$33-Million Fund Increase No Cure for Strapped City, Lockwood Says

Most of the debate over City Manager John Lockwood’s record $1.2-billion budget proposal has focused on whether City Council should increase taxes and fees Lockwood says are needed if the city wants to maintain police, fire and sanitation services during the coming year.

Almost lost in the debate is the fact that Lockwood’s budget would increase the general fund, which is used to pay for many basic city services, by $33 million to $444 million. That increase, critics maintain, is more than enough to keep service levels from sliding.

But it’s not as simple as that, Lockwood says. Lockwood explains that the $33-million increase will barely cover a handful of expenses included in his proposed budget. For example, Lockwood said, the $33-million increase won’t even cover two big-ticket items: inflation, which will raise next year’s costs by $28 million, and the costs associated with settling lawsuits, which are expected to approach $20 million.

With just inflation and litigation expenses, “you’re already in the red” when it comes to the $33-million increase, said Lockwood, who said that nearly $60 million in new revenue is needed to keep services at their present level.

With just $33 million, “there’s not one penny there, to maintain the existing ratio of police officers to residents, or to keep libraries, recreation centers and swimming pools open,” Lockwood said.

Why is the current budget crunch so much worse than past crunches?

“There seem to be a lot of chickens coming home to roost,” said Jim Ryan, executive director of the San Diego County Taxpayers Assn. “There’s always been a financial rope to grab onto in the past.”

“But a lot of things are coming to a head,” Ryan said. “It’s a watershed year for local government financing because a lot of concerns about the effects of Proposition 13 that were raised (years ago) have come home to roost.”

The budget crisis “has been a kind of a creeping thing,” according to J. P. Fowler, who chaired the Citizens Finance Committee that, in January, predicted the crunch. “It’s been building, building, building . . . since 1979 when Proposition 13 went into place.”

“On one hand, it’s been the intent of the voters to limit revenue growth from property taxes,” Fowler said. “But, at the same time, they’ve continued to press each and every council to fund new programs.”

But the upcoming year’s budget is sorely lacking in the “one-time money” that council has used to ease past budget crunches, Lockwood said.

For example, the council last year bolstered the size of the general fund by using $10 million earmarked for capital improvements and other projects. That money was used to hire more police officers and pay other operating costs, but it made it difficult to fund those programs during the upcoming year because “there is no one-time money this time,” Lockwood said.

Most experts agree that “one-time money should go for one-time capital improvement projects, not operations,” Lockwood said. “We always knew that would come back to bite us in the behind.”

But San Diego has often done just that: During the 1980s, for example, the city used a multimillion-dollar legal settlement to fund after-school recreation programs. Lockwood on Tuesday recommended that those programs be dropped because funding has evaporated. Several years ago, the city used $10 million from the sale of the old Sears property in Normal Heights to fund operations.

Lockwood offered a long string of examples of where the city must find new funds--or cut existing services--to pay its bills. Among them are:

Next year, the city will pay $1 million for new programs mandated by federal and state agencies. (These programs include such items as new work boots required for certain jobs and boiler inspections mandated for the first time.).

The city must pay $2.8 million to operate and maintain new city parks, a fire station and 75 new traffic lights. For the most part these are projects paid for by developers, but the operating costs must be paid by the city.

The city would have to pay $1.7 million to create 37 new police officer positions that would maintain the city’s current ratio of 1.68 officers per 1,000 residents. Similarly, it would have to pay $3.2 million to “maintain the current level of service for . . . fire apparatus replacement, staffing of three new municipal courts and other similar items.”

Because of an accounting technique known as “annualization,” the upcoming budget must also include salaries for police officers and civilian employees whose full salaries were authorized but, in many cases, not completely funded during the current year. Annualization costs for police and civilian employees will top $8 million.

Lockwood has listed nearly a dozen “big-ticket” items that will increase the upcoming budget, but not necessarily increase the level of service.

For example, he has budgeted $28 million for inflation. That amount, he said, is needed to finance an estimated $12 million in promised wage increases as well as $11 million to restore supply budgets that the council last year froze in order to cut general fund expenses, along with other inflation-related items.

Lockwood maintains that the city, which agreed to pay a record $25 million in lawsuit settlements during the current year, expects litigation awards to hit nearly $20 million during the coming year. Because the city ran out of funds to cover settlements, it will use $6 million of next year’s general fund to pay for settlements reached during the current year.

SAN DIEGO BUDGET

1989-90 1990-91 % Change Library $12.6 million $6.5 million -47.9% Planning Dept. $10.8 million $9.7 million -9.7% Park & Recreation $40.0 million $37.4 million -6.6% Police $139.8 million $145.4 million +3.9%

Source: City of San Diego