San Diego Mayor Has New Power, Same Old Problems

On New Year’s Day, government reforms approved by angry voters granted newly elected Mayor Jerry Sanders more authority than any mayor in the city’s modern history.

But then, he faces bigger problems than any previous mayor.

Consider: a $2-billion pension deficit, criminal corruption cases both underway and looming, and an internecine war between the city attorney and the rest of the government.

If that isn’t enough, the 55-year-old former police chief has identified two problems he thinks are undermining a once-admired city government: loss of a sense of mission among rank-and-file employees and overreliance on a top-down management style.

Add to all of these problems a public mood about local government that has grown cynical after two years of controversy and bickering at City Hall and the spectacle of two City Council members convicted of taking illegal campaign contributions from a strip-club owner.

“I think people would like to see an end to the grand juries and the investigations,” Sanders said in his characteristically low-key voice. “They want us to put the pieces back together.”

The mayor has begun hard bargaining with employees to force them to accept salary freezes and pension rollbacks in the next six months or risk massive layoffs. He is preparing a ballot measure that would allow San Diego to privatize some city services.

Department heads may soon roll, and the city budget to be adopted in July may include greater cutbacks in services, which until now have been largely spared.

“I think it’s going to be an ugly six months,” said Tim McClain, editor of San Diego Metropolitan magazine.

Under the new strong-mayor system, Sanders will no longer be on the council and will not have a councilman’s vote; the mayor can veto council actions, though the council has override power.

“I don’t believe the City Council will dare rise up en masse and oppose anything Jerry Sanders does,” McClain said. “He’s the chosen one, the savior, and they’re not; they got us into this mess.”

There does appear to be a glimmer of light at the end of this tunnel. This being modern San Diego, however, that light might be an approaching freight train.

A number-crunching firm and a consulting group of “forensic” auditors are expected to finish their examination of the city’s books by midyear. Already, $26 million has been paid to the auditors, lawyers, accountants and other consultants. The cost to taxpayers could soar $15 million more.

After those audits are completed, the city can get a favorable credit rating from Wall Street and do something it has never done: sell pension bonds.

The refusal of KPMG, the New York-based auditing firm, to certify its audit until a second, “forensic” audit is done to ferret out wrongdoing has blocked the city from the bond market.

After a campaign in which the lack of audits was an issue, Sanders was elected in November to succeed Dick Murphy, a fellow Republican who resigned.

To bolster his Republican base, Sanders pledged not to seek tax increases in this city where low taxes are a kind of civic religion. Sanders’ opponent, Democrat and surf-shop owner Councilwoman Donna Frye, had dared to suggest that a half-cent sales tax boost might be needed.

Sanders has been meeting with groups of employees at their work sites with a blunt message: “We don’t have any money. Things are bad.”

In November 2004, as the pension deficit controversy began to boil, city voters decided to scrap a system that vested executive power in an appointed city manager. They instead create a strong-mayor system, effective Sunday.

If this year will be a time when the mettle of the new mayor can be judged, it also may help clarify whether City Atty. Michael Aguirre is helping to solve the city’s larger problems or is just a headline-producing sideshow as he questions the honesty and intelligence of city officials, past and present.

In the last year, the San Diego Union-Tribune published 195 stories in which Aguirre was the focus. There was no story Friday, but there was a photograph of Aguirre marching in the Holiday Bowl parade. Sanders was riding in a car, but there was no picture.

“Mike does the press thing better than I do,” the mayor said with a laugh.

In another development, the U.S. attorney’s office is expected sometime in 2006 to wrap up its investigation of San Diego’s pension board and the city’s decision not to warn Wall Street about the pension deficit while floating sewer bonds. The latter decision also provoked an investigation by the Securities and Exchange Commission, which is pending.

Six former pension board members are charged in Superior Court by the district attorney with conflicts of interest for voting to increase their own pensions as part of a risky plan in which the city counted on an ever-rising stock market to underwrite the pension plan. When the market declined, the pension deficit ballooned.

A preliminary hearing is underway in Superior Court to decide whether the six will stand trial. Their attorneys argue that state and local laws not only allowed public employees to sit on the pension board but required it, and that various lawyers hired by the city had, for the most part, blessed all the pension board votes.

The U.S. attorney’s case now being presented to a closed-door grand jury is thought to cover much of the same ground and deal with a group of ex-pension board members and former city bureaucrats.

If federal indictments are handed down, they could end up dealing mostly with people who are no longer at City Hall for having done things under a pension board and financial disclosure system that no longer exists. Most of the bureaucrats have retired or been fired or forced off the payroll by the previous mayor and former city manager.

If such a case is filed, it will in a sense be the opposite of the corruption case brought by the same U.S. attorney’s office against former Rep. Randy “Duke” Cunningham (R-Rancho Santa Fe), which involved a current officeholder and a bribery scheme that was continuing apace. Cunningham pleaded guilty, resigned and awaits sentencing.

Les Girard, who retired as assistant city attorney in October to go into private practice, is guardedly optimistic about better days ahead if the City Council tightens the budget, even if that means risking the wrath of voters by cutting services.

“If the council makes good fiscal decisions, we can begin to come out of this,” Girard said. “If not, then that light at the end of the tunnel could very well be a train.”