San Diego City Hall Needs Citizen Help to Achieve Fiscal Recovery

(This op-ed was originally posted on San Diego News Network this week)

With falling tax revenue projections from our national economic downturn, and the ongoing turmoil of a structural deficit in our local government, the City of San Diego now faces an estimated $201 million budget shortfall for Fiscal Year 2011. Thankfully for taxpayers, reaction from elected officials to this crisis has been swift, but many difficult decisions lie ahead that will require the public’s full support.

City Hall is eager to begin making budgetary adjustments sooner rather than later; Mayor Jerry Sanders has set a goal for implementing a new budget reduction plan by January 1^st, 2010, half a year before the start of the new budget. Additionally, the City’s Chief Operating Officer has now requested city departments to identify 27% reductions in their discretionary budgets, to be submitted by the end of the month. It’s not clear how the City of San Diego will close a deficit that swallows nearly 1/5 of the General Fund budget, but if the experiences of other cities are any indication, our elected representatives are likely to ask for extraordinary sacrifices from the city’s public workforce.

Earlier this year, the City of Phoenix closed a $269.7 million budget shortfall, partly by cutting $156 million through program and service reductions via an average 27.3% cut in General Fund departments, and 7.5% budget reductions for police, fire, and criminal justice departments.  In all, Phoenix elected officials painfully eliminated 923.5 city jobs. More recently, this week Chicago Mayor Richard Daley announced that he will slash $64 million in city spending by eliminating 220 vacant city positions, cancelling pay raises for non-union workers, and requiring 24 unpaid furlough days for city managers. Previously, Daley had ordered white-collar city managers to take 16 furlough days, in a successful effort to get public union representatives to agree to similar sacrifices for their members, which included taking all city holidays and unpaid vacation.

Layoffs and concessions from city workers may be unavoidable in San Diego, but they can be lessened with citizen-friendly programs that enhance government revenue and take a common-sense approach to residential and fiscal priorities. For example, amnesty programs that waive penalties and interest for delinquent business taxes or parking tickets have proven popular and profitable across the country. Last fall, the City of Atlanta instituted a dual parking ticket and business tax amnesty program, which it anticipated would raise up to $4 million for government coffers. Additionally this summer, more than 8,600 businesses in Los Angeles participated in a three-month amnesty program that collected $18.6 million. Temporary building permit “holidays” can also generate net sales tax revenue – for two weeks this June, the City of Denver waived permit fees for basic home remodeling projects, which stimulated $6.2 million worth of construction work while only sacrificing only $85,800 in fee revenue. These programs deserve greater review and consideration at City Hall, especially given that most one-time budget-balancing techniques, such as raiding reserve funds and selling public property have been largely exhausted.

Moving forward, our City’s ballooning labor costs must be stabilized with sustainable reforms that will produce real savings for taxpayers, while providing fair and competitive incentives for workers. A new agreement between labor and management at City Hall was passed in 2008, changing how pension benefits are allocated for public workers, but it will require nearly 30 more years before it achieves its annual full savings of $22.7 million. Real structural reforms to how the City of San Diego provides public retirement benefits will have to be on the table, and likely on the ballot, in the near future. Early signs suggest that the public will embrace compensatory changes at City Hall: according to the results of a statewide Field Poll released this month, strong majorities of California voters support capping the amount local government workers can receive in pension benefits, as well as replacing the traditional defined benefit pension system with a 401(k) retirement savings plan for new hires.

Regardless of how the San Diego City Council and the Mayor’s Office will choose to close the massive $201 million budget gap, citizens will still expect quality public services and the preservation of their neighborhood parks, libraries, and recreation centers. Failing to provide this is nothing short of wholesale disenfranchisement of the public, and taxpayers have every reason to be disappointed with the results.

However, by working together, I am confident that City Hall and everyday San Diegans can build common ground and retain our quality of life for the years ahead.