The Morning Report
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With just five weeks to go before Election Day, backers of Proposition D are endorsing a major overhaul of the financial reforms guaranteed by the ballot measure.
The overhaul, developed by a task force of local business leaders, seeks to tighten substantially Prop. D’s fiscal reforms, freeze city spending and commit future budget surpluses to paying down debt and bolstering reserves. Doing so, the report said, would end the city’s ongoing budget deficits. Also, it could convince skeptical business leaders to endorse the ballot measure.
The report argues Prop. D, which would temporarily increase the city’s sales tax by a half-cent after the city implemented 10 cost-cutting reforms, won’t solve the city’s financial problems as is.
“There is not a chance in hell of Prop. D passing if they don’t do some additional work,” said Vince Mudd, the task force’s head and incoming chairman of the San Diego Regional Chamber of Commerce. “I’m not saying it’s only these three things, there may be five things they have to do. But if they don’t do these things that we’ve shown, I don’t understand why anyone would vote ‘yes’ on it.”
Neither, apparently, do Prop. D’s backers.
Two council members who support Prop. D immediately requested Council President Ben Hueso put the report and its fiscal targets on the City Council agenda as soon as next week. Mayor Jerry Sanders, who is in Washington D.C. this week, released a statement calling the plan the “missing piece” in the Prop. D debate: a clear and definitive plan to end the budget deficits that have dogged City Hall for years.
It took a group of business leaders, not any city politician or other official, to develop one. Mudd said his group believed the vast range of potential savings associated with Prop. D reforms neither provided enough certainty to voters, nor guaranteed that the measure would fix the city’s problems.
The annual savings estimates associated with Prop. D reforms range from $626,000 to $85.5 million. Mudd said the gulf was too vast to be meaningful.
“If you wanted to go buy something from someone and they said it was going to cost between $100 and $1,000, you would just walk out of the store,” he said.
The task force’s recommendations make that gap much smaller. The report calls for guaranteed reform totaling $73 million annually. Additionally, it says that no more than $20 million of the $100 million in expected new tax revenue a year should go toward restoring services, such as library hours and fire engine closures. Most of the remainder, the report argues, should pay down debt and improve reserves.
But at such a late date, anything above the minimum savings level couldn’t be tied to the ballot measure. Instead, it would represent a spoken promise on the campaign trail. Backers hope that would be enough to help the proposition garner broader support from the business community. Currently, the ballot measure’s most prominent endorsements are from the mayor, the City Council’s six Democrats and city labor unions.
Hueso’s office confirmed he would put the task force report on the council’s agenda, but gave no further details on the date or the substance of the discussion.
It would be stunning if the council and the mayor embraced the report in its entirety. The recommendations go far beyond anything they have proposed to fix the city’s financial problems before.
The report, for example, doesn’t include any salary increases for city employees through 2021. It also relies heavily on savings from privatizing city services, a path long resisted by city leaders.
These issues are sure to cause concern for city labor officials. Both the city’s white-collar union head and fire union head declined comment on the report Monday because they hadn’t yet read it.
Murtaza Baxamusa, an analyst at the left-leaning Center on Policy Initiatives, calculated about 40 percent, or $300 million, of the $745 million in savings estimated by the task force comes from privatization.
“The problem is not specific to (the) analysis, rather it is endemic to the theory that privatization is the silver bullet that will magically solve the city’s structural revenue problems,” Baxamusa said.
Mudd, the owner of an office interiors firm, argued the city needed extensive privatization because city worker retirements cost too much. Further, Mudd said, attempts to roll back previously granted benefits have failed in the court room.
“If you can’t unwind the benefits, then you have to eliminate the number of people who are receiving and who are going to receive what might be a very rich benefit,” he said. “The only way to do that is to shrink the size of the city of San Diego’s workforce.”
At a press conference Monday morning, Councilwoman Donna Frye and Councilman Todd Gloria, Prop. D proponents, did not speak to those issues. They preferred to tout that the $73 million in cuts was within the range of savings already estimated that could come from Prop. D.
Frye said she endorsed the report and its savings targets. But, she added, the city could hit some of the savings targets through other means than those identified in the report, such as refinancing debt.
The report comes on the heels of last week’s Chamber of Commerce decision to postpone its endorsement of Prop. D until Oct. 7 at the mayor’s behest. Sanders said he wanted the council to address the task force’s recommendations before the chamber made its decision.
One of the themes in the Prop. D debate so far has been trust. Sanders and other proponents have argued that voters need to trust them to make substantial reforms as part of the ballot measure.
But the problem is, Mudd said, no one appears to be in a trusting mood. He believes there needs to be more guarantees.
“This is just a bad time to try to trust anybody,” Mudd said.
Please contact Liam Dillon directly at liam.dillon@voiceofsandiego.org or 619.550.5663 and follow him on Twitter: twitter.com/dillonliam.