The day San Diego City Councilman Carl DeMaio was elected, I warned that he could either become a leader unlike any we’d seen in town, or he could fail politically, in the way the former city attorney, Mike Aguirre, did.
He has a lot of the same traits of Aguirre: He’s very smart. He works long hours. His ambition hits you like strong cologne the moment you meet him. And best, and worst, of all, he has a tendency to say things and make bold, combative statements without thinking through the consequences.
Unlike Aguirre, though, DeMaio isn’t a charmer. Even when his prospects were dimmest, his reforms and fights in the trash, Aguirre could still make his rivals laugh. But what advantage Aguirre had in humor, DeMaio has in discipline. And even though the mayor has tried to ostracize him — even call him “Aguirre” as though it were an insult — it has not caught on completely. DeMaio has not lost his chances to succeed.
He is simultaneously trying to win the respect of the establishment while lampooning it. It’s no accident that both the labor unions and the mayor can’t stand him. He’s working hard to outsource many city services, reduce employee benefits and crush major projects like the effort to build a new City Hall and Central Library. While he’s not fighting the push to build a major expansion to the Convention Center, he’s pointedly questioned it.
This will be a big year for De Maio. Like about a dozen others, he’s considering a run for mayor. Aguirre’s ambitions were halted when he tried to be a populist who turned out not to be very popular.
Where is DeMaio’s base of support? A cadre of nerdy, idealistic fiscal conservatives has found inspiration in him. Neighborhoods might see an ally in someone unwilling to support major downtown projects when hyperlocal infrastructure is deteriorating. We’ll be watching to see.
I had a few questions for him going into 2010 and here are his responses. Remember, to catch up on what I’m doing, you can read the intro here along with the interviews with: Marco Li Mandri, Marco Gonzalez, Lorena Gonzalez, Dianne Jacob, Gil Cabrera, Tom Shepard and Walt Ekard.)
You have posited that you believe there are employee retirement benefits that the city could try to get rid of outside of bankruptcy. You hailed a recent court decision rescinding benefits for some individual heads of employee unions. What, specifically, do you think can be changed?
I’m focused on pension reform for one simple reason: until you fix the pension system, the city’s financial health will never be restored. All you need to do is look at the actuarial projections to see that the pension costs are completely unsustainable. My office has compiled a laundry list of pension reforms that fall into the following categories:
a) reducing the pension costs through benefits reform (new hires and existing employees)
b) reducing the pension debt through reforms that achieve actuarial savings (managed competition, salary freezes, reductions-in-force, etc.)
c) achieving savings in other parts of employee compensation to pay down accrued pension liabilities, (increasing employee contributions, eliminating supplemental pension contributions, etc.), or
d) combination of all of the above.
In October, I joined with Councilmember Donna Frye in a bipartisan call for a thorough legal review of all pension benefits to determine which are indeed vested and which may be renegotiated. In that proposal, we laid out four possible reforms — and I recently released a memorandum outlining nine more possible pension reforms.
Recent court victories by City Attorney Jan Goldsmith — and other pending court cases — give us optimism that several reforms to existing pension benefits can indeed be implemented.
There are also a number of immediate pension reforms we can make in the next 18 months to save taxpayers money.
First, we must do more to reform pensions for new hires. In 2008 I supported the creation of a new pension plan for new hires, but it did not address pension reform in police and fire. Those two categories actually have the most expensive pension packages. Some are saying we have reformed pensions for all new hires, when in fact we need to go back and finish the job there.
Second, we need to finish the job of reforming two discretionary pension perks: the “employee offsets” program and the Supplemental Pension Savings Program (SPSP). In January 2009, I proposed to eliminate both of these costly programs, and through labor negotiations, we were able to eliminate these perks for some city employee groups.
Unfortunately, several unions negotiated retention of these special perks. Through tough negotiations in 2010 and 2011, city leaders can finish the job of eliminating these pension sweeteners — saving more than $25 million annually.
Third, there are a number of pension reforms that city leaders say they have achieved, but in fact have not fully implemented — such as making the DROP program “cost neutral.” Several employee groups still have “terminal leave” where they accrue pension service credits after they retire — based on their vacation payouts.
Given that what I’m outlining above is just the tip of the iceberg in pension reform, it baffles me that some city leaders are so eager to take further pension reform off the table by blindly citing “vested rights” as a catch-all excuse. Financially, that path would be disastrous for our taxpayers — and legally it is inaccurate.
Let’s say all the city’s unions came to you and said: We’ll agree to freeze compensation for several years OR lower it significantly. We’ll agree to put retiree health care funds into a defined contribution trust and slash the liability. We’ll agree to managed competition just the way you prefer it. We’ll do all of this if you agree to support a new fee on trash pickup and stormwater service. Would you take the deal?
