It's election season, and that means we need to be on ready alert for fibs, half-truths, misdirection, misinformation, disinformation, lies, damn lies and statistics.
Here's one that's made the rounds since San Diego Mayor Kevin Faulconer announced his proposed city budget last week, disseminated so far by Faulconer himself and Lorie Zapf, the current District 6 City Council member who's running this year for the District 2 seat (because of redistricting): The city has more money for fixing roads and hiring cops and other nice things because of conservative reforms.
In his budget message, Faulconer gave passing mention of an improving economy, but action by city officials got top billing: "Additional funding for programs that are important to San Diegans was possible thanks to the City's conservative fiscal policies and long-term financial planning practices." Reform of the employee-pension and healthcare-benefits system is the star of the show in Faulconer's narrative, and his beloved managed-competition program plays an important supporting role. An improving economy makes a cameo.
Zapf parroted that version during a candidates forum last week in Ocean Beach: "So I've been [on the City Council] the last three-and-a-half years working on reforms that have brought a lot more money into our coffers. And you just saw that just this week. Our budget is well above what we had projected. The pension savings, the managed comp savings, the efficiencies from the audits, all of that's paying off."
Here's the truth as we understand it:
A deal between the city and its employee unions that froze "pensionable pay" raises for five years—that means raises that would result in higher retirement benefits—will save $24.6 million in the next year. (However, costly changes in the way the pension system calculates what the city owes to the pension fund essentially knocks those savings down to $11.8 million, when compared with the amount the city paid the pension fund last year.) Listen for people attributing these savings to 2012's Proposition B; that wouldn't be accurate. Negotiations with unions led to savings. Union leaders will tell you that pensionable pay was on the table long before Prop. B. The initiative called for a pensionable-pay freeze, but, legally, it couldn't mandate it. It took normal negotiations to get it done. Also, the pension-system overhaul in Prop. B—switching from a defined-benefit plan to a 401(K)-style plan—is still a net drain on the city budget.
Managed competition, a process approved by voters in 2006, under which employee groups are pitted against private companies to provide certain city services, will result in no more than $9 million this coming year, but possibly less. For example, the proposed budget says that the competition for Landfill Operations "may result in up to $3.5 million in annual savings," and there could be savings of "up to" $4 million in Fleet Services. It's important to note, however, that, as CityBeat has reported, the decreased Fleet Services budget has resulted in a potentially dangerous reduction in available emergency vehicles.
The bulk of the money that's suddenly available for roads, cops and other goodies comes from projected increases in tax revenue, attributable to the overall economic recovery. The proposed budget projects property-tax revenues of $13.7 million more than had previously been expected. Sales-tax receipts should be $13.2 million more than was earlier estimated. Hotel-room taxes should get a $5.2-million boost over the previous estimate. Revenue from franchise fees—which are paid by cable and utility companies—are expected to be $2.1 million higher. Finally, the city is planning for an extra $1.1 million in property-transfer taxes. Together, those anticipated revenue boosts add up to a $35.3-million budgetary bonanza.
To sum up, it's fair to say that some pension reform—the pay freeze—has helped free up a significant amount of money this year, but those gains are offset by a change in how the city's pension-fund payment is calculated and the short-term cost of Prop. B. It's fair to say that managed competition has reduced expenses a little bit, but potentially at a cost when it comes to services provided.
But it's not fair to say those are the things that allowed the city to beef up neighborhood and public-safety services. If elected officials and candidates leave out the fact that the improving economy is the largest factor in the city's sudden good fortune, you might want to take everything they say with a grain of salt.
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