The Morning Report
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A fat red number stands out in the ballyhooed report from a task force of business leaders on the city of San Diego’s budget deficits. Even with aggressive reform and new sales tax money from the possible passage of Proposition D, the city still will have a $57 million deficit starting July 1, the report says. The plan promoted as an end to the city’s deficits seemingly has no answer for next year — even though it’d balance the budget in future years.
But next year’s budget wouldn’t have a deficit if the city implemented cost saving reforms sooner than planned, said Vince Mudd, the task force’s leader. Quicker reform saves the city more money in the short term and enables the sales tax to be raised sooner. Prop. D would allow the city to increase its sales tax by a half-cent temporarily after it completes 10 financial reforms. The sales tax hike is expected to raise $100 million a year, but Mudd’s report anticipates the city collecting only half that money next year. To receive the full $100 million next year, deadlines from city and state offices would force the city to complete all 10 reforms by mid-March.
Otherwise, if Mayor Jerry Sanders and his deputies are to be believed, large deficits will require drastic action next year, like gutting public safety departments and closing libraries and recreation centers.
Mudd said he wouldn’t support saving money next year by continuing to defer payments on things such as retiree health care. Faster implementation of reform would allow the city to end that practice, he said, and balance its budget.
“We can’t get into the deferral game,” Mudd said.
Mudd also is taking issue with plans announced by Sanders’ deputy Jay Goldstone earlier this week. Goldstone said the city expects to have its next Five-Year Financial Outlook, a snapshot of city finances, by January. That’s not good enough for Mudd. He said the outlook should be released this month, so voters understand the city’s financial picture before November.
The City Council is considering recommendations from Mudd’s report on Monday. They include guaranteeing that financial reforms will save $73 million annually, spending no more than $20 million in new tax money a year on restoring services and using any surpluses to further pay down debt.
These recommendations are key to business support for Prop. D, but they also have highlighted the measure’s lack of specificity. The city has estimated it would save between $626,000 and $85.5 million a year through Prop. D’s reforms.