Wednesday, Feb. 27, 2008 | Last week, when City Council President Scott Peters announced his bid for city attorney, he declared that the city’s employee retirement system was in “shipshape condition.”
We’re glad he’s happy with things. But while he began preparing for a parade, he and his colleagues on the City Council had a new report on their desks.
In the Feb. 14 report, the City Council’s independent budget analyst declares — with uncharacteristic authority and alarm — that the city is suffering from a “structural deficit.”
“Unless clear, decisive, and long-term solutions are implemented, municipal services will continue to erode in the future,” wrote Andrea Tevlin and her staff at the Office of the Independent Budget Analyst. She goes on to list the dozens of services that have already been shed in the last few years.
Tevlin’s declaration, though not timely for the councilman, confirmed the basic premise behind the collective outrage this city’s residents have felt about the pension scandal for years: It was never about the threat of the retirement system going broke. The employees’ pension fund was guaranteed to receive as many assets as it needed to pay legitimate benefits.
What worried residents was the burden the city would have to bear in order to bail the pension fund out. It was, in fact, the same fear that motivated Peters years earlier when he and his fellow members of the City Council desperately sought a way to avoid the burdens of the city’s retirement system by, bizarrely, adding to the benefits of employees in exchange for relief from the obligation to pay for them. Every dollar that went to shoring up the pension system couldn’t go to streets, libraries, parks, or pet projects.
Yes, when the president of the City Council trumpets the incremental improvement in the health of the pension system, it may be a relief to the retirees and city employees. But residents can be excused if they don’t share in the enthusiasm.
The burdens of those past decisions are becoming ever clearer.
As Tevlin and her staff found, the city has experienced chronic deficits over the past several years. This is “striking,” she notes, because the last several years have seen robust revenue growth as the result of a strong local economy. Now as the economic cycle heads in the opposite direction, one can only wince about the possible implications ahead.
In an interview, Tevlin accentuated the point: “The community is able to understand budget cuts when you’re in a down economy. But when you’re still making cuts in a good economy, what’s going on?”
What is going on? Tevlin refuses to pass judgment on the levels of city benefits for its employees — “we have to stay competitive,” she said. But she enumerated what she says are obvious signs that the city is simply unbalanced. All cities, for instance, must deal with occasional annual deficits caused by a slowing economy or an unexpected loss of revenue. The city of San Diego, however, has been persistently in the red.
“In general, a structural deficit is defined by a situation where ongoing expenditures consistently exceed ongoing revenues,” Tevlin’s reports reads.
To fix a structural deficit, you must structurally change the city.
The city’s leaders somehow found a way over the last several years to take robust revenue growth and still leave the city reeling from persistent budget deficits. The mayor and council have finally begun addressing the looming liabilities of retiree health care and deferred maintenance.
While Peters did not return a call for comment on Tevlin’s report, the Mayor’s Office acknowledged her central finding.
Spokesman Fred Sainz said the mayor had done more than acknowledge it, in fact.
“If anything, not only have we added transparency and revealed the full extent of the structural deficit, but, by being as aggressive as we are in exploring it, we have more than likely increased it. It is now a reflection of reality,” he said.
While it is refreshing to hear that some are acknowledging the reality with their rhetoric, it is one thing to recognize that you have a debt, a deep imbalance actually, and quite another to actually come up with money to pay it.
And this is where the mayor falls short. Again, he remains loyal to his plan to solve the chronic problem without either raising taxes or dramatically cutting services. Yet if Tevlin’s report makes anything clear it’s that the city is simply running out of
temporary solutions to the problem. She lists more than a dozen one-time budgeting tricks the city has used to stay afloat since 2003.
There’s not many tricks left for the city’s books.
The mayor might have been willing to acknowledge the problem but he has been decidedly unwilling to seriously communicate the consequences of it. And even when grappling with the structural deficit, the Mayor’s Office left out the possibility of wage increases for employee groups when estimating how large deficits might grow in the coming five years.
The mayor, however, has clearly communicated that at least police officers if not other employee groups can expect some kind of wage increase.
As election season heats up, many claims will be made about the city’s financial health. And it took courage for Tevlin’s team report in no uncertain terms that no matter what is said, the city’s burdens have left it fundamentally imbalanced.
City officials may be “shipshape” but somehow, the ship is sinking.