Friday Fish

I moderated the first of six election programs at the Catfish Club today.  This event was on the pros/cons with the strong mayor system.  Darling Donna Frye squared off against  political consultant and Strong-Mayor guru Adrian Kwiatkowski. I’d call it a split decision but that’s because I’m increasingly ambivalent/agnostic on the issue.  The audience, for the most part, seemed to go with Frye and the return to the old Mayor-Council-Manager status quo.

For me, I’m not convinced going back to the old model would do any good.  Indeed, I’m historical a supporter of the Strong Mayor system–except for the fact that the current system is only a kinda-not-weak Mayor system, what with the simple majority veto override power.  Strong Mayor 2.0 promises to right this mistake and increase the council from the oddly even current eight members to the rightly odd nine members with a two-thirds veto power.  That’s all well and good.

Three things have made my support for waiver, however.  First are the slew of stories (such as Don Bauder’s Reader exposes) on just how cozy things have gotten behind the closed Eleventh Floor doors of the Mayoral fiefdom and downtown interests, some of less than savory repute.  Second has been accusations by Councilmembers like Donna Frye that, now that the Chief Operating Officer formerly known as the City Manager is no longer directly accountable to the Council, the typical response of city staff to council inquires is a polite, bureaucratic “drop dead.”  And third, being a stalwart believer in Cicero’s admonition “show me he who benefits and I’ll show you the guilty party,” I’ve got to wonder why all the champions of Strong Mayor 2.0 (as well as the original Prop F) seem to reside in the moneyed towers of our municipality.  If just a few bona fide citizen activist groups—particularly a few representing  some of the city’s less advantaged denizens—where systematically stepping on in favor of this, I’d have less of the “oh my, there goes the power elite again” heebie-jeebies.

But I’ve still got an open mind on all this and wait to be wowed by the Strong Mayor 2.0 pro and/or cons artistes out there.

For now I’m just content knowing that Friday after next I get to return to the Catfish club for a nice piece of fish and a good side of debate.  And it will be my birthday!  I do hope they have cake….

Fried

Late word that Darling Donna has decided to sit out the race to out Righty Ron Roberts is disappointing though, from what I’ve read and heard, not unexpected.  The Board of Supervisors is not exactly the most exciting of civic electoral posts though its significance to the local quality of life is far in excess of its public profile–or notoriety. A Frye-Roberts free for all would have been interesting and useful to focusing attention on the body–as only a Frye candidacy would do.  One can only hope that Donna is saving herself for one last fling at the Mayor’s office.  Otherwise it just might well be Carl Demonic DeMaio as the new strong mayor in chief.   Oh, where have all the a good Democrats gone?

Summer Song

 Broke my long hiatus from punditry today with an article on the city’s faux-budget. Read it, hot from the pages from CityBeat Analog, here. Haven’t written since my last, aptly named entry, “Last Hurrah” back in April. Don’t really plan to write any more until the end of August. I’m not teaching this summer, for the first time in around 20 years, so I’m taking the summer off from my usual concerns–teaching, administrating, teaching, punditrying and, of course, teaching–to pursue other pursuits (beach, patio, other writing projects, beach, patio and, above all, five o’clock proseco time in the gazebo. I’m not kidding. We have a freakin’ gazebo and, every summer day at 5, adjourn there for a glass of cold proseco. It’s a good life.)

In any event, what is there to say right now that’s worth saying? At the local level things in June, 2009 are not really all that different than in June, 2000 or 2001. The city continues to muddle along with the usual mediocre municipal mundanity: precarious finances, feckless leadership and a gentle diminishment of America’s finest city to just another over-extended, under-repaired American town. Frye will be off the council soon, Jerry will be off to gentlemanly retirement and DeMaio will be Mayor—so it has been written, it seems, so it will be done. The Tribe of Five Old White People will continue to dominate the County. The Airport Authority will continue to plan billions of dollars in new projects that will never be spent for an airport that will never be adequate or replaced. The Chargers will continue to lobby for their new stadium which will inevitably be built with public monies (my suggestion, alas, that they build it beneath a three trillion dollar convention center expansion—which, I think, around the amount the convention center really dreams of spending) whether it takes another year or ten. Only the decline of the UT and the tantalizing possibility that the new owners might realize that if Kittle and Kompany continue to dictate editorial viewpoint the paper’s circulation will continue to shrink to the sixty-five and older north of Mira Mesa Boulevard crowd offers some hope for a break in the local monotony. Who knows – by fall the UT may have a new crowd (albeit probably a bunch of twenty-somethings paid minimum wage) flogging the pagewaves. Couldn’t hurt.

