When I launched my campaign for City Council I did so understanding that the city faced its greatest financial crisis in its history. I knew addressing the financial problems would be tough, but I and others were willing to do it.

Since that time, the economy has tanked — and our local tax revenues are beginning to slump. What’s worse, the federal and state governments are likely to cut back on funding for local governments. With the investment market in turmoil, expect to see the SDCERS pension liability grow due to investment losses.

In short, we can expect a really tough time for the city and its budget in the next several years.

So what should the city do as these financial problems mount?

In August I joined with Councilmember Kevin Faulconer to suggest to the Mayor and the City Council that the city draft and act on a Mid-Year Spending Reduction Plan. You can read the full memo here.

As revenues fall with a slower economy and the state budget cuts come down, it is essential that the Mayor and the City Council take immediate action to curtail expenditures by a commensurate amount to maintain a balanced budget. Any delay in spending reductions will only make it more difficult to achieve a balanced budget later in the fiscal year.

At the same time, the city’s reserves have already been tapped to fund mid-year expenses from FY 2008. Any additional unbudgeted mid-year expenses in FY 2009 would further draw down city reserves. To prevent this, the City should implement a “Pay-As-You-Go” funding approach for any unbudgeted mid-year expenses for City Council offices, all City departments, and litigation initiated by the City Attorney.

The response to the memo? Delay — and zero action by the Council.

The Council won’t even receive a report on this year’s tax revenues until November and may not even take action then. I do credit the Mayor with achieving $4 million in cuts with a hiring freeze, but the budget process should include action by the City Council.

We need only look next door to our city to see a different example of fiscal discipline. Citing the sluggish economy and state budget cuts, the City of Poway trimmed its budget this past week. It understands the need to be pro-active.

We see the irresponsible way the state government pushed off balancing its budget for real — meaning bigger cuts are likely in store for our city next year. We read more and more every day about the economy faltering. Yet the City of San Diego is taking a “wait and see” approach.

I’m frustrated and concerned — are you?

— CARL DeMAIO

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