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Wednesday, Oct. 15, 2008 | In what was essentially an emergency State of the City address, San Diego Mayor Jerry Sanders on Tuesday warned city residents of significant, perhaps even drastic, service and program cuts — and he said they are coming soon.
Current projections show the city $43 million in the hole just three months into the fiscal year as the plummeting economy continues to hit the city’s three main revenue generators — tourism, sales taxes and property taxes — as hard as they’ve been hit in decades.
“These are uncharted waters, and I don’t pretend to know where the economy is heading,” Sanders said to a packed ballroom at the Kona Kai Resort and Spa on Shelter Island. “But I can say this — we almost certainly will need to curtail programs and close facilities that enjoy broad public support.”
Sanders offered little in the way of specifics as to what programs and services are on the chopping block, instead laying out broad promises. He would only say that the cuts will be made “without damage to our city’s core services,” adding that police and fire budgets will be spared.
The administration will present a package of cuts for the fiscal year — which began July 1 and runs to June 30, 2009 — to City Council in early November, with the expectation that they will be voted on by mid November. He added that until the economy shows signs of improvement he will veto any council action that increases spending in non-essential programs.
“At this moment I can’t speak to its content,” he said of the budget proposal, “but I will attest to its character: It will meet the problem head-on. It will tell the public the truth. It won’t flinch from the tough decisions before us.”
The speech, delivered to a fundraising luncheon for the San Diego County Taxpayers Association, had the build-up of a State of the City address, the annual January event in which the mayor lays out the year’s agenda. In Sanders’ first three years in office, the State of the City was his only major annual speech. He was re-elected in the June primary.
It had, in some respects, the feel of a Depression-era FDR speech. While talking of the courage and tough choices that will be needed to get through the current economic turmoil, Sanders also highlighted public works projects that he said will strengthen the city in the long run.
He reasserted his commitment to revamp Lindbergh Field, expand the San Diego Convention Center downtown, build a new City Hall and urged San Diegans to cut their water use by 10 percent as mandatory conservation appears imminent. And, for the first time, he offered to be a leader in the Chargers’ quest for a new football stadium.
With an eye on the Nov. 4 election, Sanders also lobbied voters to pass the fire-protection parcel tax Proposition A and stressed the need for allies in the City Attorney’s Office and the City Council.
He made a point to recognize the presence of Councilman-elect Carl DeMaio, a tenuous mayoral ally who made budgetary reform the centerpiece of his successful run for the District 5 seat, but has opposed the building of a new City Hall. DeMaio said Tuesday that he would follow Sanders’ lead and call for an across-the-board 5 percent cut of City Council’s $12 million budget.
The speech, for which the Taxpayers Association charged $45 admission for nonmembers, had been on Sanders’ calendar for several weeks. It was looked upon by the administration as an opportunity for the mayor to tout his successes and present his vision for the city ahead of the election. However, both the speech’s tone and content began to change significantly last week as officials began to get a handle on the severity of the budget deficit and the larger global financial crisis.
“The world has changed dramatically in the last few weeks, and these changes dictated what was going to be included in the speech,” said mayoral spokesman Darren Pudgil.
Sanders began with unscripted remarks on meetings he had this week with city employees about the new economic realities. “I told them we’re in a time probably none of us remember — none of us have seen the chaos we saw over the last three weeks,” he said.
“As a community, as a nation as a world, we are going to have to do things differently, we are going to have to take care of each other. And we are going to see courage all over; we are going to see it in families, we are going to see it in institutions, we are going to see it in places we never expected.”
He then pledged to build on reforms from his first term that he said have made the city stronger and better able to handle the economic storms ahead. Among other things, he highlighted the elimination of 700 city jobs, a significant dent in the city’s structural deficit and pension reform. He also talked about millions in savings from new-found efficiencies by San Diego lifeguards and the Police Department.
Sanders, however, acknowledged that the city may pay dearly for its four-year long exile from the public bond market following the pension scandal. Earlier this year the city regained its credit rating, and in 2009 will have to float $500 million in bonds to fund court-mandated water and sewer projects that could not be funded while it was banished from Wall Street.
Yet the worldwide credit crisis has city officials worried that at best borrowing costs will be high; at worst it may be impossible to find investors willing to bet on municipal bonds. The city had already been gripped for the last four years by a financial crisis at a time when many other governments nationwide were flush with cash from the housing boom. Now, just as it seeks to conquer its serious financial troubles, it is doing so in a climate much different than in years past.
Before the recent global economic meltdown and the $43 million, the city had projected structural deficits going out years into the future and is already preparing for a deep deficit in the 2010 fiscal year.
“The economic calamity that began on Wall Street is now hitting us at home, making us work harder to attain our goals,” he said.
Nonetheless, Sanders didn’t hesitate to promote an expensive expansion to the San Diego Convention Center, a proposal to build a new City Hall and Proposition A, which seeks to increase property taxes countywide to fund $50 million in firefighting equipment upgrades.
He characterized this spending as investments that “we must make to secure our financial future.” He added a caveat regarding the City Hall proposal, saying he is not yet satisfied with an analysis showing that the city would save money by building a new City Hall rather than continuing to lease office space.
Perhaps Sanders’ most surprising comment was his offer to be a leader in the effort to build a new stadium for the Chargers football team. Since he took office, the mayor has largely stayed out of the stadium issue, saying that he had more important issues to deal with such as the city’s financial crisis.
He said he supports efforts to locate the stadium in Chula Vista. “But if those discussions don’t pan out, it isn’t the final chapter. Other options can be explored, such as a regional approach to accommodating the Chargers, and I’m willing to be a leader in that effort,” he said. But later he made it clear city dollars would not be spent on a new stadium.
The speech, which had several light-hearted moments, was well received by the largely Sanders-friendly audience. He drew hearty laughs when he talked about his personal water conservation efforts, which include shaving over a sink instead of in the shower.
Although he said afterward that he “didn’t want to make it a political speech,” he did take swipes at City Attorney Michael Aguirre and the city’s labor unions. Aguirre was the butt of his biggest applause line: “I need a city attorney who is a problem-solver, not a problem.”
Beyond DeMaio, the audience members included Councilmen Kevin Faulconer and Jim Maddaffer, and council candidates Marti Emerald and Phil Thalheimer. All, including the Democratic Emerald, gave the speech high marks.
“It was very direct and straight forward,” Faulconer said. “I appreciate the sense of urgency.”
Donald Cohen, head of the left-leaning Center on Policy Initiatives, credited Sanders for backing such projects as the Convention Center expansion, but said he should be careful about making drastic budget cuts in a downwardly spiraling economy.
“Those are the kinds of things we need to do,” Cohen said. “But how do we staunch the short-term bleeding so we don’t decimate city services, increase unemployment and further weaken the economy?”