Pension Deficit Saps City Budget

Service cuts may extend for years; courts grant partial relief

San Diego's unending cycle of budget cuts, fueled in large part by a runaway pension deficit, threatens to become a fixture for the forseeable future.

Barring a major rebound in the economy and global markets, the city's actuary estimates the deficit -- which he now pegs at $2.8 billion -- will require an extra $85 million paydown next fiscal year.   This year's outlay was $161 million.

"The cuts we're talking about today, in terms of parks, rec centers -- that's going to look like nothing," says Lani Lutar, executive director of the San Diego County Taxpayers Association.  "Next  (fiscal) year, we could be talking about cutting public safety significantly."

In an interview, Lutar said reforming the retirement system is priority-one: "They need to scale back these lavish benefits that are being awarded to public employees."

Mayor Jerry Sanders says he'll approach the city's labor unions to make concessions on their pension benefits, but seems likely to get the cold shoulder.

Fire Fighters Local 145, -- which received no pay raises this fiscal year, and was accused of "scare tactics" over their opposition to Sanders' proposed service cuts in the Fire-Rescue Dept. -- has no desire to meet with Sanders on that subject, according to vice president Frank DeClerq.

The San Diego Police Officers Association, according to its president Bill Nemec, also will snub the mayor.

The Municipal Employees Association is ready to meet with Sanders, says spokeswoman Judi Italiano, but only if he's willing to consider granting "floating holidays", flexible work schedules and other bargains that she claims would be easy on the budget.

City Attorney Mike Aguirre has been looking to the legal system to set aside $900 million in retirement benefits which he argues were illegally granted.

Late Thursday, he won a $40 million victory when Superior Court Judge William Nevitt invalidated a program under which city employees could buy up to five years' worth of pension-service credits for time they did not actually spend on the job.

But earlier Thursday, Aguirre's challenge of the remaining disputed benefits was dismissed by a state appellate court on grounds that it was prematurely filed, since there are other litigation issues still unresolved by another Superior Court trial  judge, Jeffrey Barton.

Aguirre, however, saw a silver lining in the appellate ruling.  "What this means," he told reporters during a City Hall news conference, "is the case has to go back (to Superior Court). 

"And what's great about that, from our perspective, from the city's perspective, is that will require a jury trial.  And that's one of our goals throughout ... we have always felt that our case can be resolved best before a jury."

But the 4th District Court of Appeal's dismissal language makes no mention about a jury trial now being required.

Opposing counsel for the San Diego City Employees Retirement System and the city's labor unions could not immediately be reached for a reaction to Aguirre's analysis of the appellate ruling.

When pressed by reporters to elaborate on his legal theories, Aguirre eventually halted the news conference and left City Hall's 13th floor press room.

He was followed into the elevator, where he stopped the lift halfway down its descent, got out, and took the emergency stairwell the rest of the way to the lobby.  

On the revenue side of budget-balancing, there's talk of charging residents for curbside trash collection.   But that would require a City Charter change that wouldn't see the ballot box until 2010 at the earliest.

But passage of such a measure could reap $57 million a year.

"We have to look at everything," says Councilwoman-Elect Marti Emerald.  "San Diego is the only city in the ocunty that doesn't charge for this.  But it will come down to the voters, and what the voters are willing to pay for." 

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