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More than five years into San Diego Mayor Jerry Sanders’ tenure, the relentless spotlight on San Diego’s shabby finances continues to shine.
Fixing them has been a primary theme in every State of the City address he’s given. In his penultimate speech delivered Wednesday night at downtown’s Balboa Theatre, Sanders again promised to leave the city two years from now in the black.
But the mayor’s focus has shifted away from the glare of the present.
It is the city’s future, with its promise of big buildings and eliminated pensions, that excites the mayor. Now, on the heels of Sanders’ failure to have voters approve his first comprehensive financial package, promises little enthusiasm.
“Lasting prosperity must be our top priority,” Sanders said.
Tomorrow, the mayor said, San Diegans will thank him for the economic development that paid for services San Diegans can expect to see a quarter-century from now. Today, he said, they’ll face more service reductions.
Still, fixing today’s problems would help the city in the long term. On these issues, Sanders offered many of the same ideas — consolidation, outsourcing and a “rethinking of government” — that have yet to materialize into substantial savings during his time in office.
No better example of Sanders’ focus on the future was his discussion of pensions, the city’s financial bogeyman.
Sanders’ speech expanded on his proposed ballot measure that would eliminate pensions for non-public safety employees and replace them with 401(k)-style retirement plans.
Pensions, he said, used to provide order and stability. Now, they’re disruptive and creatures of the past, a “destabilizing force.”
Sanders conceded that this plan is aimed at the future, not now. It will do little if anything to affect the city’s $2.1 billion pension deficit, which comes from benefits owed to current and retired city workers.
“I’m thinking about the taxpayers in 25 years, and the kind of city they’ll inherit,” Sanders said.
This theme appears again and again. Even with the mayor’s efforts to improve city finances, San Diego’s budget deficits now have lasted a decade and the city still chronically underfunds its infrastructure.
Streets continue to deteriorate, despite an infusion of bond money. The city’s annual financial statements again are delayed, despite a new multimillion-dollar computer system designed to fix the problem. The city’s pension system is funded near its lowest levels since the nadir of the pension crisis in 2004, despite constant attention and $200 million-plus annual payments.
To be sure, some things are out of Sanders’ hands. The national economic recession and state money grabs have contributed to a sharp decline in city revenues and exacerbated investment losses to the pension system.
But last year saw the biggest political defeat of the mayor’s career. Sanders backed a temporary sales tax increase tied to 10 financial reforms. It was his first attempt at a comprehensive solution to the city’s budget woes.
San Diegans defeated the ballot measure, Proposition D, with more than 60 percent of the vote.
In his speech, Sanders said he learned from that loss: Voters want the reforms, not new taxes.
Also, Sanders repeated a message he voiced throughout the campaign: Prop. D’s defeat means further reduced services. The cuts coming to help eliminate a $70-plus million budget deficit the mayor said would be “the harshest yet.”
Beyond service reductions, the mayor embraced a pension-reform proposal developed by Councilman Carl DeMaio, increased competitive bidding for city services and the consolidation of some departments. Sanders added he would still push for all 10 reforms tied to Prop. D.
None of these ideas are novel save DeMaio’s, but after 10 years of debating budget cuts maybe that was the point.
“I didn’t see anything new,” said April Boling, who headed the city’s Pension Reform Committee in 2004. “It would be new to actually do it.”
Big buildings are a different story. Last year, San Diego broke ground on a $185 million downtown main library, a project more than 30 years in the making and a top Sanders priority.
One of the speech’s most spirited moments came when Sanders defended redevelopment, the financing mechanism that made the library and other potential big buildings possible.
Redevelopment allows the city to use property tax dollars to subsidize development and make public improvements in rundown neighborhoods. It’s money that would otherwise flow to schools, the county and the city’s daily budget, among other things.
And it’s essential to San Diego’s potential, Sanders said.
Sanders said a proposal from new Gov. Jerry Brown to eliminate redevelopment agencies to relieve state budget pressures steals from the future. By continuing to subsidize redevelopment downtown, Sanders said, the city will gain more jobs, sales and hotel-room taxes in the long run.
For now, though, redevelopment diverts property tax dollars that could pay for services in the city’s ailing day-to-day operating budget. Redirecting the money back to the day-to-day budget, Sanders said, wouldn’t be worth it.
“To those San Diegans who would sell out our redevelopment agencies for pennies on the dollar, I say that your thirst for quick cash will come at a steep price,” he said.
The city’s next big redevelopment project is the $710 million expansion of the Convention Center, which Sanders called “the heart of our tourism industry.”
New conventions will bring in nearly $400 million in visitor spending and $17 million in tax revenues, Sanders said. Hoteliers, who will benefit as much as anyone from an expansion, will be expected to shoulder a major financial burden for the project, too, he added.
Sanders also is targeting redevelopment dollars for a new downtown Chargers stadium, proposing an election on the $800 million project as soon as next year.
Conspicuous by its absence was mention of a proposed new City Hall in the speech. Sanders pulled the project from the ballot in November after backers balked at funding a campaign for it.
After the speech, Sanders said the building was in City Council’s hands now. Some on the council want to approve the building without a public vote.
Sanders said he continues to support a vote, but demurred when asked if he would veto the project should the council try to pass it without one.
“Not necessarily,” he said. “I don’t think it will come forward. But if it does, I’ll reevaluate it.”
As has been his pattern in the six State of the City speeches he’s given, Sanders was at his most eloquent when discussing problems of the past. In his first State of the City in 2006, Sanders famously said past administrations practiced “delay, deny or deceive” in dealing with financial matters, most notably with the pension system.
This time, Sanders called previous pension underfunding “failure of character.”
“It wasn’t about left or right, labor or management,” Sanders said. “It was a bipartisan mugging, a conscious decision to rob the future instead of building a better one. And its thin cover was the delusion that our day of reckoning would never arrive. Well, it always does.”
Now, Sanders’ focus is on the future. The present day of reckoning portends much more pain.