Just three years ago, candidates for mayor discussed seriously whether the city should declare bankruptcy because of its pension obligations -- one serious candidate claimed it was unavoidable. Likewise, our city attorney claimed it was critical to invalidate benefits he deemed "illegal," and the candidates for mayor agreed he should have that chance. He filed that case ("Ta-Da!") and lost that case ("Thud!"), yet the pension system has recovered and nobody talks about bankruptcy anymore. What happened?
Well, since 2003, the mayor(s), City Council and employees have addressed pension funding in a variety of ways. Beginning in 2004, we stopped the annual pension underfunding that had been a practice since the mid-1990s. In ballot measures that year, we outlawed further underfunding agreements and we reconfigured the pension board so that it would no longer be run by a majority of persons with financial interests in the pension. In 2005, the city’s labor agreements produced a reduction in the pension deficit -- estimated at $350 million -- that was worth approximately seven times the cost of the 2002 benefit increases. That came about because employees went without raises and took money out of their pockets to pay a higher proportion of the cost of their benefits. We committed to a payment schedule that will eliminate "negative amortization." And in the past three fiscal years, we have paid more into the pension system than our actuarially required contribution.
As a result, and because the pension system’s investments have performed well, the pension has recovered. In a remarkable presentation in April virtually ignored by the media, the city’s independent actuary found that the pension system was not bankrupt, but was financially "sound," and that "there is no material risk that SDCERS will be unable to pay the benefits which the City has agreed to pay." And as pension administrator David Wescoe pointed out last week in response to the city attorney’s 24th interim report (a set of publications less interesting but more imaginative than the Harry Potter series), projections for the next 20 years "show a decrease in the City’s annual required contribution as a percentage of payroll and the reduction and elimination of the [Unfunded Actuarial Liability]." That’s good news we can all be proud of.
Nobody thinks that’s the end of the work -- certainly not me. Even though our pension payments are now expected to decline over time, the IBA’s report still warns of a structural deficit. The fact that this report was even prepared is itself good news. It is possible the City Council and the public would never have seen this kind of report without an IBA, a position that was illegal under the old city manager governance system. The new system of government, which began in 2006, allows and necessitates a more open and honest discussion of finances and fiscal issues than ever took place under a city manager.
The IBA report does not attribute the city’s deficit problem to the labor agreements of 2002, which your editorial does, if obliquely. In fact, while virtually everyone, including me, agrees it was a mistake to underfund the pension in order to give raises and to maintain services, that controversial vote resulted in only 4 percent of the pension deficit at that time. (The annual cost of that vote is far less than the cost of outside attorneys’ fees incurred by our city attorney every year.) And, as I’ve explained, a lot has changed and improved since 2002.
The IBA report does confirm what we have long known -- San Diego is a low revenue city. Right or wrong, the City Council has been reluctant to impose new or significantly higher fees, and voters have generally not approved new taxes. In San Diego, two measures in 2004 to increase transient occupancy (tourist) taxes -- on visitors, not San Diegans -- both failed. Thus we are forced to operate with limited resources, and we have cut a lot of worthy programs just to stay close to our resources. I’m proud in this context that we have still been able to maintain services at the level we have, while (appropriately) increasing spending on police by nearly 40 percent and fire protection by roughly 50 percent since the Cedar Fires in 2003.
Our long-term structural deficit is exactly that: long-term. It took us decades to get to this point; we cannot solve the problem overnight. As the IBA suggests, we must have a civic conversation about smart, legally sound ways to reduce our expenditures and/or increase revenues. The IBA report is the first step of many in finding ways to make our city structurally sound and a model of efficient, transparent governance for other cities nationwide.
Scott Peters is council president of the San Diego City Council, where he represents District 1, and a candidate for city attorney.
Comments so far on this story:
1. La Playa Heritage wrote on February 28, 2008 9:59 PM:
"We agree. Ms. Tevlin our Independent Budget Analyst is showing great leadership in talking about the financial condition of the city in an open forum."
