the only one to consider that the city may be insolvent reportedly fired (and then unfired) his top deputy for talking openly about San Diego’s need to go through bankruptcy.
So, Garcia may be trying to scare people, but he’s using language that means something very significant to credit rating agencies and investors in the city’s municipal bonds.
After his remarks, Garcia’s financial staff showed this chart. This is amazing:
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Last year, I asked the city’s financial staff if they were planning for the possibility that there could be no growth or development someday. After all, much of the city’s financial future hinged on development impact fees and permits. They said no, the idea that there would be no growth is unrealistic.
“Even in the worst of times, Chula Vista was still issuing 800 or 900 building permits a year,” Maria Kachadoorian, the city’s finance director told me then.
Now, look at that chart. They lowered the projections recently for this year assuming developers might only push through 600 permits this year.
And how’s that going? So far, through October, only 60 permits have been issued. At this rate, they’ll get 180 permits by June, when the fiscal year ends.