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The city of San Diego’s financial crisis has been the albatross that’s saddled Mayor Jerry Sanders since he entered office in late 2005. It again weighed upon the mayor Wednesday night at his annual State of the City address delivered at downtown’s Balboa Theater.
“This structural deficit — the imbalance between the public’s expectations of their city and the revenues that sustain it — was allowed to grow for decades,” Sanders said. “It has deep roots.”
Those roots have grown deeper due to a national economic recession and money grabs by the state government. On Wednesday night, Sanders promised a plan to solve those problems once and for all, offered up his most extensive comments yet on the new Chargers stadium plan and said he plans on using his office to spur job and economic growth.
He delivered little in the way of new budget fixes, though his message was a marked change from those earlier in his tenure — in the past San Diego’s city government was the problem, now it’s the solution.
In his speech, Sanders acknowledged the persistence of San Diego’s fatal flaw: The city collects less money than it spends. But he argued the city government’s role has turned from a national embarrassment in failure to a nationwide leader in fiscal change.
The mayor ticked off a series of reforms shepherded by his administration that improved the city’s financial situation.
He’s cut more than 1,000 positions from the city’s budget, forced 6 percent wage cuts on city employees, slashed pension and retiree health care benefits for new hires and closed a $200 million budget gap in December, six months before the city’s deadline. The result is the lowest number of city employees per capita in four decades.
But none of these reforms have altered San Diego’s fundamental financial situation, as noted recently by diverse sources. Last week, the Office of the Independent Budget Analyst outlined 11 guidelines for long-term budget solutions, many that reject one-time fixes used to close the deficit in December. Also last month, a task force made up of the mayor’s own business confidants said the city risked insolvency if it didn’t institute a series of radical reforms.
More change, the mayor said, is coming. But in his speech he asked for 18 months before releasing a plan to end on-going budget deficits. That timeframe leaves him with only 18 more months before he’s out of office.
Still, Sanders rejected calls for the most drastic sort of fiscal reform. Arguments for municipal bankruptcy, he said, were “extremist” and “simplistic.”
“This isn’t a job for salesmen or sloganeers,” Sanders said. “It isn’t glamorous. It’s work.”
After the speech, Councilman Todd Gloria said he hoped the mayor would have offered more budget specifics. Everyone, Gloria said, knows that the solution will be a combination of outsourcing, more efficiencies, service reductions and new revenues.
“We just need to give it to the people sooner rather than later,” Gloria said. “We don’t have a great deal of time and my general sense is people are really tired of the continual story line of San Diego being out of money.”
Throughout Sanders tenure, he has harkened back to the failures of past administrations to speak honestly about fiscal problems. He did so again Wednesday, digging up the infamous New York Times “Enron-by-the-Sea” headline to contrast with the city’s current approach to finances.
But Wednesday, state government and other municipalities wore more of a bull’s eye than past city leaders. Both the state and other governments haven’t acted to fix their fiscal crises, and San Diego is “a model.”
“We are beginning 2010 on a strong footing,” Sanders said.
In an interview after the speech, he said while he was unaware if other governments were using San Diego as a model, they should.
Football Stadium Solution
Sanders used Wednesday’s address to make his first extensive comments on the proposal to build a new downtown stadium for the San Diego Chargers football team, a plan that Sanders said could see the ballot in 2012.
The mayor’s argument was based on economics. A new stadium would need to solve the city’s money-losing problems at the current site in Mission Valley and continue redevelopment efforts in downtown’s East Village community. If true, the Chargers deal would have to overcome the research from a cottage industry of academics who have found that football stadiums rarely spur redevelopment.
Sanders also made a bold pronouncement on his administration’s ability to negotiate a better contract with the Chargers than previous city leaders. Their deals with the football team resulted in the city losing millions annually.
“If there is a deal to be made in which both the taxpayers and the Chargers come out a winner, this is the city that can find it,” Sanders said.
Asked after the speech about his plans to do better than those before him, Sanders said the city’s new system of government gives the Mayor’s Office more power and he trusts his administration to make a good deal.
“I think it’s a new day,” he said.
Sanders devoted much of his speech — and committed the rest of his term — to job creation. The mayor emphasized making San Diego a clean technology hub, a point he made last year as well. These jobs, Sanders said, are middle class and growing.
“I am using my office, and its resources, to invest in an emerging pillar of our economy,” Sanders said. “And I will not rest until San Diego is synonymous with clean technology.”
Sanders said he planned to introduce measures to City Council in the coming months to provide low interest loans that would double the size of the city’s solar sector and allow homeowners to save energy through retrofitting their properties.
“Cleantech really is right now the future and now is the time for San Diego to brand itself as a Cleantech city,” San Diego Regional Chamber of Commerce President Ruben Barrales said. “I think [the mayor is] really smart to focus on that.”
Sanders also tied a $1 billion effort to expand the city’s Convention Center to new job growth. Funding for the expansion, he said, would come from “private-sector revenue streams from the industry groups that would most directly benefit,” likely a reference to downtown hoteliers and restaurants.
There was little news on two other major building projects the city is considering. Sanders said a new City Hall and downtown schoobrary would only happen if their costs didn’t touch the day-to-day budget.