If they approached me with those offers, they would certainly get my attention — and my willingness to help put together a comprehensive package to make a deal happen. And I’d be willing to put a lot of things on the table.
I do not think that tax and fee increases should be part of a comprehensive package — and I would work to show the labor unions how we can fix the city’s financial problems without them.
If we want to grow revenues, the best way to do that in a sustainable way is to get San Diegans working again. That’s why any package we agree to must be consistent with giving San Diego a more jobs-friendly economy and helping San Diego’s working families make ends meet. As we start seeing glimmers of hope for an economic recovery, tax increases would be the worst thing right now.
You’ve cast yourself as a reformer challenging the establishment. What defines the establishment to you?
The establishment is a small group of powerful individuals in business and labor unions who actually think that a small group of elites should make the decisions for our community. They look down on public involvement — and the policies they advocate reflect that lack of public involvement (e.g. putting a new City Hall before neighborhood infrastructure.)
In fact, Malin Burnham recently summed up the attitude of the establishment when he publicly stated the general public should not be given the right to vote on a new City Hall because they are too ignorant to understand the issue. Mr. Burnham stated publicly what many in the establishment privately believe.
Reformers are focused on “meat and potato” issues of making city government work again on the basics: neighborhood services, infrastructure, etc. Hailing from both political parties, reformers tend to focus on the “geeky” issues of financial management reform, deferred maintenance, performance audits, etc.
Ultimately reformers want to maximize public participation in the process as the best way to achieve policies that reflect the core values and priorities of all San Diegans, not the privileged few.
Name one good thing that has come from the strong mayor form of government.
The best thing has been accountability. We know who to hold accountable when things go right and when they go wrong. In the old system, whenever there was “good” news the politicians fell all over themselves trying to get to a camera or microphone to take credit. When there was “bad” news, they hid in the hills and blamed the city manager.
Haven’t heard same level of opposition from you on building a new stadium with public funds as you unleashed against projects like a new central library or new City Hall? What makes the stadium different from these other major projects?
There is no stadium proposal out yet, so it is premature to make any judgments right now. We are doing what we should be doing right now: talking to the Chargers, exploring our options, getting the research, etc. The current stadium contract is outrageous to taxpayers — we are getting “hosed” and are losing millions annually to subsidize the current stadium. I am optimistic that some sort of deal will emerge from the talks. However, any stadium proposal must go to a public vote — and I believe that only a package without a taxpayer subsidy will win voter approval.
Are you having fun?
Absolutely. Public service is truly a privilege. While it does come with headaches, we are making progress on several issues and that makes it all worth it.
What decision will you be paying attention to the most in the coming year and who will be making it?
The biggest decision will be whether the mayor and City Council can reform retiree medical benefits given to city employees. The current package is completely unsustainable — as it promises free taxpayer-funded healthcare for life for city employees. City taxpayers face a $1.3 billion liability for these benefits — and the mayor and City Council recently approved a budget that intentionally underfunds this liability by more than $60 million a year.
As part of the labor contracts adopted last year, the mayor and City Council will soon enter into negotiations with our labor unions on this issue. As these benefits are not vested, city leaders have the ability to implement reforms to create a more affordable and equitable benefits package.
Who is the most promising leader in San Diego these days and what do you think he or she might do in 2010?
Hands down: Lani Lutar, president of the San Diego County Taxpayers Association. She has had the courage to speak her convictions and hold city leaders accountable for fixing the city’s financial problems. In 2009, the Taxpayers Association (driven by Lani’s leadership) has emerged as a true watchdog on financial issues — and their continued active involvement in 2010 will be key to whether city leaders make more progress on the city’s financial problems.
What else are you looking forward to in 2010?
I have four goals in 2010: 1) Make city policies more jobs-friendly, 2) Push for more pension and retiree healthcare reform, 3) balance the budget for real, particularly through managed competition and performance audits, and 4) put in place a new water rate structure that provides residents financial incentives for conservation.
DeMaio’s rank of the priority of major projects for San Diego:
You didn’t include the most important category of public works projects: neighborhood infrastructure projects — such as repairing streets, sidewalks, and public facilities. That should be at the top of our list until we reduce the city’s deferred maintenance debt.
As for other public works projects, the top priority should be projects that either have their own financing or can demonstrate a tangible economic return on investment greater than the cost of the project. At the moment, none of these meets those criteria — though I am optimistic that several proposals could emerge on the projects below that do meet those criteria, most likely with the Convention Center and possibly a new stadium.
And his rank of civic worries:
Municipal Budget Shortfalls and School Budget Shortfalls — Until you solve this one, NONE of the other issues can be addressed
Water Reliability Concerns
— SCOTT LEWIS