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Sounding Board: Financial Remedies

The Daily Transcript introduces Sounding Board, a regular opinion page feature focusing on current issues. The Daily Transcript will engage community leaders in a dialogue and publish their comments. Readers' comments are also welcome. Send your responses to soundingboard@sddt.com.

Question: What five initial actions should the new city administration take to remedy financial problems facing San Diego?

1. Take any and all steps necessary to complete 2003 and 2004 audits.

2. Develop an accurate budget that reflects the real cost of running the city. This should include funds necessary to bring reserves up to at least 7 percent, full funding of the pension on specified schedule, funding to address infrastructure and deferred maintenance also on a specified schedule. This budget should also require full cost recovery, where appropriate, for city services.

3. Develop a five-year economic plan using the five-year economic forecast that was developed earlier this year by the city manager. The assumptions contained in the plan should be revised to reflect the accurate cost data included in the above-mentioned budget.

4. Initiate department-by-department efficiency review and follow through on any cuts in personnel that result from that review. Resist pressure from special interest groups to restore proposed cuts in the next budget.

5. Resolve, by court action if necessary, legality of previously granted pension benefits and the responsibility of the city for retiree health benefits.

-- Lisa Briggs, executive director of the San Diego County Taxpayers' Association

Verify the legality or illegality of various pension improvements and settle the issue now through whatever means. If that means releasing documentation, that means waiving attorney-client privilege.

Second, come to grips with the management imbalance that forgets that there are some services that are necessary and identify them. The others are special interest. I fund the first and get rid of the second. In that context, repeal the so-called living wage.

-- George Hawkins, president and CEO of the San Diego Associated Builders and Contractors

The first answer is that we need to figure out what the financial problems are and the magnitude.

I think there is another side to that; we need to know the financial problems to continue to maintain and build our infrastructure. I'm not sure we know how much of a shortfall we have there.

The first action would be is to get a grip on what the magnitudes of the problems are: the pension and the overall funding.

I would recommend that the new mayor put together a team of expert financial advisors who could make sense of the situation and make recommendations to the new administration on the magnitude and how to address it.

Another part of this is completing the audits. We need to do that before we can remedy the financial problems.

Another part of that is interacting with the leaders of the city government, city manager, water department, to get a good grasp of what the financial situation is.

I have experience with the water department; they are looking at not being able to complete some projects. From an operations and management standpoint, they are in trouble there too.

-- Joe Panetta, President and CEO of BIOCOM

First of all, we have to complete the audit. We have to get the pension board on track. I think that we had an outstanding board, but the contention in government has cost us some very fine members.

I think we have to make an effective transition to strong mayor because that affects our credibility and puts us in a leadership position.

I think that the city could look to more outsourcing.

I think they need, in the transition to strong mayor, a thorough review of what the city spends money on. It's like in the private sector a while back, it would be called a TQM, or total quality management, to map the processes and make sure they are delivering their services at the least cost in the best way. We need to ensure that they are optimizing everything. That will be important for the future.

-- Julie Meier Wright, president and CEO of the San Diego Regional Economic Development Corporation

The first thing they have to do is decide, pending whatever legal result, whether they are going to continue to pay the amount of deficit that the city attorney has determined are illegal.

On day one, you need to decide whether the city will put money into paying those amounts. If you don't, you bleed a lot more money. If not, you'll piss a lot of political powers off.

That's the first indication about where the new mayor will go.

The second thing is do a numerical assessment of sources and uses of money. Come up with two pie charts. One has revenue; the other is what you use that (revenue) for.

Because, you're not going to get through the next budget cycle like the last time. You are going to have to pay the normal cost, the fully loaded cost for the pension. The city attorney will see to that. That's, at a minimum, $190 million. It may be a lot more. You have to come up with an extra $50 million or $60 million more than was paid this year.

One of the issues is that right when they get elected and take office, they will jump right into the budget cycle.

The third thing, you will have to decide whether or not you will try to raise taxes. I'm not saying you have to, but I'm saying it's a decision that will have to be made early.

The fourth thing, (notice that I'm not saying issue bond money, because you can't until you do these) you have looked at staffing. We have a remarkable number of people at the executive levels than there are people sweeping.

The fifth, you have to figure out if you are going to get along with or fight with the city attorney. The new mayor doesn't have any of the baggage, so you get a chance to have any kind of relationship if you want to. Or you can take the city council, union and business community and fight him. To a certain extent that will define if your administration is one of general reform or if you are the next Dick Murphy.

-- Patrick Shea, local bankruptcy attorney, bank founder and former mayoral candidate

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