Don't look for any sudden cuts in San Diego's municipal services just because voters last week rejected a $102 million annual sales-tax increase.
That was the word from the mayor's office Wednesday, even as a $73 million crater is opening in the city's next budget. Don't expect city officials to rush quickly through the doors of U.S. bankruptcy court to file for Chapter 9 protection from creditors -- mainly, the city's retirement system.
Jay Goldstone, Mayor Jerry Sanders' chief operating officer, told the City Council's Budget & Finance Committee that budget-balancing details won't be released until April 15, 2010 -- two and a half months before the new fiscal year starts. When Goldstone said Sanders doesn't plan to trigger spending cuts in the midst of this fiscal year, he got a sharp challenge.
"Why not cut the budget now?" asked Councilman Carl DeMaio, who last week released a so-called Road Map to Recovery, which he claims would save $87 million in fiscal 2011-12.
"Why not proactively adopt budget reform that we all agree on?" DeMaio pressed on. "Like the 5 percent cut in supplies and services; Why not make that happen now?"
Replied Goldstone: "While I'm not trying to minimize any kind of savings, for $3 million -- given some of the information we don't have, and the uncertainty -- it's more prudent to wait and go through a more thoughtful process. Let's see the values."
So for now, the mayor's proposal to cut 7 percent from public safety budgets and 24 percent from other city departments figures will stay on the back burner, absent a precipitous drop in projected revenues and escalating costs.
As for the 10 fiscal reforms in Prop. D, the half-cent sales tax measure, Goldsmith said Sanders is committed to completing them with the council's help.
"I've heard some suggestions that the voters, by rejecting the new revenues, voted down the reform measures," Goldstone observed. "That is not the message I took away from the Nov. 2 vote."
Outsourcing the city's vehicle-fleet maintenance and print-shop functions are the first moves under one of those reforms: "managed competition" with private bidders.
"We have to work together; the campaigns are over," said Councilman Kevin Faulconer. "We have one city, and we have to move forward with the best interests of our city expeditiously, on all of these."
DeMaio is taking his own budget-balancing agenda to a series of town hall meetings and a live Twitter forum between Friday and Nov. 22. For his part, Sanders is referring the Road Map to a citizens' fiscal sustainability task force for vetting.
The chairman of the task force, Vincent Mudd, cautioned the committee, however, with this remark: "If I said to you today: 'Cut employee wages by 20 percent, I could eliminate the structural budget deficit.' That's an idea, but that is not a plan. That's not a plan that's gone through any vetting yet."
Meantime, there was talk of the city filing for Chapter 9 municipal bankruptcy protection to avoid a projected $250 million in pension obligations next year.
Former city attorney Mike Aguirre enthusiastically recommended that idea, prompting a vigorous push back from his successor, Jan Goldsmith.
"We are insolvent; there is no doubt about that," Aguirre told the committee. "All we have to do is rid ourselves of that portion of the benefits that were illegally granted, and we're home free. It's a fresh start."
Retorted Goldsmith: "The city is not insolvent. The city can pay its debts over this year, next year. And Chapter 9? Orange County's cost over $100 million 16 years ago, and nobody lost a pension.
"Never in the history of this country has their been a reported case of change of public pensions in a bankrutpcy situation," Goldsmith added "It's nonsense. It just get to the point where we're diverted from the discussion of hard choices that we have to make in this community."
Meantime, Goldsmith recommends using redevelopment money to reimburse the city's general fund for the city's bond costs on the 2001 expansion of the convention center. That could recover roughly $90 million in past payments -- plus $9 million a year going forward -- for public safety and neighborhood services.
Goldsmith said he plans to issue a memo on the proposal, which potentially may encounter legal resistance, in the near future.
That prospect may help explain why Sanders is taking a measured approach to implementing budget cuts.