2. What Planet Is Scott Peters On wrote on February 28, 2008 10:02 PM:
"Pinch me!!! Is it 2003? Because this op-ed sounds exactly like the same dribble we heard from Scott right before the awful truth came out that the city had broken the law, committed securities fraud, raided water funds illegally, covered up deficits, etc. ALL under Scott Peters' watch and with his votes. Yes, someone please pinch me!"
3. Christopher Hall wrote on February 28, 2008 10:34 PM:
"Nowadays, 'Enron By the Sea' means (refers to) people in power who are willfully negligent. These characters crash corporations and cities into ditches hurting innocent bystanders. Just like the guys who sank the real Enron, we have politicians doing the same to San Diego. // How is it that in the real Enron they got jail but in the improved San Diego version of Enron, they got nothing? Well, what makes San Diego 'Enron 2.0' is that here, in this city, not even the worst Enronites got their due justice, they got away with their actions -- so in reality, San Diego is even more Enron than Enron was. // To sharpen the point, now the Enronites are writing pap like this article, which is truly beyond the pale!"
4. jorgeelgato wrote on February 28, 2008 11:33 PM:
"Given your record of leadership why in the world would anyone vote to give you more tax dollars to spend? I am sure others will comment more fully on your fairly bizarre rationalizations and minimization of the fiscal impact of your conduct. What is galling is now that you admit your 2002 vote was a mistake, you have as far as I can determine, failed to offer Dian Shipione anything in the way of a public apology for the appalling manner in which you and others on the council dismissed her concerns, which of course were well-founded. What seems to have gone utterly passed you is that quite apart from the fiscal problems you seek to minimize, what you and your colleagues on the council really cost this city was the ability of its citizens to have any faith that their government would be run honestly."
5. jorgeelgato wrote on February 28, 2008 11:59 PM:
"Then there is the matter of the Friday afternoon golf. There are literally hundreds of thousands of honest hardworking people in this city. They are teachers, they are coaches, they work in hotels, and restaurants and they own businesses large and small. All of them certainly make mistakes, but when they do they generally come up with a better excuse than "I was too busy on Friday afternoon's with golf to do my job." So please tell me, are you still taking Friday afternoon's off to golf?"
6. CaboWabo wrote on February 29, 2008 1:36 AM:
"I just hope Aguire can't sue Peters over this fabricated charge that he brought to the State bar, Peters has already spent enough for defense attorneys paid for by SD taxpayers."
7. Point Loma Resident wrote on February 29, 2008 5:08 AM:
"Scott, Do us a favor and get a job outside government. Given that you got us into this trouble by voting the City into billions of dollars of debt, we don't need your help no more. Then, you authorized the City Attorney's office to sue to overturn those benefits, but more recently lied about your closed door comments in this regard. Geez, how do you say "hypocrite" in legal terms?"
8. Leanne1 wrote on February 29, 2008 6:37 AM:
"Hypocrite. I don't trust a word he says. He has proved himself by his actions...and the proof is that he wastes resources (how's that rain forest doing?), is an indifferent leader, participates in low end party politics, and has sold himself to the special interests of the unions and developers. In other words, a typical San Diego politician with excuses for bad decisions. Would not vote for this man if he were the only one running."
9. Just Wondering wrote on February 29, 2008 6:53 AM:
"Mr. Peters what's your take on the City revenue sources? Are we taxed appropriately for the services rendered? Is our revenue inline with other cities in the State? Does San Diego receive its fair share of State and Federal distributions to Municipal Governments? Does the city get its fair share of grants? I whole heartedly agree with Ms. Tevlin's analysis. I’m dismayed that you believe we can take a "long term" approach to fix this. Using the rational; it took us a long time to get into this situation is a red herring. The truth; it took two votes, one on MP-1 the other on MP-2 to create this mess. Time is only a factor when we consider mismanagement, concealing the truth from the public and politician being termed out so they won't not being held accountable. It’s time to fix this NOW."
