The Morning Report
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Mayor Jerry Sanders recently declared that the city of San Diego budget for the upcoming year is balanced for the first time in decades. Under Mayor Sanders’ leadership, the city of San Diego has had a major turnaround.
Mayor Sanders is to be commended for crafting a budget that does not use one-time revenues or budget gimmicks to be balanced.
The $1.15 billion General Fund budget includes $121 million set aside for infrastructure, and $713 million over the next five years. However, to put this into context, it is estimated that $159 million is needed annually to maintain the infrastructure’s current condition and stop any additional deterioration. Improving the quality of our roads, rather than just maintaining them, would require substantially more dollars.
The City Council has also streamlined procurement processes for construction projects to help ensure that they will be completed quicker with increased accountability. These are welcome changes that should result in significant taxpayer savings.
In spite of this significant progress, without fundamental reform to the city’s pension program, the pension liability will continue to diminish the impact of other reform efforts.
Pension costs this year will total $231 million, with another $1 million subsidizing the employee cost of pensions. Adding in all employee fringe benefits, the total costs are $427 million. Meanwhile, the current pension unfunded liability stands at $2.2 billion. Add in the retiree health liability and the unfunded liability balloons to nearly $3 billion.
Clearly, even though there is good budget news to report, now is not the time to relax. As we move forward, it is critical that the city maintains fiscal discipline and continues efforts to reform city government, because there is still much work to be done.
The budget may be balanced, but this does not mean that the city is adequately funding services and maintaining infrastructure. Drive down any neighborhood street, and you’ll know we have a long road ahead of us, one with plenty of potholes left to be filled.
Streets forego repairs, library and recreation service hours fall far short of demand. Library hours are being increased to about 40 hours per week. But in 2003, libraries were open about 50 hours per week. Nor does the current budget account for any infrastructure and operating costs of new facilities that might be needed, such as fire stations.
This is why pension reform has been a top policy priority of the San Diego County Taxpayers Association for a number of years. We have issued annual reports on the state of the pension systems for the county of San Diego, cities and water districts within the region.
SDCTA worked together with Mayor Sanders, Councilmen Kevin Faulconer and Carl DeMaio, and The Lincoln Club of San Diego County to craft Proposition B, which will be on the June 5 election ballot in the city of San Diego.
This initiative will stabilize the method used to calculate employee pensions and stop pension spiking, a gaming of the system that results in government employees receiving more in retirement than what they earned during the peak of their employment.
Prop. B is projected to save San Diegans nearly one billion dollars over 30 years. When the city gets a better grip on its retirement benefits and reforms current pension calculations, this measure will free up funding to re-open the doors to closed neighborhood libraries. We can extend the hours of our park and recreation facilities; keep the lights on and the facilities clean. We can fix the backlog of potholes, crumbling sidewalks and properly maintain water and sewer pipes to prevent sewage spills and water main breaks.
These savings are achieved by implementing a fair and equitable system of providing retirement benefits to city employees. Prop. B does not rely on any single or isolated cutback or reform, but rather on a well-balanced portfolio of reforms that brings back balance to the city’s retirement system and ensures that the city’s books are not balanced exclusively on the backs of hard-working employees.
This June, voters will have an opportunity to ensure that city of San Diego will build on the positive momentum and legacy of fiscal reform left by Mayor Sanders. First, San Diegans must pass Prop. B. Second, San Diegans must elect a mayor who will maintain fiscal discipline and continue to implement fiscal reforms that put the taxpayers first.
Otherwise, we will be right back where we started: at the bottom of a fiscal sinkhole growing wider and deeper by the day with no repair in sight.
Chris Cate is the vice president of the San Diego County Taxpayers Association.
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