San Diego City Councilman Carl DeMaio is releasing his long-awaited comprehensive financial plan at a 10 a.m. press conference Friday morning. It arrives after the failure of Proposition D, a sales tax/financial reform ballot measure DeMaio fought against.
This morning DeMaio previewed his plan at a breakfast meeting of 20 to 30 business and community leaders.
I obtained DeMaio’s presentation late this afternoon. His spokesman said he was unavailable for an interview. We’re publishing the presentation because it’s immediately newsworthy. I’ll add some observations with the caveat that, without speaking to him, I don’t know the full context.
DeMaio argues the city’s primary problems are its pension and retiree health care debts. He believes the city can reduce those costs by 36 percent, or $737 million, over the next five years.
It appears his primary methods for cutting retirement debts are eliminating retiree health care for current employees, forcing employees to share pension investment risks and salary cuts and freezes. Reductions in salary lower pension debts because employees’ benefits depend on their pay from their final years with the city.
The legal problems with these ideas are many, but they’re not impossible on their face. As we’ve mentioned, cutting retiree health care to this extent will mean lawsuits from city labor unions. Also, DeMaio is banking that City Attorney Jan Goldsmith will win a lawsuit on employees sharing investment risk — the retirement system doesn’t agree that employees should be on the hook. The city can, however, cut and freeze employee pay. Pay cuts will result in $10.6 million in immediate budgetary savings next year, the presentation said, plus pension savings.
Another significant portion of DeMaio’s plan relies on outsourcing and competitive bidding. He says the city should privatize its Miramar landfill (it’s already asked companies to bid) and potentially its information technology services (it’s already exploring this option). Also, the city should competitively bid 11 services to realize $11.7 million in savings.
Two other nuggets in the plan immediately jumped out at me. It kills the stalled new City Hall project and it redirects $3 million annually in redevelopment funds to the city’s day-to-day operating budget.
We’ll be covering DeMaio’s press conference tomorrow to fill in the gaps.
Please contact Liam Dillon directly at liam.dillon@voiceofsandiego.org or 619.550.5663 and follow him on Twitter: twitter.com/dillonliam.