FIVE THINGS SAN DIEGO NEEDSA Reality Check and More
By Pat Shea
Wednesday, March 5, 2008 | Five Things San Diego NEEDS Most. Hmmm.
Well, let’s try these (not in order of importance): reality, honesty and contrition, judgment and resolve, courage, humor and hope.
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| Pat Shea |
I. On Reality
We’re broke. I think it would be OK to abandon the fakey-fakey stuff.
The Union-Tribune reported the city knew months ahead that there was land subsidence in the Mt. Soledad area. Slide monitors were put in. Geologists were sent. Studies were done. They knew what was going on. Shoring was not done. Does anyone think we didn’t shore up that area because we just didn’t care about it?
Are we as a city that callous, indifferent or stupid to not see real danger looking us in the face? No. We are broke. We didn’t shore up the area because there was no money available to do so. It’s the same reason we don’t do brush management for fires, keep our libraries open, pay for the Veteran’s Day parade, or provide swim access for inner-city girls, just to name a few.
 It’s why we do four or five, or however many, $150-million short-term financings; why we continue to raise our sewer and water fees even though we were the highest in those combined fees of any city on Earth several years ago, before the couple more fee enhancements that occurred thereafter. In her recent article in The New York Times entitled "Paradise of Lies," Staceyann Chin writes, "...I was exhausted from the effort of keeping track of my elaborate falsehoods..."
As a city, we too are exhausted. It’s OK to just say it. We’re broke.
On the pension side, we have not financially recovered from anything. Last year, we contributed about $167 million. In that same year, a modest (and deserved) pay raise for police increased the pension deficit by at least $90 million. The 8 percent "interest" the city owes annually on the $1.2 billion pension deficit (assuming the gross number is that little) is at least $96 million.
That was just last year.
And, don’t tell me that last year and this year our pension investment geniuses are going to outperform the assumed 8 percent return on all assets in order to pay down the deficits and pay all the current "waterfall" goodies from "excess earnings." Were that so, the pension geniuses would be working for Berkshire Hathaway, not the San Diego City Employees Retirement System. Look, the deficits are getting bigger and are just being re-amortized out over a longer period of time so your kids, their kids, and the kids of their kids can pay for this. Same games.
And, if the city’s financial condition ever does get better, all of whatever is improved will be swept into the pension vacuum sucker. Forever.
On the municipal union stuff, stop expecting the unions to solve the city’s problems. They are in business for themselves and their folks. They are not elected to take care of the public’s business.
They have the right to put their people in office, and when they do so, take every advantage of every thing that such power grants. If you are not willing to deal with them at that level, fold or leave.
On the "illegal benefits" -- fight them or pay them. Those are your choices. My friend, City Attorney Mike Aguirre, thinks the people want to fight them. My friend Scott Peters thinks the people want to pay them.
Everybody else seems sort of mealy mouthed about where they stand on this. Pick a side. Either way, these unfunded deficits are daunting tasks -- and likely to grow substantially in the future with additional wage increases for all city unions, and the reduction of city revenues from falling real estate values, recession related losses in sales taxes, and the growing wave of new retirees with enhanced entitlements. Get used to it.
II. On Honesty and Contrition
From Ted Kennedy to sport figures to corporate giants that have fallen on occasion, one lesson has emerged on the tablet of public measure: a real account of your screw ups, coupled with a genuine admission of sincere regret and sorrow, is almost always the shortest distance to recovering your public currency.
This is March of an election year so we should all anticipate some "March Madness." But, when you look at the events that have led us to our horribly compromised condition, and the current politically correct defense that these were just "mistakes," one thing you can be certain of is that the decisions made in 2002, et seq., particularly regarding the increased benefits for reduced pension contributions, and the phonying (is that a word?) of the city’s financial numbers on bond materials -- neither were "mistakes."
There was no "stumbling, bumbling, fumbling" in the run down the field on these. The folks involved knew what they were doing, knew the consequences and did it anyway for their own reasons. Few governments were as actively involved in the deal making that went into cooking up these two gems. Few governments received as complete, passionate, and timely a warning of the cliffs ahead as was ours.
