The San Diego City Council is expected to pass their Fiscal Year 2008 budget sometime in late-June but there are still critical challenges that need to be addressed. Rather than skip out for a long summer recess, local lawmakers should stay indoors and finish some long-neglected homework.
If the Council is fiscally disciplined, the FY 2008 budget’s core feature will be a significant reduction in the public workforce and a multi-million dollar commitment to set aside money to pay down the city’s wide array of long-term debts and obligations. Such belt tightening is long overdue; assuming no last minute special-interest shenanigans, the Council and Mayor Sanders have taken important steps toward improving the fiscal condition of the City. But rather than coast through July and take the month of August off, local elected officials would be wise to keep the momentum for fiscal reform moving.
At the top of the summer work program should be overhauling the City’s retirement system. To date the Council has largely tinkered at the margins, ending the eligibility of new hires to participate in the broken Deferred Retirement Option Plan (DROP) program, and scaling back opportunities they have to purchase costly service credits. Though these are two small steps in the right direction, taxpayers are still saddled with 20 years of debt payments to restore the City’s pension plans to solvency.
As lawmakers pay down yesterday’s mess, they must avert future fiscal meltdowns. The most important proactive reform that could be adopted would be the transition of new employees to a more dynamic 401(k)-style plan. Under such a plan the City’s costs are clearly known, more transparent and the City is far better able to avoid costly errors due to actuarial miscalculations or sweet-heart deals like the 1996 and 2002 underfunding schemes. Moreover, provided a reasonable employer match, such a plan would work to the benefit of younger employees and those that may not wish to work for the public sector for twenty-five or more years. A priority project for the Council this summer would be to debate and pass a resolution strongly encouraging the Mayor to incorporate a 401(k) plan into the new labor contracts his office is currently negotiating.
Secondly, it is important that both Mayor Sanders and the Council move aggressively to implement managed competition, allowing outside groups to compete with local government departments for the opportunity to provide non-essential public services. Despite 60% of voters supporting Proposition C eight months have passed by with little action. To get the ball rolling, this summer the Mayor should prepare and release a set of initial request for proposals. That way by the time next year’s budget is released, potential savings can be incorporated which could meet critical needs such as police and firefighter salaries.
Finally, the summer work plan must include reforms that would improve the dysfunctional budget process in the City of San Diego. Compared to other municipalities, San Diego’s budget is incomplete, confusing, and difficult for the ordinary citizen to translate. For years watchdogs have complained that the pages of “happy-speak” and inconsistent methodologies result in a document that only a handful of bureaucratic insiders can make sense of and which fails to clearly illuminates policy choices and tradeoffs.
A sensible initial reform would be for the City Council and the Mayor to hold hearings this summer to examine how San Diego can earn the Government Financial Officer Association’s (GFOA) “Distinguished Budget Presentation Award.” Achieving this nationwide best-in-class standard isn’t impossible. Los Angeles, Oakland, and San Jose are all recipients of the award. To qualify, local governments must take simple steps, such as “clearly stating goals and objectives of organizational units” and openly providing the information necessary to determine whether or not resources adhere to government objectives. Moving towards award eligibility as soon as possible would result in a FY09 budget process that is more transparent, understandable, and accountable to residents.
With these important tasks left to accomplish, it is critical that our elected officials don’t treat themselves to a season-long European-style vacation. San Diego taxpayers should never again have to pay the price for City Hall’s lack of vision. Working diligently through the traditional break this year will assure that the momentum for fiscal reform is maintained and the City’s recovery will be fast-tracked.
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