I am planning on reading Steve Erie and Vlad Kogan’s book “Paradise Plundered” as soon as I get a chance. I’m practically its target audience embodied. But for now, I have to make do with discussions like this interesting exchange between Erie and our own Liam Dillon. Quite a back and forth is also brewing in the comments on the article.
Erie, a professor at the University of California, San Diego, made the argument very clearly that he believes the city of San Diego’s financial crisis and therefore its deteriorating facilities, roads and amenities is due to “inadequate revenues.”
That’s not really a stretch. Obviously, the revenues are inadequate to cover the expenses. That’s what a deficit is. As we all know, the city is not set up to take in as much money as it is set up to spend and pay out in benefits.
Now, what you propose to do to fix that is the question.
Dillon asked Erie how he’s leaning in the major decision of the moment:
Of any of the four major candidates for mayor, do you think any of them are in any way in a position to reverse some of the trends that you’ve talked about?
I think Bob Filner is more positioned to reverse some of these trends than the others.
Why’s that?
He would probably find ways to raise revenues. He opposes this comprehensive (pension) reform act, which at this point given the public polling is kind of a courageous thing.
Courageous!
The most impactful part of the pension reform initiative is not the switch to a 401(k) for future employees. Future employees have been dealt with. The most impactful part of the plan for those who care about city services is the proposed five-year freeze of the “pensionable pay” city workers earn. This would save the city millions as its pension bill assumes a regular increase in salaries.
Filner opposes this, as he explained to me on the radio. “A freeze on salaries is unfair,” he said.
If, in order to restore and protect city services, you do not support cuts or employee sacrifices, it’s incumbent on you to lay out an alternative.
Erie suggests Filner will turn to “revenue” and reverse these inherently San Diego trends the professor describes.
But if Filner’s courageous on opposing this ballot initiative, he’s not about supporting higher taxes. If he agrees that San Diegans should pay more for services they demand, he’s not saying it.
He has released only talking points on a financial plan for the city. He would cap pensions at $125,000 per year (but this would only affect future employees, not any currently at work). Except that he says he’s not sure $125,000 is the right number.
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And he wants to lengthen the period of time the city’s allowed to close its pension shortfall. A quick history, the city used to have a so-called “rolling” 30-year pension payoff plan. But the scheme, unlike a conventional mortgage, actually makes it possible for the pension’s shortfall to get worse, not get balanced.
So voters in 2004 passed Proposition G, which required the pension system to calculate the debt payoff over 15 years and force the city to make payments accordingly. The city’s retirement system said this was an illegal encroachment on its turf and rebuffed the law, settling on a 20-year plan instead.
Filner wants to move this to a 30-year plan again, effectively pushing the pension debt off further into the future.
As he told me it would “free up the assets of this city without raising taxes.”
There are three things wrong with this:
1) Filner, even if elected, would have no say on it. Sure the mayor has a bully pulpit, but the city’s retirement fund is quite accustomed to ignoring said pulpit, and it quite clearly has the say on how the system is funded.
2) It’s not clear the move would save much. As Erie’s co-author said the other day, the move “would provide minimal savings given the interest rate.” The pension fund assumes it will grow 7.75 percent every year. If you push off the city’s contribution to the fund, the debt grows and the system loses out on what it would have earned.
3) It doesn’t correct any wrong or provide the citizens with the kind of confidence Filner says they need to support major collective initiatives in the city. It’s an accounting gimmick and risk manipulation.
Oh well, it’s not really a plan yet anyway. Filner told me on the radio he was still working on the specifics. That was Sept. 16.
“It’s being run through accountants and actuaries and we hope to have an answer soon,” he said.
I used to think Filner would provide a stark progressive alternative to the encyclopedic and well-organized recovery plan City Councilman Carl DeMaio is promoting across the city. And many liberals in town, like Erie, obviously assume he has one.
I don’t blame a mayoral aspirant for being unwilling to say the city needs to raise taxes. But until he does, Erie and other supporters can’t pretend he is somehow more courageous in how he would approach the city’s most pressing polemic.
I’m Scott Lewis, the CEO of voiceofsandiego.org. Please contact me if you’d like at scott.lewis@voiceofsandiego.org or 619.325.0527 and follow me on Twitter (it’s a blast!):
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