Of course, things have changed dramatically in Sacramento. Six years ago we had an unpopular second-term governor disowned even by his own party presiding over massive state deficits, declining services, increasing taxes, unrestrained partisan warfare with absolutely no realistic solutions being offered by the legislative leadership lugs. Oh, how times have changed. (Dramatic pause for sarcastic effect.)

And, at the national level, we have our Obama moment, Act One. Tobacco has been regulated. Some form of healthcare reform is on the way. The economy is no longer sinking. Yay. Except that the tobacco reform is about two generations too late to really matter, the healthcare reform is going to be delightfully watered down and any leveling off of economy we’re currently seeing is actually a consequence of actions taken last fall before Obama came into office. It takes around six months or more for policy decisions in DC to trickle into the real economy—the Obama stimulus won’t really begin to be felt until late summer and, by then, will be revealed, I fear, to be too little. Unemployment continues to rise – my bet is it eventually hits 11%-12%. Foreclosures continue to mount and the other shoe of the real estate debacle—the commercial side of the house—is caving. (Count empty storefronts and commercial “For Rent” signs next time you’re out.) At some point Obama’s love affair with Wall Street and Wall Street types has got to end and more aggressive Keynesian tactics aimed at homeowners and consumers have got kick in. According to retail experts, it’s going to take ten years, at this point, to get back to consumer spending levels in 2007. If everything starts turning around now. Obama keeps going the path he’s going and he runs the risk of becoming the American Kiichi Miiyazawa, (the Japanese Prime Minister who helped keep Japan from falling into depression back in 1990-1991 but, instead, ushered in a decade plus of stagnation.) The world can—and did—survive a stagnant Japan. It won’t survive, with any stability, a stagnant United States. Meanwhile national discourse has degenerated to a nasty level that simultaneously makes dock workers blush and insults the intelligence of second graders. I’m taking the summer off from Fox, MSBNC and the entire AM dial. I haven’t heard one original thing said (Obama is a radical, communist-socialist-muslim-American-hater and Republicans are Rush Limbaugh) in months by any of my brethren (albeit it far more lucratively compensated kin) in punditry. My bet is, come September 1, I turn on Sean Hannity and Chris Matthews after a two-month hiatus and I won’t have missed a beat. Maybe, by end of summer, democracy will have come to Iran. (Which I doubt. Erstwhile president Ahmadinukejihad will emerge from this ultimately stronger, probably having co-opted the authority of the religious clerics and, thereby, regressing Iran back to a standard authoritarian model.) If democracy does triumph, however, people are going to (oh, it gives me gout right down to my little toe to write this) reassess the Bush-Cheney theory of viral democracy. Look at Lebanon. But that’s a debate for another month.

In short, I go into the summer feeling crotchety and persnickety about all things political. By summers end, though, batteries recharged, feelings reinvigorated, I’ll be back to pound the punditry pages. Hopefully in a reformatted format—one of my summer projects is to try and upgrade and integrate this blog into more comprehensive website that can be useful to both my students and you, my faithful reader. (If there are any of you left – alas, even poor Mlaiuppa has bailed on me given my niggardly natterings. ) As such, a bid you summer time adieu. Look for me when the dog days are over, if you care to.

In Lieu of Flowers

From Today’s Hard Copy of City Beat

A Eulogy For Mike Aguirre

True to my prediction of four years ago, Mike Aguirre has become San Diego’s version of the mad Florentine monk Savaranola: having incited the locals to burn down the downtown power establishment he finds himself instead burned at the political stake.  His legion of detractors, however, from the editorial and blogger  pages of the UT to the front office of the Chargers to the halls of City Hall right to Jerry Sanders himself might well find they will  ultimately rue the day of Mad Mike’s fall.  For now whom will they blame their many failings on?

