San Diego May Sell $674 Million in Bonds
San Diego Mayor Jerry Sanders said he wanted to sell $674 million in bonds during the next two years to help reduce a $1.4-billion deficit in the pension fund for city workers.
Bonds have been used by other municipalities nationwide to fund pension deficits. The assumption is that the city could earn more on the bond proceeds than it would pay in interest on the securities.
Sanders became mayor of the seventh-largest U.S. city in December, inheriting a pension shortfall created after almost a decade of the city’s failing to set aside enough money to pay all the benefits that were promised. Sanders also has proposed cutting 500 city jobs.
San Diego has been unable to sell bonds because it hasn’t filed certified financial statements after discovering mistakes in its 2002 audit. Those statements will be filed once consultants conclude an investigation of the city’s financial reporting.
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