This is one weird mayoral election.
Not only because a write-in candidacy has changed the dynamics. And not only because the primary election was essentially a rerun of four years ago. And not only because the incumbent first chose not to seek reelection and then succumbed to a grassroots draft by the downtown establishment. What is really bizarre about this mayoral election is dollars. For the first time in memory, fiscal issues are the overriding election issue.
Mayoral elections, during the last three decades at least, have been primarily about growth. Slow growth. No growth. Managed growth. Smart growth. Even in San Diego's early days, the smokestack vs. geranium debate was about how the community should grow.
Even though the issuea that are still top of mind for most voters are traffic, growth and quality of life, this election has been laser-focused on the financial mess at City Hall.
Which candidates are best equipped to deal with the city's financial crisis? First off, what crisis?
The asteroid and the cancer
The pension crisis, caused by the City Council's deliberate decision to reduce necessary contributions to the retirement system-starting in the mid '90s and climaxing in November 2002-is the political asteroid bearing down on the city.
The way most politicians deal with problems, especially those they helped create, is to ignore them: "What pension crisis? Oh, you mean the downturn in the stock market. Oh, don't worry, just a temporary blip that will adjust itself."
Unfortunately, the asteroid has become the death star, its gravity hurling San Diego toward a black hole: Bankruptcy, massive cuts in services, a special property tax increase, massive debt issuance-or some combination of the above.
The cancer in the city's financial mess is the budget crisis. It's been like a fiscal melanoma, slowly spreading while the City Council has kept sunning itself in spending binges.
Also starting in the mid '90s and continuing today is the City Council's propensity to spend more annually than they have revenues to cover. They have hired more than 1,000 new employees since 2000, but have not identified any new revenues to pay for them
The mayor and City Council have "solved" this problem by using one-time revenues to balance the budget. They have sold land; raided water, sewer and other funds; and used various budget contortions, too Byzantine to detail. Suffice to say, this budget melanoma has spread and has the city facing annual structural deficits of approximately $50 million.
So which candidate is best qualified to fight the financial asteroid and fiscal cancer? Let's look:
Mayor Murphy had probably the greatest opportunity of any mayor in history to solve San Diego's problems. He was elected in 2000 without the support of organized labor, which advocates, very successfully, for higher salaries and better benefits for its members. Nor was he supported by the downtown establishment, which pushes for corporate-welfare handouts.
But almost before the election results were in, he quickly went "native" and gave the unions and the downtown establishment everything they wanted, including pushing through the ballpark, which is an annual net drain on city coffers of about $15 million per year.
Murphy's stint has been an ongoing PR campaign vamping his "20-20 Vision" or his "10 Goals," which are mostly warmed-over tasks started by Mayor Susan Golding. Critics say Murphy has been a feckless and impotent mayor. In addition to swelling the ranks of city employees-while allowing the number of police officers to fall below an adequate level-he passed the biggest tax increase in the history of the city, the $600 million "utility surcharge," ostensibly to underground power lines, and immediately created a bureaucracy to accomplish it.
His plan for solving the pension crisis is more concrete, if not financially viable, than his opponents'. He proposes to issue $600 million in bonds, freeze salaries next year and pay more annually into the pension system. If he could get labor to agree to freeze salaries, it would, according to the mayor, "save" as much as $80 million. But it's not "savings" in existing expenses-it's $80 million they won't have to spend next year, and as long as the freeze is in place. It does not cut any current spending, but it's certainly a good start. However, if Murphy pushes through the debt issuance (which is no slam dunk, given the city's credit problems and cash-flow challenges), he will need to generate at least $50 million a year of new revenue to pay off the debt service. Probably more if the bonds are short term.
Where will he find that money? Only two ways: cut spending or raise taxes. (New revenue growth will naturally occur, as well, if the state does not cut too much. However, most of those new funds will be needed to pay additional cost increases outside of salaries.)
Murphy is opposed to Prop. J, which would increase the hotel tax, while probably privately praying for it to pass and bring in the $28 million in new revenues. The November surprise many are talking about is a "special" property tax that some legal beagles say the council can institute without voter approval.
In order to cut $50 million annually, to pay the debt-service costs, the city can eliminate the 1,000 employees it hired since 2000. That would, roughly estimated, save $50 million a year. But he has shown no inclination to make any cuts and has never been interested in outsourcing or competing government services. He has not addressed the city's structural deficit, nor has he even acknowledged its existence.
The Howard Jarvis Taxpayers Association (HJTA) wanted to file a lawsuit against the city of San Diego. In 1996, California voters approved Prop. 218, which required local governments to get super-majority voter approval for new taxes and fees. The Jarvis group authored the measure, which it believed would close loopholes in Prop. 13, the 1978 measure that limited property tax increases in California.
It seems that the city was implementing business-improvement district (BID) taxes on various areas throughout the city. HJTA was incensed that the city was implementing the BIDs without getting proper voter approval.