No longer having Aguirre to kick around, Gentlemen Jerry and the City Council may also find that the only thing that’s kept the political peace in San Diego for the last four years was their  shared fear and loathing of Mike.  Sanders first tried to triangulate with Aguirre against the council, then teamed up with the council against Aguirre. With Mike gone and all the financial problems hanging over the city, watch the mayor and council turn on each other like rabid and ravenous professional politicians.

Let us not underestimate or minimize the degree to which Mike mauled himself. By most accounts Mike’s management of City Attorney’s office was closer to Humprhey Bogart’s helmanship in the Caine Mutiny than E.G. Marshall’s stewardship in The Defenders His inability to focus on any one project long enough to see it to completion, whether it be run-of-the-mill civil litigation or major investigations left him long on rhetoric but short on accomplishment.

Meanwhile the promised centerpiece of his litigation empire—the lawsuit to roll back pension benefits– only served to alienate Aguirre from what could have been a political alliance with the municipal unions and gave the UT with millions of dollars in ‘wasted money” to shoot at him with.  That Jerry Sander’s said the lawsuits  needed to proceed and be resolved  before he could take any actions to solve the pension problem somehow has gotten deleted from the pension narrative.  With Jan  Goldsmith ready to drop the litigation, the UT’s question should be:  So what’s the new pension plan, your Mayorship? Instead, no doubt, the paper of record will congratulate Goldsmith for saving millions of dollars by dropping litigation aimed at saving hundreds of millions.   Se la vie.

And then there was Mike himself.  Or, specifically, Mike’s mouth.

Mike seemed to have reinterpreted Thumper’s Mother’s advice to be “If you can’t say anything nice about someone, go out of your way to kick them as many times as you can.” Mike was San Diego’s little boy who cried corruption so often that, even when corruption seemed to be evident (can you say Pensiongate?  Sunroadgate?) the press and much of the public rolled their collective eyes and said, “There he goes again.”   What Mike forgot was the Occam’s razor of municipal government: never claim corruption and conspiracy when simple incompetence will suffice.

Aguirre actually had a higher view of the city’s leaders than most common folk did.  Presented with the incredible screwups on every thing from sewer systems to development deals, most San Diegans simply threw up their hands and said, “What d’ya expect from those clowns.”  Aguirre was actually charitable enough to assume that city officials—both elected and appointed—where smart enough to know what they were doing and that screwups where actually intentional subversions of the public good.  His constant maligning of multiple malificient muncipal malefactors, however, eventually fell flat in the face of the depressingly low level of competence San Diegan’s have come to expect from their municipality.

Yet the real irony in the case of Mike Aguirre was that, no matter how flawed the messenger may have been, his fundamental message—that the city was heading towards, be it by incompetence, corruption or cowardice, a fiscal Armageddon and no one on the council (with the exception of Darling Donna Frye)  or the Mayor’s office was willing to even so much as admit how bad things were let alone take proactive steps to head off disaster–was  quite correct. Indeed, Mike is even more correct about the state of the city leaving office in defeat than when he entered it in victory.

Between 2000 and 2004 the city became the municipal version of the Titanic, slamming full speed into the pension fund debacle.  Over the last four years, under the stalwart stewardsip of two mayors, two acting mayor and scads of City Managers and CFOs,  the city backed up and then slammed full speed ahead into that iceberg again. And again. This time the ship might finally sink.

As Aguirre recently claimed (and Dan Bauder reiterated in last week’s Reader)  the pension fund deficit, around a billion  and a half dollars when Mad Mike came into office, is probably closer to THREE billion today.  Back in 2004 the City was in the middle of good times with the markets and tax revenues on the rise.  Today the City, like the rest of the country—and the world—is in a recession heading towards depression. Which means any hope of riding this out without making major—and painful—cuts are simply delusions or deceits.

