Financial Package Clears City Council. Next Up: Voters

What remained after six weeks of intense negotiations and four San Diego City Council meetings was some 4,400 words read in 28 minutes by an assistant city attorney who stopped just twice for something to drink.

San Diego voters will choose in November whether the city will increase its sales tax by a half-cent for five years once a series of retirement benefit and outsourcing reforms are met. The decision came after city leaders worked to cobble together enough political support for a ballot measure in advance of Friday’s deadline to put items before voters in the fall. Six council members, the minimum needed, voted Wednesday in favor of the package.

“This means we’ll get a lot of reform in San Diego,” said Mayor Jerry Sanders, who signed off on the plan just Friday. “It’ll lead to the road to financial stability.”

The road to Wednesday’s vote was bumpy. The process became so rushed that the entire financial reform package had to be read out loud to comply with state public notice laws. Assistant City Attorney Mary Jo Lanzafame did the honors.

“Kick back and think in terms of Thomas Jefferson and everyone else,” City Attorney Jan Goldsmith quipped before Lanzafame began. “This is the way they used to do it.”

The ballot measure represents an attempt at a compromise solution to San Diego’s underlying financial problem: The city doesn’t collect enough money to pay for the services it provides.

Backers hope the package pairs enough cuts to city expenses for voters in a famously tax-averse city to approve raising the sales tax from 8.75 percent to 9.25 percent. The cuts must come before the sales tax increase would go into effect.

Public support for the ballot measure initially came from the council’s six Democrats and organized labor. But then Sanders, a key ally of the business community, gave the package his blessing. All expressed fear the city would continue to cut fire and police services to close an ongoing, more than $70 million budget gap unless the city had more money. The sales tax hike would raise an estimated $100 million annually.

Since Friday, Sanders has lobbied for the support of two major business organizations, the San Diego Regional Chamber of Commerce and the San Diego Regional Economic Development Corporation. Both groups spoke in favor of the ballot measure for the first time at Wednesday’s meeting.

“We have been involved in the discussions and are pleased to see the fiscal reforms take center stage,” said Tom Wornham, the chamber’s chairman.

But both the chamber and the EDC said they could not endorse the package until they knew how much money the cuts required by the ballot measure would save the city.

For some, the reforms already are nothing more than window dressing. Councilmen Kevin Faulconer and Carl DeMaio, the council’s two Republicans, railed against the measure. DeMaio pointed out the city has met one of the reform targets, requesting qualifications from private companies to outsource the city’s Miramar landfill.

“What money have you saved by checking the box on that reform?” DeMaio asked the city’s chief operating officer, Jay Goldstone. “It’s a very simple question.”

“The reform that’s called for here is to begin this process,” Goldstone replied. “We’ve begun the process. We plan on completing it. When we bring the proposals to the council we will have specific savings identified.”

Other reforms, such as reducing the city’s $1 billion unfunded retiree health care liability, remain imprecise. The city will have met that requirement if costs are cut by just $1, though backers insist the intent is for dramatic change.

Evaluating the reform triggers falls to Eduardo Luna, the city’s independent auditor, who undoubtedly will face pressure from both sides to decide if the city has met its requirements. No tax increase can kick in until he signs off.

Luna’s role was one of the key matters solved during Wednesday’s meeting. Goldsmith, the city attorney, led much of the discussion as it involved legal intricacies in writing the ballot measure. Goldsmith has called the proposal unprecedented, saying he could not find any other tax increase contingent on substantive reforms.

During the meeting both DeMaio and former City Attorney Mike Aguirre, who spoke against the ballot measure during public comment, referenced possible lawsuits against the plan now or in the future.

For now, though, legal concerns are taking a backseat to political ones. Councilwoman Donna Frye, the plan’s chief architect, moved to give Luna the sole right to determine if the reform triggers had been met, instead of having the council approve the auditor’s determination. After the meeting, Frye said she made that decision to address concerns from Councilwoman Sherri Lightner about independent vetting. Goldsmith had advised that leaving the council out of the determination was the riskiest option legally.

But before Luna’s opinion matters, voters will have their say. Right as Wednesday’s meeting was concluding, a new independent survey sponsored by KGTV was released showing 66 percent of those polled against a sales tax increase tied to reforms.

The city’s police and fire unions have committed to backing a campaign in favor of the financial package, and Sanders indicated he would help rally support. Fire union officials estimate the campaign will cost $750,000 to $1 million.

Still, that talk is now shifting to a campaign shows the lengths the city has come since late June. That’s when word first leaked that the mayor was considering a tax increase as part of a financial reform package. Since then, the mayor declared the tax increase dead, and so did Council President Ben Hueso, who had revived the idea after the mayor had given up.

Ultimately, Frye led the negotiations that led to the accord being reached Wednesday, the last, best shot for both her and Sanders to make good on promises to fix the city’s finances made when they squared off for mayor in 2005.

But even Frye concedes that if voters pass the ballot measure, the city’s financial woes won’t be solved. That shouldn’t take anything away, she said, from what the council and mayor achieved in such a short time.

“Do I think it is the end-all and be-all and it will make everything better? No,” Frye said after the meeting. “Do I think that under the current reality, under the current situation of what is legal and not legal, under the current time constraints that we have had, that this is the best package we could put together? Yes, I do.”

Please contact Liam Dillon directly at liam.dillon@voiceofsandiego.org and follow him on Twitter: twitter.com/dillonliam.