10. Henry the 4th wrote on February 29, 2008 7:20 AM:
"Greetings Scott-I'm glad you could come down from the mountain and explain to us mortals why the City's budget mess is no big deal. As one of the founding members of the Gang of Five it must please you from time to time to explain to the dirty tax paying plebs why you are master and they simply must pay more more more for the bloated pensions and benefits they demand for their city employees. I also understand you've got a little bit of a water use problem at your La Jolla estate. Seems you need to keep your private woodland irrigated. Clearly you've grown quite wealthy in City service. Viva Mike Aguirre!!"
11. Dukestir Wilkes wrote on February 29, 2008 7:57 AM:
"Phil Thalheimer: I'll spend one million to win. Marshall Merrifield: In that case, I'll spend two,"
12. Dukestir Wilkes wrote on February 29, 2008 8:01 AM:
"Todd Gloria: I'm the frontrunner, look at me. Stephen Whitburn: Not so fast, I'm closing fast. John Hartley: I'm the Ralph Nader of D3."
13. Dukestir Wilkes wrote on February 29, 2008 8:04 AM:
"Carl DeMaio: I'll buy the District Five seat. Bob Ilko: Do I even have a shot?"
14. Dukestir Wilkes wrote on February 29, 2008 8:08 AM:
"April Boling: I can't be worse than Madaffer. Marti Emerald: I can't be worse than Madaffer."
15. Dukestir Wilkes wrote on February 29, 2008 8:11 AM:
"Jerry Sanders: Send me money, send it fast. Steve Francis: Mayoral campaigns are not good investments."
16. Mark Schaeffer wrote on February 29, 2008 8:24 AM:
"Civilization is high maintenance, and San Diego has pretended otherwise for too long, from hostility towards power, apathy, or ignorance. Now is the time to reverse that trend. Save yourselves!"
17. Simple Guy wrote on February 29, 2008 9:36 AM:
"Henry, Point Loma, Jorge, Christopher Hall et al, get over it. Everyone knows the 2002 benefits increase vote was a mistake. It's 2008 now. And thanks to the responsible leadership of people like Scott Peters, Jerry Sanders, Andrea Tevlin, and the other reasonable people in our city government, San Diego is well away from the threat of bankruptcy and headed in the right direction financially. As soon as Aguirre is out of office, whether he's replaced by Peters or Goldsmith or any of the other candidates for that matter, the City will take another major step toward civic health. Let's quit looking back at 2002 and start looking forward to 2008, 2009 and beyond."
18. Larry wrote on February 29, 2008 9:38 AM:
"Let me be the first to thank you for joining the city attorney race. Because while you're focused on that futile effort, it's going to be hard for you to screw up our city any more than you've already done. Thank you, mister Million Gallon Man!"
19. Wake Up San Diego wrote on February 29, 2008 9:44 AM:
"You can agree or disagree with what Mr. Peters has accomplished or not but the facts remain, the City AND the entire County needs to have a serious face to face talk with itself and decide if it will ever be the first class City that it pretends to be. The streets are horrible, the sewers are still breaking, city hall/civic center looks like a Yugoslavia housing project, the parks are barely operating, Balboa Park is falling apart, gangs rule half the COUNTY (are you listening Supv. Roberts...oh thats right, you can't hear us when you're in China!! but I digress). To paraphrase Mr. Peters, unless all the citizens starting paying for the Rolls Royce they think they own, they will keep driving the Pinto while buring their head in their free trash collection."
20. Paul Lazarr wrote on February 29, 2008 10:07 AM:
"Can't wait to see Scott Lewis deconstruct that PR release."
21. JF wrote on February 29, 2008 10:15 AM:
"Scott, generally speaking I agree with your analysis.However, you're being less than upfront when you say that you increased the FD budget by 50% since 2003.A whole two engine companies have been added in that time, when twenty two were needed.All you did was actually budget for the overtime that happens each and every year, rather than list it as a overage.That's a step in the right direction for transparency.You still only got 10% of the needed improvements done.I can't speak for all firefighters, but I'll vote down a raise if the city council and mayor fund ten more fully staffed engines for next year.We need help."
