This Tuesday, San Diego Mayor Jerry Sanders publicly released his plan to close the estimated $179-201 million gap in the Fiscal Year 2011 General Fund budget at City Hall. While Sanders’ proposal minimizes the deficit’s impact on residents without raising taxes, it fails to secure the long-term interests of local taxpayers. Why?
#1 Short-term financial fixes are heavily relied upon. Of the $179.1 million in budget-balancing methods proposed in the Mayor’s plan, 54% ($96.8 million) are “one-time solutions.” These solutions include deferring future contributions to budgetary reserves and raiding millions of tax dollars designated for park and library improvements. Marginal, interim fixes like these mask the true size of City Hall’s fiscal crisis from the public and delay the need for more difficult service cuts which may be politically unpopular.
#2 San Diego City Hall will continue to spend more money than it takes in. According to the City’s Five Year Financial Outlook updated in October 2009, total General Fund revenues are expected to increase $135 million over the next five fiscal years ($1.061 billion in FY 2011 to $1.196 in FY 2015), but they will still be outpaced by soaring Fund expenditures ($1.240 billion in FY 2011 to $1.333 in FY 2015). The reason for this is largely our pension debt obligations. The pension debt paid out of the General Fund will double in the next five years, from $125 million this Fiscal Year 2010 to $257 million in Fiscal Year 2015. Out-of-control city spending is a structural financial problem that existed prior to the national economic downturn that began last year, and has been publicly acknowledged by City Hall since November 2006.
#3 Only structural budgetary reforms will bring financial solvency and taxpayer accountability to City Hall. Regardless of our economic climate, the public will still rightfully demand city services that retain their quality over time. Large cuts in budgeted vacant positions and the city workforce, like those proposed in the Mayor’s plan, will only erode city services and disenfranchise taxpayers, not protect them. Keeping the doors open in our neighborhood libraries and recreation centers will require new budget tools that increase cost-efficiencies and reform costly labor policies, such as direct outsourcing, contract transparency, public-private partnerships, and competitive 401(k) plans for new city employees.
What’s Next? According to the Mayor’s Office, the budget proposal will be reviewed by the City Council’s Budget & Finance Committee on December 2nd, and will be brought before the full Council on December 10th and 14th. The ink isn’t dry on this proposal, and may be changed in the coming weeks.