The city council might want to hold off voting to ban plastic shopping bags. What will hundreds of city employees put the contents of their desks into when they are, let us say, sent on extended permanent furlough (what shall they call “firing you”? Let them count the ways…) once the full financial plight of the City is realized? Keep a few branch libraries from closing?  By this time next year the Council may be selling the library’s books on E-bay for spare cash and wondering how to keep at least a few police stations open. Citizen Aguirre thus leaves office as he came in,  with the name of his cherished boyhood sled “Bankruptcy” on his lips.

That Mike Aguirre leaves shallow footprints on city politics is in part due to his own personal failings but more because so many of the city’s movers and shakers worked so hard to brush him away.   His attempt to turn the City Attorney’s office into something of a Tribune of the People is now being rolled back, much to the relief of the city establishment. Safely ensconced at last in his new City Attorney digs, Landslide” Jan Goldsmith is ready, true to his word, to take the office back to the halcyon days of  Casey “Pension underfunding? Sure we can do pension underfunding”  Gwinn.

Just how will Ferret Man Jan deal with the next Sunroad? Or the next (as in current) pension under funding scheme?  Will Goldsmith continue any of Aguirre’s Quixotic adventures, like efforts to force Kinder Morgan, the corporation that owns the tank farms by the stadium, to finally make good on its legal responsibility to clean up the Mission Valley aquifer  contaminated in a fuel spill twenty years ago? Given that Goldsmith campaigned on the platform of turn the City Attorney’s office back into the legal mouthpiece of the mayor and council, one can only imagine the answer.

Meanwhile the changing of the guard at 202 C Street is now complete.  In addition to Aguirre’s agonosites,  the last four members of the City Council’s gang of seven (the gang that voted the city into its current fiscal failures starting in 2000) have been turned out as well, though, in these cases, by term limits and not voter vindictiveness.

And thus it’s a final irony that, with the exception of Dick Murphy (who cheated a public recall hanging by his own political suicide) Mike Aguirre is the only elected San Diego official since to pay any price for a lack of success in public office is recent memory. (And how many people DID get fired over that little Sunroad flap?  Ah ha.  Thought so.)  Scott Peters is off to his cozy sinecure on the Port Commission, a going away present from his former council buddies. The troika of Atkins,  Maienschein and Madaffer may be, as yet, unspecific about life post-council but we should all sleep well at night knowing that there’s probably a nice public sinecure or private partnership awaiting them somewhere.  Jerry Sanders,  meanwhile, having coasted to easy reelection can now hear, wafting whispers of his name on the lips of Republicans desperate to find some one to run for governor in 2010.

Only Mike Aguirre comes out of this miserably mauled.  But take heart Mikey. Your principal public antagonist, the UT, is on the sales block.  And your political antagonists like Peters and Sanders may well see their political shelf-lives shrink to that of overripe mangoes given the financial fury facing the city.  Indeed, it is unfortunately possible—and not for your lack of warnings–that your dourest predictions of municipal collapse might yet come true.  Like the mad monk Savaronola ranting against the corruption of the  De Medici’s, you may end up vindicated in the end.

And the citizen’s of San Diego may find themselves saying a few years—or months—if only we’d listened to that obnoxious Mike Aguirre.

Word Games

What do you get when you combine the millionaire Republicanism of Mitt Romney and the hot-tempered progressive populism of Mike Aguirre? That would be local self-made millionaire running his own multi-million dollar “I’m already a millionaire and now want to be a mayor, too” Steve Francis.

Francis has hit the media board running with an unprecedentedly early and expensive mayoral primary media blitz. His platform is to the social progressive left of Sanders and the fiscal conservative right – no mean feat. But if Dick Nixon and Pete Wilson could do it in the 1970s, maybe Francis has a shot at it in 2008.

Francis makes great political hay out of the fact that he’s self-funding his own campaign. There’s a political equivalent to the old saying that “a lawyer who defends himself has a fool for a client.” It’s “a man who finances his own campaign has proven he has only one supporter – himself. At least, that is the conventional wisdom on such matters. Self-funded candidates have, on the whole, done worse in elections than those who do the dirty work of digging in the muck for political moola.