22. south park human wrote on February 29, 2008 11:02 AM:
"Mr. Peters please save your dribble for someone who cares like the unions and the evens. You sold out when you didn't need too - you had the independed wealth to be an independent and you sold out for a few gold coins. Someone suggested you should just go ahead and get that job with the unions or maybe the evens can hire you."
23. Joe wrote on February 29, 2008 11:02 AM:
"Now that you acknowledge city employees for forgoing raises and paying more into their pension (to "help the city out"), can you please explain why you voted to let Aguirre go forward with his ill conceived lawsuits? City workers are tired of being asked to sacrifice and then have you and other officials use us as whipping boys. City workers did not cause this mess, elected officials did!"
24. Joe wrote on February 29, 2008 11:02 AM:
"By the way Scott, the city IS cutting services in every department and the idea that services are not being cut is a facade. You also forgot to mention that you and the mayor want another 10% cut from every department for the upcoming fiscal year. The cracks are showing."
25. power_of_cheese wrote on February 29, 2008 11:40 AM:
"The good news about city finances is that Scott Peters will soon be off the City Council. Just today we learned that Peters in fact *approved* of Aguirre's filing suit to overturn pension benefits. Peters wanted Aguirre to sue, in a desperate attempt to stop the hemorrhaging of city funds which Peters himself helped orchestrate, but, with characteristic guile, wanted only Aguirre as plaintiff, and not the Council. As today's U-T reports, Peters et al. "wanted a ruling in the case, but did not want their names attached, because they didn't want it to look like they were questioning the legality of benefits they had negotiated, the transcript says." How can anyone continue to be taken in by this unctuous patrician charlatan?"
26. Dimples wrote on February 29, 2008 12:22 PM:
"Thank you Scott for telling the plain truth. Drama junkies won't like it and maybe it is a little too dull for the media. Yours is the voice of reason. You've taken a stand and its on solid ground. There is a lot of work yet to do, and we need a leader with your kind of conviction to get it done. Best of luck to you!"
27. CaboWabo wrote on February 29, 2008 1:11 PM:
"In an interview yesterday, Peters, who is running to unseat Aguirre in the June 3 election, said Aguirre “definitely went beyond what we authorized. If you read (the transcript), it's pretty clear.” I'm sorry Scott, but you're a baldfaced liar! And you keep repeating the lies! Please retire to your La Jolla mansion. And leave us alone."
28. clp wrote on February 29, 2008 1:57 PM:
"If being 1.5 billion dollars in the hole is "fiscally sound" then I'm a monkey's uncle. San Diego cannot even fix its potholes let alone treat City workers fairly. San Diegans need to pay more taxes for this city to be livable. Unfortunately most of the politicians, Mr. Peters in the first rank, are cowards, lacking the guts to even mention the T word ("taxes"). Donna Frye-the most honest politician I have ever seen-acknowledged the possibility of tax increases when she ran for Mayor and got spanked for it by voters living in a wonderland where low taxes lead to great services. We need more honesty and leadership like Donna's to solve these problems, not more political blather like that just excreted by Mr. Peters."
29. Nelson wrote on February 29, 2008 3:35 PM:
"Hey Scott, so far 2 out of 24 comments are positive--Simple Guy and WakeUP SanDiego- If that is any indication, I doubt you will get passed the Primary for City Attorney. The everyday citizen is on to you! The destruction of the neighborhood and its character will be your legacy for District 1! Those who pay attention have witnessed your indifference to residents, your manipulation of the truth, your smooth deceptive and misleading articles and speeches, and your inability to vote for the best outcome for District 1. Please leave now and leave my neighborhood alone. Mike Aguirre will prevail because his heart is in the right place--with the people!"