Enter Donna Frye. Like all small-business owners, she had to deal with city regulations, business licenses, signage ordinances and other bureaucratic headaches. The city's intention to start charging businesses a special tax to clean up the business district drew Frye's ire. It was not that she was opposed to paying the tax. She just felt that it shouldn't be pushed through without a public vote.
Politics occasionally creates strange bedfellows, but the teaming of liberal beach activist Donna Frye with the conservative HJTA was a classic. Frye became the HJTA's plaintiff against the city of San Diego.
While Frye and HJTA lost the lawsuit, the city did agree to change the voting procedures to make them more consistent with Prop. 218.
What does this incident reveal about the potential of Mayor Frye?
Donna has always been the outsider. She voted against increasing pension benefits, voted against the Padres' ballpark and the recent Chargers deal and has questioned corporate welfare at City Hall. She was also the only City Councilmember to vote against Murphy's $600 pension bond concept.
However, aside from the pension deal, she has supported all pay raises and benefit increases. About 70 percent of the city of San Diego's general fund budget is salary and benefits. If elected, she will likely owe much of her success to organized labor. Can she, as she has said, get them to make the major concessions necessary to avoid financial disaster and even bankruptcy?
Frye has also showed total disinterest in competing or outsourcing government services, but now she says "everything" has to be on the table to fix the mess. She also has voted for all fee and tax increases to come before the council.
To date, Frye has been the lone "no" on many controversial votes. Can her principled opposition morph into leadership?
Her stated plan consists of "opening the books" and "telling the truth," which would be a major paradigm shift at City Hall. But will she and her staff know when they're being rolled by city staff?
Donna's current council staff, although energetic, is devoid of any real budget expertise. But that is par for the course, and in Frye's case, she actually understands the budget games better than most. She would need to recruit knowledgeable folks to help her poke through the budget BS, which she says she'll do. Frye has shown she knows how to ask the follow-up questions on financial matters.
You could smell the fear. Ron Roberts was chairman of the county Board of Supervisors. He and his four GOP colleagues had inherited the worst financial mess in local government history. It was the mid '90s. Orange County had just gone belly up.
Bankruptcy was a viable option for San Diego County, too. The county was so tight on cash flow that there was real worry as to whether the money was there to pay employees and other bills. The garbage-collection system was bleeding the general fund dry. Roberts was presiding over a freshman Board of Supervisors, which had inherited one of the worst deals in local government history. The debt on the San Marcos recycling plant was siphoning off all spare revenues.
In addition, for years the county was the poster child for inefficiency and bureaucratic arrogance and incompetence. Unlike the city of San Diego, the county is essentially a big Laundromat for tax dollars. The money for welfare, criminal justice and health programs flows from the federal and state governments and the county distributes it at the local level. Unlike the city, the county has very few options for raising new revenues.
Now the county is efficiently run. Supervisors sold off the solid-waste system for $300 million cash-the bureaucrats estimated they would only get $60 million. They have eliminated all deferred maintenance on infrastructure, and have ongoing funds to keep it from sliding into disrepair again. They have huge financial reserves. The have a genuine competition program that has pitted employees against the private sector, with the employees faring very well. County employees knew that, unlike the bogus competition program at the city of San Diego, if they did not come up with more efficient ways to deliver services, they would lose jobs. They got efficient, and the county reduced the cost of service delivery by more than $40 million per year. They did this by bringing in a no-nonsense businessman, Larry Prior, to run roughshod over the county bureaucracy. He offended everybody but got the job done.
The county outsourced its $600-million information, technology and communications system, the largest of any local government in the nation. It's had some rocky days, but overall, the county staff has upgraded computers and phones and provided better service to the public. This, in comparison with the city of San Diego's scandal-ridden Data Processing Corporation.
The county's pension system is funded at around 87 percent, and it has a realistic approach to annual funding that deals with its liabilities.
Does Roberts have a plan to fix San Diego? Not really. He says he will get an outside audit and outsource non-essential services like he did at the county. He, too, would need to beef up his staff expertise, which is fairly weak on city finances, because they're all county folks. But Roberts has shown he can hire good financial people and is the only candidate in the race who has been tested by financial disaster and has not blinked.
Who is best qualified?
Murphy is a known consensus builder who's ducked problems until the feds and the bond markets forced him to face reality. Maybe he's finally gotten religion. Murphy does have at least a partial plan to deal with the pension shortfall. And given the tight squeeze the city's in, any plan will have a downside.
Frye has shown she prefers to hear the truth, bad news and all, and is willing to take tough stands. She's pushing for open government and touts her ability to sway labor to solve the problem. But she has no record of leadership, and voters will have to hope her straight talking will translate into financial fixes.
Ron Roberts has already been tested by fire and shown he can lead a large government through financial disaster and come out unscathed.
The future of the city is in your hands. Good luck.