And Francis’ claim that self-funding his campaign will keep him independent of influence from all those nefarious special interests out there. Should he be elected he’ll owe something to the groups that banded together to vote in into office—at least if he wants to be reelected down the pike. Of course Francis also says he doesn’t care if he wins reelection—and that may be true.

Four years in the morass of city government may be enough for anyone. Francis could have the advantage of a one-term shaker-and-a-changer. But, then again, becoming a self-admitted lame-duck from the moment he is sworn in can work against him. Long-term municipal interests (the kind who plan to be around more than four years—or four decades) will figure they can just hunker down and wait Chango Stevo out.

But even then Francis will have to deal with those downtown interests—municipal employees, cops and firefighters, developers and financiers and the rest of the cast of characters who have been a part of city politics for decades. And he will have to do favors here, end up with IOUs there, if he is going to get his agenda for streamlining and making transparent city government.

In short, if Francis is going to win the election and, more importantly, successfully deliver on his campaign promises, he’s going to have to become something of the very specious he deigns himself above: a politician.

But Francis’ rebranding of himself from the arch-conservative choice in 2005 to the people’s rational choice in 2008 makes sense. The Democrats still have yet to pony up a candidate to challenge Gentleman Jerry from the social progressive left, leaving Francis free to adopt rhetoric more usually the turf of Mike Aguirres and Donna Fryes. And Francis’ self-funding may matter less in San Diego, where contributions to mayoral races still tend to come from a few thousand people—usually members of organized interests—and not from grass-roots Barack Obama/Ron Paul/Dennis Kucinich style e-campaigns. So the amount of money Jerry raises for June will be less representative of deep popular support.

And, as Francis keeps hammering on the simple and true message that Sanders has delivered on almost none of his significant campaign promises from 2005 against a backdrop of what promises to be a grisly budget season with tough cuts called for, Sanders veneer of Teflon may well start to wear thin.

After all, what do you get when you mix the jovial ineptness of Jerry Ford with the ineffective administration of Jimmy Carter?

That would, of course, be Jerry Sanders.

And so far Steve Francis is the only—and, therefore, best—alternative to four more years of the same: the City treading water as it slowly drifts towards fiscal shoals again.

Go for it, Stevo. Show ‘em the money.

Charter Reform This

Egad how complicated can you make charter reform. What to put on the ballot? When to put it on? Come on, guys, it’s not that complicated. Here is the four-step plan to simple San Diego charter changes:

1. Mayoral Veto: The UT had to have published one of the most inane editorials it ever has (and believe me, the competition for the title in the annals of UT lore is intense) last Sunday when it lambasted the City Council for refusing to accede to the Mayor’s ultimate dream scenario of requiring a super-majority to veto Mayoral actions.

“The flimsy pretext for this unwarranted delay was that a six-vote requirement to override the mayor’s veto would constitute more than two-thirds of the eight-member council.”

So sayeth the oracles of the UT.

Exsqueeze me? Not wanting to adopt a 75% override super-majority is a “flimsy” excuse? So what now? The UT’s Bowtie Bob Kittle disinters Jimmy Madison from his crypt over in Montpelier and slaps the corpse around for having the temerity for putting a two-thirds veto Congressional majority into the Constitution as opposed to the three-quarters required for ultimate weighty issues like, say, amending the Constitution? How dare Mr. Madison, et. al, constrain the power of the energetic and noble executive.

A Super-Mayor (as opposed to just a run-of-the-mill Strong Mayor) would provide one-stop convenience shopping for the powerful economic interests that dominate the downtown scene. So, of course, the UT would love to see a Mayor with a super-majority veto shackling the City council. At least, that is, a Mayor who conforms to the UT’s editorial board positions which, often as not, align all so nicely with those of the downtown money crowd (which, given the paper’s dwindling readership, seems to be their principle subscribers anyway).

I wonder what the UT’s position on the veto would be if a social progressive like a Donna Frye was Mayor. Hmmmm, let me think…

UT, get over it. Ain’t nobody this homie knows of that requires a super majority for a legislative veto. The Council’s veto should be set at two-thirds. Which, of course, means the council has to be expanded to at least nine districts, with six necessary for the veto. And which leads me to suggestion….