In reviewing this conduct, the SEC was not wrong in the way they saw it, Kroll was not wrong in the way it saw it, and we were not wrong in the way we saw it. It wasn’t a mistake. It was worse than just miserably bad judgment. It was intentionally doing the wrong thing, thinking there would be no timely consequence.
This wouldn‘t even be an issue any more if the admissions and regrets thing had already occurred. But it hasn’t.
On Judgment and Resolve
"Judgment" is a big word that embodies principles, education and experience. Having it allows you to make good decisions.
We have some "Charter Changes" (oooo) coming at us. Many are intended to move more power to the mayor. It’s been suggested that this will allow those with business before the city to concentrate their efforts on just one person rather than having to "count to five." One is easier than five, it is assumed. This is seen as a focus of the "old guard business establishment" whoever they are, and the "old guard Republican establishment" whoever they are.
With all the Charter Changes stuff fizzing about, a moment’s pause is in order. The law of unintended consequences has not been repealed. If, as suggested, some of these changes are intended so the business guys will only have to deal with one person rather than five, you should consider that those persons of other persuasions might also be capable of seeing the efficiency of the one is easier than five things, and may set their minds to occupying that seat for themselves. How would that work out for you? Perhaps we need a big engraving over the door of City Hall that reads, "Be Careful What You Wish For."
I have one on both the Judgment and Resolve side. After the Cedar fire, then Fire Chief Jeff Bowman (one of the most un-squirrelly of the city’s department chiefs) recounted at a private lunch, that on the third day of that fire the wind changed at about the junction of Hwy 805 and Hwy 52.
It allowed his troops to cut some breaks to the fire which was quickly moving west. He said, candidly, had that not occurred, the fire force did not have the manpower or equipment to stop the fire, that there was nothing they could do to keep it from burning through Rose canyon to Hwy 5, up over the eastern side of La Jolla, and down the other side into La Jolla. He concluded that it would likely have burned La Jolla to the ground.
His biggest concern was that with the fire coming from the east on 52 the only ways out of La Jolla was on two-lane La Jolla Boulevard south and on two-lane La Jolla Shores Drive North. With 15,000 households he concluded there would be numerous fatalities. There was no evacuation plan. He thought we needed a much better equipment platform and an evacuation plan.
These were words that were not well received by anybody in the downtown triangle. But, I live in La Jolla, and I appreciated that he was willing to say them. He is still out there doing this type of advocacy. Last Sunday he was quoted in the U-T "Insight" section saying, "They write these reports, and they put them on a shelf. And then, they say that have no money. So nothing gets done."
This guy is retired, and he has the courage and judgment that is so noticeable by its absence in those still showing up to have their attendance taken. We need more of this guy, and anybody else like him.
On the Resolve side, I’d like the City Council to determine if there is any need for them at all any more. With the exception of Councilwoman Donna Frye (who is seen as something of a pill for all her question-asking) it sure didn’t seem like they had any sense of a separate role in the governance of the city these past few years, other than the occasional vote to affirm something financial they knew little about, or the giving away of powers to the mayor -- to which I don’t completely object since he at least seemed to have some idea of what to do with them.
But, my council friends, at least on the money side you might want to decide if you even care where the city’s money get’s spent and by whom. You might want to know who is counting the beans, when that gets done, and whether every bean gets counted. You’re the legislative branch of this government -- sort of. It’s the kind of thing those bodies normally do. Someone might expect you to have done that job at sometime in the future.
Also on the Resolve side, I’d like to see the formation of more parallel government agencies to accomplish specific purposes. The financial architecture issues for the city will continue to be so overpowering, little will be accomplished beyond the daily goal of survival. The hotel folks recently created a new little government thing with a separate source of revenue to advance tourism. Good start. There could be one for
sports and recreation so those interested in that effort can do planning and funding models for those types of projects away from the financial baggage of the city. Likewise, for arts, libraries and parks. These entities could exist for those limited purposes with the power to plan, ballot and fund this type of infrastructure away from the city. These things just won’t happen otherwise.
III. On Courage
I’d like more of the smart folks in this city to openly debate in opposition stuff they see and hear that they know does not make good sense. I don’t know if we added both fluoride and lemming to our water, but there is clearly a lack of spirited and open debate about things that simply don’t have just one side.