30. Christopher Hall wrote on February 29, 2008 4:46 PM:
"Hey Simple Guy -- it's blowing off the facts, cutting out the details, ignoring recent history of the past 10-15 years and false promises of a bright future that ARE THE PROBLEM. You ask people to get over it, as if it's just that simple. You, my friend, are the face of willful negligence with a greasy sheen if ignorance glistening off your ever growing nose. Simple, indeed! // Thanks to the 'Simple Guy' types, people are made even more determined to not get over it, and to take it out and thrash it!"
31. Anti-Peters wrote on February 29, 2008 10:58 PM:
"Hi Scott, Thanks for all the work you did in, for once, not stopping/blocking the ballot measures that allowed the good people of San Diego to outlaw you and your ilk from ever enacting another 'closed-door' deal with the unions to increase their already 'blue ribbon' benefits and retirement package. If you have ever had a deep enough thought to wonder why the "tourist" tax was voted down, maybe some of the fine folks who have posted here would be willing to patiently explain to you that San Diego is a tourist town and, by raising taxes on their visits, it just might make them think twice about San Diego and consider other locations. But such trifles are the worry of the private sector and not worthy of the attention of one who draws his paycheck and golden benefit dollars from the sweat of others. ("Thud!")"
32. Henry the 4th wrote on March 1, 2008 9:42 AM:
"Joe and Wake Up and Scott-Come on-PLEASE- You and me and the guy layin under a tree in Balboa Park know that every new dollar of revenue is going to be vacuumed into the pockets of city employees and the very large imperial court that Scott and his fellow mafiosi maintain in City Hall-WHY? you may ask-BECAUSE THEY CAN!! Nature abhors a vacuum and the political vacuum in San Diego is filled by self-serving monsters like Scott, Jim, Ms. Golding, Ms. Kehoe, and an endless shimmering rogues' gallery of liars, pickpockets and outright thieves. The people who need to REALLY GET REAL are city employees-you are making more than the people who employ you and that situation is not based in reality--in other words it is not sustainable. Do you understand this? Capiche? I know you've got a sweet deal, and you'll fight like a cornered badger to protect yourbenefits."
33. Disgusted wrote on March 2, 2008 12:02 AM:
"With the exception of a few, most notably "Wake Up San Diego", most of you people with your drivel for comments are so far off the mark, it's laughable. "Wake Up San Diego" has it pegged - things cost money and this City doesn't have enough - and that's been obvious for far too long. Long before MCGory "borrowed" the Pension money in 1996 by initiating a practice of short paying into it, San Diego has been broke. Expensive tastes like picking up trash for residents with not enough money to pay for it. Elected people who can't vote themselves a pay raise surely can't be trusted to make sure adequate revenues are coming in. These complainers get what they deserve. Read your own comments and stew in your own juices. You've made San Diego what it is."
34. Time for reality wrote on March 4, 2008 12:15 PM:
"Thanks to those who recognize Scott Peters and the others who voted for the ill-conceived pension benefits are not the reason this city is in deep financial trouble. When will we accept that all the wonderful things we want are not free? No one wants new taxes or fees -- of course! But do they want what they get for low taxes and fees? Apparently not. As much as I hate that podunk "Just Fix It" column in the U-T, it does speak volumes about how broke SD is when the infrastructure managers admit there just isn't a budget to fix anything. Blame the pension costs if you want, but the real issue is a revenue issue, and until we face that, our city will continue to slip deeper into disrepair."
35. realchange wrote on March 17, 2008 8:08 PM:
"For the love of God people, if you want things to change we have to look at the money. If you do nothing else look at the money at link . It matters. You can see who and what industries support your candidate. Gloria will be a disaster he is backed by the Building Industry Association and massive developer contributions. If we want reform we have to elect leaders that are beholden to the citizens and not special interests and that will take down the current leadership structure which is corrupt and run by special interests. This election is exciting because we can take this city back!!!"
PRINT 
E-MAIL STORY
SHARE
FACEBOOK
REDDIT
NEWSVINE
DIGG
DEL.ICIO.US
BLINKLIST