2. Council Expansion.: The proposed nine council districts is better than the ridiculous even numbered eight council districts the Strong Mayor reform package left the city with. Going to nine districts will reduce the number of people each councilmember is trying to represent from 163k to 146k. But this pales in comparison to the level of personal representation afforded citizens of, say San Francisco, whose 11 supervisors represent around 70k citizens each or Chicago, whose 50 (yes, 5-0) Alderman represent around 50k each. In other words, San Diegans are vastly underrepresented.

Okay, significantly increasing the size of the council adds to costs (staff and salaries, etc.) and to complexity (more people trying to reach agreement). So, what? How about we abolish the council entirely and just have a mayor—maybe a wealthy one like Steve Francis who will foreswear his salary—running the show? Boy, that would save the moola. And, of course, flush the whole concept of democracy down the porcelain fixture.

I’d like to see a council of 11, 12, 15 or 18 (which makes the 2/3 veto majority math easy). That would increase representation (and, potentially, diversity) on the council. So what if that would also render the current council chambers obsolete. They keep saying City Hall is outdated and needs to be replaced. So do so and build a new one, big enough to accommodate the needs of San Diego in 2008 as opposed to 1974 when the current City Hall was built. Which brings me to suggestion….

3. Build a new City Hall and don’t build it downtown. Why is “downtown”– a place most San Diegans seldom go to–the nexus of City municipal life? Could it be because the rents and land there is are cheap it would be foolish to move City Government somewhere else? Could it be because downtown is centrally located and convenient in terms of traffic and parking for most San Diegans to reach? Could it be because it places City Hall within easy walking distance of all the developers, bankers and lawyers representing these said and other special interests who can afford to maintain tony downtown offices precisely to lobby City Government?

Gee, I wonder which one it could be?

How about we sell all the City’s downtown property and disperse the mechanisms of City government around the City itself? Downtown San Diego has always been more of a wish than a reality anyway. Why is Normal Heights or Clairemont any less advantageous a locale for the seat of governance of a sprawling Uber-burb like San Diego? There are these thing called phones, fax and the internet which, I hear, makes communication over vast distances (like, say, Linda Vista to Mira Mesa) very doable these days.

Put the main City Hall, and its council chambers someplace truly central, like Kearny Mesa or Tieresanta. Have each councilmember’s office and staff located in their own district so their constituents can find them as opposed to the downtown suits. And put the Mayor in a really big RV and have him or her tool around town, doing each day’s business in a different district.

Okay, the last one is a little pie in the cracked sky. But why keep all the representatives of the City in the same building every day? They should be in the communities they represent. And access is power, something, interestingly enough, mayoral candidate St. Francis of the City acknowledges when he’s suggested the Mayor’s office be moved to City Heights or some such . Why do you think the very first battle in every new administration, be it mayoral or presidential, is who gets the office closest to the chief? You keep city government downtown and,–Surprise! Downtown money interests get disproportionate influence.

Finally….

4. Fix the City Attorney conflict. An elected City Attorney cannot faithfully serve both the people who elects him or her and the members of City Government as the interest of the People and the Government often conflict. This puts the CA in an untenable position: either be a lapdog of the Mayor and Council (as past CAs were and which the Council and Mayor would like the current and future ones to be) or be a public advocate at odds with the very City Government he or she is called upon to represent. So, as I’ve advocated before, split the job. Create a new position of City Counsel to represent the City in legal affairs and turn the CA into something more akin to the County DA—a watchdog representing the legal interests of all members of the community. Do that or simply abolish the elected status of the CA and return the position to that of Council/Mayor appointment. You can’t have a good watchdog and lapdog at the same time. (Well, actually you can as my ninety pound shepherd-collie-Afghan mix attests to, but you get point.)

There are other tweaks that can be done (like having truly independent City Auditors appointed by a “blind” panel of public citizens and a truly independent City Ethics Commission. But these are my Big Four for Charter Reform.

