As the City of San Diego confronts a staggering $200 Million-plus budget deficit, Councilmembers Carl DeMaio and Donna Frye have teamed up to propose a process to analyze and negotiate significant reforms in pension benefits that have been awarded to city employees over the years and are now contributing to the city’s financial problems.
Below is a great editorial by Michael Rosen detailing the deficit and the bipartisan plan to begin the reform process.
San Diegans have known for years that our city is in trouble, but the extent of that trouble came sharply into focus days ago with the release of the latest alarming budget deficit numbers.
The city’s Independent Budget Analyst (IBA) report described the current status about as bluntly as possible: “the City of San Diego is facing a calamitous financial situation.”
The IBA’s mission is “to provide clear, objective and unbiased analysis and advice to the City Council and the public regarding all legislative items bearing financial and policy impacts to the City of San Diego,” and in this case, it appears to have lived up to its billing.
The report itself revised upward the enormous deficits anticipated in Mayor Jerry Sanders’s own “Outlook” for Fiscal Years 2011-2015, predicting a $200 million shortfall in FY 2011 and a cumulative, gaping five-year chasm of $1.16 billion (with a “b”).
Councilmember Carl DeMaio of the 5th District (Scripps Ranch, Mira Mesa, Rancho Bernardo, etc.) released his own far grimmer version of the budget. When labor contracts, retiree medical payments, and deferred maintenance are taken into account, the FY11 deficit balloons to $262 million and the five-year gap surpasses $1.6 billion.
Some of the city’s woes can be attributed to the dramatic economic downturn, as unemployment in the county remains disturbingly high. And trimming city services or imposing new taxes would narrow the gap slightly.
But DeMaio observes that even if we shuttered all city libraries and closed all park and recreation facilities, we’d still suffer from $100 million-plus deficits for years. Even if the council imposed a trash tax, as some members have suggested, the five-year outlook still shows a nearly $400 million shortfall.
Instead, the vast majority of our budgetary problem derives from bloated union contracts and overgenerous pension benefits to city workers. We are on the verge of embarking on an unprecedented spike in annual benefit payouts, which will skyrocket from the current 18% of payroll (around $300 million per year) to more than 50 percent (and more than half a billion dollars) within 15 years.
To build support for his plan, DeMaio is hosting a series of town-hall meetings throughout his council district promoting pension reform and outsourcing.
Specifically, along with Councilmember Donna Frye of the city’s 6th District (Clairemont, Mission Valley, Linda Vista, etc.), DeMaio has launched an initiative to curb pension benefits and suspend cost-of-living increases through negotiations with the city’s labor unions. DeMaio and Frye argued in a recent memorandum to the mayor and their colleagues that “the city’s financial problems have reached a point where one-time solutions are no longer an option.”
DeMaio told me that “the public needs to call the mayor and the council to push for real pension reform.” He also urges San Diegans to demand “no more tax increases [and] no more cuts in service.”
He stressed that “the reforms Donna and I are exploring are long-term and structural.”
DeMaio also points to a significant—but overlooked—legal opinion issued on October 8 by City Attorney Jan Goldsmith that bolsters city outsourcing.
According to the opinion, the new charter section adopted by voters in 2006 “provides broad authority to contract out the work of classified, civil service employees when the Mayor determines, subject to City Council approval, City services can be provided more economically and efficiently by an independent contractor than by” city employees, while “maintaining service quality and protecting the public interest.”
To get there, the mayor must first consult an independent board and provide notice to and an opportunity for negotiation with city employees. But for the first time, the city definitively concluded that the independent board’s recommendations are “advisory” and that the mayor can present to the council a proposed agreement with outside contractors even if the board recommends against it.
But, even more significantly, the opinion empowers the mayor to outsource directly to private businesses without first—or ever—seeking a bid from the relevant city department.
Despite overwhelming voter approval, outsourcing has been stymied for years as previous city attorney opinions have required the mayor to obtain bids from municipal workers before turning to outside industry. Negotiations over these bids have dragged on, and the independent board has yet to meet.
Now, according to the city attorney, Mayor Sanders can bypass the fruitless talks and get the ball rolling immediately. Thus, DeMaio, in his typically enthusiastic manner, says now “we can do outsourcing–let’s get cracking!”
Cracking indeed. Because the only other thing cracking at this point is our city’s financial condition.
michaelmrosen@yahoo.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Michael M. Rosen, a News Room contributor, is an attorney in Carmel Valley and the Secretary of the San Diego County Republican Party. Reach him at