I’d like the city’s IBA ("Independent Budget Analyst") to act like one. Stop being part of the "cooperative and collaborative" element in government. Just do the job -- emphasis on the "independent" part of your title.
I’d like the municipal union membership to (perhaps quietly) agree that the financial mess they are in was not caused solely by the political rascals at the city. I certainly don’t blame the rank and file, but don’t you think it’s pretty clear that your leadership, and their professionals, were aware that getting promises to fund big pensions so long as the city was not required to put any money in the pension fund was not workable, stupid and dangerous. I don’t mind the fact that you are angry at your situation, but at least some of that should be directed to your side of the table. It would make you more credible with the rest of the city. The Little Bo Peep thing is not very believable.
IV. On Humor and Hope
I got to this last one and I’m just kinda staring at it.
I guess I hope we find more things to be hopeful for in the future. If not, I hope things get funnier.
Pat Shea previously wrote a weekly column in voiceofsandiego.org called "For the Record" in 2006. What are the five things you think San Diego needs? Write your piece and e-mail it here.
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Comments so far on this story: 1. Billy Bob Henry wrote on March 4, 2008 10:25 PM:
"Wow, the pension statements hit the nail on the head. It is a black hole that we will NEVER dig out of, and you're exactly right-any "excess" money will go to the employees, while any shortfall will be paid by the taxpayers. It is all a big scam. We hsould have filed BK 3 years ago." 2. Cheeky wrote on March 5, 2008 12:19 AM:
"Here comes Patty McShea, Same old stuff, different day. Your hidden agenda is showing - boost Aguirre, boo Peters, villify the unions, all in a good day's work. How do you do it? Maybe it's the Irish in you. Anyway, I appreciate your humor (in a twisted sort of way). Your hope is questionable, and your honesty is doubtful. Your judgment and resolve are unwavering. You didn't utter the "bankruptcy" word once in all your ramblings. Imagine that. We do agree on Jeff Bowman - a gem of a retired city employee. If you fat cats in La Jolla care so much about the city's finances, why not throw a fundraiser yourself and kick in a few million to the city coffers? Or better yet, put some parking meters on your streets, and watch the revenue soar. The city may be broke,but you're not." 3. Fred Williams wrote on March 5, 2008 12:46 AM:
"Outstanding, Pat. We could make a start on reducing our structural debt by no longer paying tens of millions every year to Spanos and Moores. The illegal ballpark bonds won't be paid off until 2037. Hosting the Chargers costs us, according to Fabiani himself, more than $19 million annually. We have more important things to do with our money. San Diegans would rather stop lavishing money on games than lose Balboa Park to yet more corruption. Good thing it's an election year. Time for new ideas." 4. Hand across the aisle wrote on March 5, 2008 6:35 AM:
"Mr Shea drops the dime on some very likely suspects or, at least, un-indicted co-conspirators.I image that within a few hours he'll come under some pretty intense fire from the "frei corps' within these ranks. The Know-nothings escalate when someone casts his "pearls before the swine" and Mr Shea's thoughtful efforts today strike at the roots of our municipal malaise and those that profit from its rotten roots. He's a worthy advocate for the public good and,as we know, on these pages,no good turn of phrase goes un-punished. On Part 2: An acknowledgement that the obsession that this tenured establishment has with Nat'l conventions in support of their ideology beginning with the aborted '72 effort and culminating with Golding's re-apportionment of the general fund in '96 has resulted in part to our fiscal problems is desperately needed, if only in service to truth. Do they still prevail? I think so. Thanks Pat." 5. La Playa Heritage wrote on March 5, 2008 7:18 AM:
"Hi Mr. Shea. Thank you for your insights, which are always a few years ahead of the curve. Please think of restarting your column "For the Record," it provided great information. There is hope on the horizon. If Mike Aguirre is re-elected City Attorney, and Steve Francis is elected Mayor, the City of San Diego may actually be ready to listen to your great advice and move towards meaningful change and accountability. The public is welcome to the Campaign kickoff for Mike Aguirre today at noon (12:00 pm) at the Cabrillo Monument, just pass the visitor's center. In addition, Steve Francis is planning on submitted his candidacy paper this afternoon at the City Clerks office at 202 C Street at 1:30 pm." 6. Billy Bob Henry II wrote on March 5, 2008 7:54 AM:
"The city employees are some of the hardest working dedicated employees of any municipality. If we do not pay them a competitive salary and benefits, we will end up with a much lesser employee that has no dedication or work ethic." 7. Jim wrote on March 5, 2008 8:51 AM:
"Ok Pat....When Orange County went into Bankruptcy, exactly how much did employee benefits get cut...Oh yeah...None....Those are vested and protected as they should be. The employees did not create the mess, the politicians did. So how does taking San Diego into BK solve the pension issue?" 8. betty hosie wrote on March 5, 2008 9:00 AM:
"Thanks, Pat, for the refreshing facts. Your excellent article should open some closed eyes. Keep writing." 9. Larry wrote on March 5, 2008 9:04 AM:
"Poor old Cheeky. Poster child for class warfare. Here's a clue for you. Some people have money because they've earned it, without union corruption and intimidation." 10. Rocky wrote on March 5, 2008 9:52 AM:
"I'm with you Pat as I to hope we can find more things to be hopeful for in the future, but for the time being we will just have to settle for funnier, because this whole situation has become one big bad joke. Kind of like the rise and fall of the Roman Empire." 11. Steve K wrote on March 5, 2008 10:41 AM:
"Kudos, Pat--I'm with you on the currant needs of my home town." 12. jr wrote on March 5, 2008 10:56 AM:
"The pending recession may create a opportunity for a reality check in many of the points made by Pat! Will we continue to go with un-managed growth before the infrastructure is ready? We don't do this in our own lives why should the city do it? With the recession the city will have cutbacks and hopefully they are done fairly across the board with a flat percentage and not by eliminating a few low level positions." 13. Dimples wrote on March 5, 2008 11:12 AM:
"The private sector has been peeling away benefits from employees for decades to the point where public sector benefits are looking good. So now we want to slam public employees benefits in addition to paying them low wages. The blood is in the water and we're feeding on our own fellow victims. We should, instead, be supporting more and improved benefits for employees and push back at the wealthy owners, developers, and politicos. If you think you're immune to the plight of the public sector employees think about this.A friend of mine went to the ER recently with what turned out to be pneumonia. She was given a shot, a swab for testing and an IV and after 2 hours went home with medication. Her bill was $10,000 and she has no health insurance. Don't fool yourself we are all one medical disaster away from bankruptcy." 14. JF wrote on March 5, 2008 12:15 PM:
"Pat, first off, you always have some great insights.I do have a couple of comments.Surely as a financial attorney you're aware that returns "last year and this year" are pretty short sighted.Let me share a quote from the 2006 SDCERS CAFR; "Over the ten-year period ended June 30, 2006, SDCERS’ investment performance of 10.0% ranked in the top 3%."(p.20)It seems that the SDCERS folks are doing OK investing.We didn't get into this over a year or two, and we won't get out of it in a year or two.You state that the city paid $167 million into SDCERS last year.If you halved that bill, you'd have almost enough to fully fund the FD as Chief Bowman envisioned it.OK, so what about the rest of the city's needs?I'd like to hear your views on the need of the city to raise more funds." 15. Billy Bob Henry wrote on March 5, 2008 12:46 PM:
"OH, Mr./Ms. Dimples, this one is for you buddy: Police and firefighters account for 80% of Vallejo's budget, city officials say, due to ballooning ***overtime bills and ***lucrative union contracts that have boosted base salaries, benefits and retirement plans. The firefighters union in particular has become a lightning rod for blame among bitter local residents, particularly after news hit that 10 different fire department employees received salaries topping $200,000... . . BOOOOMMM!" 16. JF wrote on March 5, 2008 1:39 PM:
"Gee, BBH... and how many FD employees make over $200K here?A whole ONE, in a city that's ten times as big.There's a good reason that those folks are making all that OT.It because a good chunk of the FD and PD left already.Someone has to work.The same thing is going to happen here on July 1, 2013 when 20% of the FD walks out the door on the same day... five years to the day after Sanders eliminates DROP.Smart thinking, Jerry.So tell me about the different industries in Vallejo and how that's different than in San Diego.... oh wait... there was only one industry in Vallejo and it's gone now.Basically SD and Vallejo are apples and oranges, but since it's apparently paradise to you property is probably pretty cheap there..." 17. Torrey Pines wrote on March 5, 2008 2:18 PM:
"A real intelligent San Diegan once told me that the only way that this city will correct it's ills will be when we have a complete financial meltdown. Otherwise, the citizenship will mosey along with the status quo and hope that we all get by. Government systems, and the people who manage them, just won't change their Modus Operendi willingly. I appreciate Mr. Shea's observations. This is one of the finest articles that I have read on the Voice. Anybody running for public office should have this piece stapled to their jacket's lapel." 18. Howiek wrote on March 5, 2008 2:39 PM:
"Yes JF, the only thing Vallejo had was the Navy (Mare Island) and a refinery--both gone at least 10 to 14 years now--Vallejo is just a bunch of rundown businesses and low-rent apartments." 19. Pat Shea wrote on March 5, 2008 4:17 PM:
"Thx to all. Cheeky:I like Aguirre but am not intending to 'boo Peters' or 'vilify' the unions. I like Peters' open position that SD wants to pay the pension deficits and that is what he supports. Far better than others trying to play both sides. And, I admre those representatives of labor that openly propose how these deficits should be paid, by whom and for how much. We won't make any progress unless we can consider these aproaches. Didn't mention 'banruptcy' becasue I'm not the Mayor, and he is not going that way. That's how elections work. Bankruptcy was one option which, I believed, got us where we all need to go faster than other options. But, we're going to do it another way. We'll see how that works out." 20. Pat Shea wrote on March 5, 2008 4:31 PM:
"To Jim: True, the Orange County Bkcy did not cut any employee benefits. That was not any part of the legal or financial issue that drove O.C. into Ch. 9, and no one even raised it. But, about 20-30% of O.C. employees lost their jobs to address the financial shorts, and like here, it was the non-safety folks on the bottom of the political ladder that took the brunt of the hit. That's one of the rotten things about financial messes like this. Those furthest from the flame are often the first to feel the heat. To Dimples: Agree the private sector has lots of retirement related problems, too. Amen to adressing that." 21. Pat Shea wrote on March 5, 2008 4:40 PM:
"To JF: I like people that think like you. We can't solve finance issues with liberal arts approaches. That said, assume your number are right (?) and sdcers earned 10% in its assets of $5.2B. That's $520M. Of that, $416M is already spoken for as the rate of return owed to the system. That leaves $104M. The annual admin cost of sdcers is about $52M. That leaves $52M in "profit". But, that does not include what is taken out of the system for what is known as the "waterfall". Nor does it include paying the 'assumed rate of return' on the $1.2B misssing deficit. That number alone is 8% of a minimum of $1.2B or $96M. You're easily $50-100M underwater every year. And that's just with rounded figures. Think the real problem's bigger." 22. Fred Williams wrote on March 5, 2008 11:49 PM:
"Pat, wouldn't you agree that paying $17 million a year for Moores ballpark, and $19 million a year for the Chargers should NOT be a priority? All things considered, Spanos and Moores can afford to pay their own bills." 23. Johnny One Note wrote on March 7, 2008 9:04 PM:
"Sings again. Do you know any other tunes?" 24. JF wrote on March 9, 2008 6:47 AM:
"Actually, Pat, the number is a little higher than $520 million, because it's compounded quarterly.I don't agree with many of the waterfall benefits because of exactly what you're stating here.My question all along has been; "What does it take to break even and maintain a competitive retirement system?"And, of course, you didn't answer my question to you about the other end of the equation -- raising more funds for the city." 25. Joe wrote on March 9, 2008 8:54 AM:
"Boy Mr Shea, you sure have alot of new ideas! You could have just reposted one of the last 10 articles you wrote for this forum, they all read the same." 26. Billy Bob Henry wrote on March 9, 2008 10:16 AM:
"Here is a great tune, enjoy link" 27. Panchy wrote on March 9, 2008 5:13 PM:
"Silly Billy Did you mean Toon? "Cause I didn't hear a thing!"
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