Then again, why fix anything? I mean, things have been running so well in San Diego government for so long, if it ain’t broke……

Orange You Glad I didn’t say Derivatives

You’ve got to love San Diego City Council meetings. They drag on and on (like the nine and a half hour marathon session last December 4) about items of municipal minutia so mundane that even the most wonkish of policy wonks find their thoughts drifting to their next session of “World of Warcraft.” But buried in all this mundanity are often items of extreme importance. Which, of course, the press and public, overwhelmed by the sheer boredom of it all, don’t pick up on.

Like last Monday’s session. And Docket ITEM-200: Variable Rate Debt and Derivatives Workshop for the City Council.

Sounds enticing, doesn’t it? Like going over your insurance portfolio with your sixty-two year old, loves to talk about fly-fishing and vaguely smells of Lysol agent.

So last Monday the council sat through a long, monotonous presentation on how the city, should it EVER get back into the bonds markets, could pursue various options in reducing short term borrowing costs. All presented in the clearest of businesseeze readily comprehensible by any Ph.D. in economics with a five year post-doc in esoteria.

At the end of the presentation a motion was put forward to bring this topic before the City Budget committee next month to continue consideration of the high-falutin’ investment strategies—using variable rate bonds and derivatives to offset up front financing costs—with an eye towards recommending their adoption by the full council.

And then Donna Frye pointed out the five ton orange elephant in the room.

Orange, that is, as in Orange County which, more than a decade ago, went belly up when the similarly sophisticated investment strategies they had pursued came tumbling down.

Frye asked the workshop presenters to go over the risks of variable rate borrowing. You remember the concept: low initial rates that can skyrocket if conditions change? The kind of borrowing millions of Americans engaged in to afford their overpriced homes? What do they call that market, now? Oh yes, that’s right.

Subprime.

So there is the San Diego City Council all hellbent on signing the City up to engage in volatile interest rate borrowing without even the slightest peep of protest.

Except for Darling Donna.

After going over the risks associated with the scheme the council was being recommended to buy in to Frye then asked which of those risks would be present if the City continued to borrow under traditional, fixed-rate terms. The answer, of course, was none. So Frye asked the obvious question: why should a City bludgeoned out of the bonds markets because of its incompetent financial management even consider reentering those markets using riskier strategies than it ever used before?

The response of her fellow council members was deafening. Or, better said, deaf. The council over road Frye’s motion to reject the proposal out of hand as the snakiest of snake oil and referred the matter to the Budget Committee for further review. From whence it will emerge, months from now, to be considered and adopted by the full council during yet another marathon, bore the world into submission session, no doubt.

So why would the Council even consider getting the City into borrowing strategies which have the possibility of putting the City essentially into the same position as millions of homeowners (homeowners, that is, until the repo orders come down) who were caught in the subprime swamp? Why, for the same reasons that drove millions of Americans into that swamp in the first place.

San Diego, for all the smiley faces Jerry Sanders and many council members try and put on it, is still in a world of financial hurt. The City faces a three hundred million dollar, five year budget shortfall which will get worse as the economy continues to stagnate, is still a billion dollars in the pension hole and has hundreds of millions of dollars in backlogged building and repair projects thanks to its being locked out of the bonds markets for almost five years. Things are getting so tight that there is even talk of privatizing the crown Municipal Jewel, Balboa Park, which needs two hundred million dollars that the City doesn’t have for basic repairs and deferred maintenance.

If and when San Diego returns to the bonds markets it will need to hit those markets hard and heavy, borrowing as much as possible at the cheapest rates as possible. At least, that seems to be how the Council is trying to position the City. Borrow billions now at cheap entry rates, fix things, make everyone happy and then run on that goodwill for a higher office when term limits are reached. That also seems to be the underlying strategy of the Council. And when, in three or five years, the new financial house of derivative and variable rate cards collapses the perpetrators will be off to Sacramento or the Port District or some other home for former San Diego politicians.

Lovely.

But at least these decisions are made right out there in the open, right between “Requests for Continuance” and “City Council Budget Priorities for Fiscal Year 2009.”

With no-one paying attention.