The Axman Cometh

Forgot pigeons.  The most foul municipal fowls in San Diego are rosters.  And they’ve come home to roost. 

Cranky old misanthropes (like yours truly) have being saying ever since the great crisis of ’02 that the City of San Diego was only putting off its day of reckoning.  The pension crisis became business as usual once the Housing and Credit bubble hid the reality of how underfunded long term pension obligations remained.  Now that the bubbles have popped the pension fund has once again become a huge drain on general fund resources.  And, of course, when investment income streams dry up tax revenue streams are sure to follow.  

Think of the City’s current financial problems as being the same as California’s drought.  No snowpack, no water.  Sinking economy, no revenue, simple as that.  Yet, rather then move to shore up City finances during the good years (and, believe it or not, 2004-2008 were good years) the Mayor and Council took the low, easy road (just as previous Mayors and Councils did during the good years of the 1990s).  No significant moves were made to reign in pensions, trim city work forces or, more importantly, raise revenues to pay for all that “big government” that everybody seems to dislike—unless it’s cut, that is.  Then all those Tea partiers tend to whine about the lack of governmental lemon and sugar.

So now the Mayor and Council must make cuts.  First on the block,  some 200 jobs of mostly mid to lower level employees for a savings of some $20 million dollars.  Not bad.  Just $150 million to go.  The Mayor’s office also said today that most of those who lose these jobs will be able to transfer into currently vacant positions scheduled to be filled.  I’m trying to understand how this isn’t really a push and not a real cut (the net savings from the 200  cuts being offset by filling and paying salary on the 200 vacant positions).  In any event, the savings is but a pittance.  Other bombshell ideas – like pulling out all the fire rings at City beaches to save a few hundred grand – may be DOA as the Coastal Commission sets up hurdles and local residents rally to save their right to pass a Bota bag around the municipal camp fire.

Side note 1:  While 3400 people have signed up for the Facebook group “Save the San Diego Fire Pits”  I must ask how many have signed up for the Facebook group “Raise My Taxes To Save the San Diego Fire Pits”?  The answer, me thinkst, will be zero.   Which is symptomatic of the structural problem:  the Voters want.  They’ve been conned into thinking (by elected officials and the voters own venality) that they can have without paying,   They can’t.  At least forever.  And forever seems to be ending over the next two fiscal years. 

Side note 2:  If ACE parking can have dozens of unattended parking lots where drivers simply swipe a card or insert cash into a machine to get a little ticket saying they’ve rented a parking space for a set amount of time, why can’t the City do the same with fire rings?  Set up machines and charge an hourly rate that covers maintenance costs with a little profit (extra revenue) on top of it.  If people want to hang out at the rings let them pay for it.  And DON’T subcontract it out to ACE parking so they can take the profit.  Surely City employees are competent enough to manage the service.

I find myself incredulous that, increasingly, the only voice operating outside of fiscal fantasy at 202 C Street is Carl “Demonic” Demaio who keeps pointing out that one time fixes ain’t gonna fix this problem.  I differ with Demaio in terms of remedy – he wants to cut, cut, cut – though his proposed cuts alone aren’t going to fix this problem.   

The city needs to do three things to get out of this mess.  First, it needs to figure out a win-win strategy to restructure the pension fund that will cut down on yearly outward obligations without negatively impacting pension recipients.  How you do that, short of bankruptcy proceedings, I don’t know.  But the municipal unions are not going to hand back the benefits the city legally gave them.  Nor should they.  The people of San Diego benefited from their services and are bound to the agreed to compensation.  Maybe inkind compensation—like boosting medical or long term care provisions in exchange for cash-out offsets—can be considered.

Second, the City needs to pursue deficit-offset funding sources.  Unfortunately, most of these – State and, in particular, Federal—are outside the City’s control.  Some, though, may offer more flexibility.  I can’t believe I’m about to write this but, Keynesian economics wins out.  If the local economy is hurting the only way to generate a bigger revenue base in the future is to invest heavily in the infrastructure for such a base in the present.  That means, if ever there was a time to pursue the three big city infrastructure projects — new city hall, new main library and, gulp and heaven forgive me, new football stadium—this is the time.

Big concrete and steel projects mean big spending and payroll in the region over the next five plus years.  Which will help offset municipal deficits projected into that same period. Which will generate additional revenues (at least from the stadium and eventual ancillary development) in the out years.  With Obama banging on bankers to show more civic responsibility and do what bankers are supposed to do—lend!—the credit crunch may be coming to an end.  This can offer the city a tap of money to support these projects.  In addition,  getting these projects underway may open up taps of state and federal monies as well.  Indeed, perhaps the NFL and Chargers organization can be hit up for more up front monies now in exchange for an expedited stadium deal and public monies later.  While it would constitute another one of those lousy one-time money fixes, a patch in a sinking boat is still a patch.

I know I’ve railed against all three projects in the past but, as Keynes said, when times are hard having the government pay a man to dig a hole and fill it back up again is still better than having the man unemployed.  Ultimately a new Charger stadium may not be the best long term use of municipal monies but it may be one of the quicker ways to get money into the municipal treasury and the local pocket.   

Third and finally, the Mayor and council have to look at longer term fixes, such as true-costing future development projects to be sure that, when the next building boom and bubble comes, as it inevitably will, developers and buyers must pay the true public cost of their projects in terms of future city services and expenditures rather than just passing them off to the public trough.  

There is, ultimately, no such thing as a free lunch or fire ring. Time to roast some roosting rosters of fiscal foolishness and set the house in order.