San Diego straddling the line on bankruptcy

San Diego UNion ^ | April 10, 2005 | Philip J. LaVelle

[Ramonan]

Bad pension moves and accounting irregularities have made a mess of San Diego's finances, but is California's second-largest city on the brink of bankruptcy?

Depends who you ask.

Some pundits and some bankruptcy lawyers say it is.

Not surprisingly, Mayor Dick Murphy and current and former top city officials insist it isn't, and some municipal finance experts agree.

Meanwhile, Wall Street credit-rating agencies and other informed third-party observers show little sign of bracing for San Diego turning into the next Orange County, which became the largest municipal bankruptcy case in U.S. history in 1994.

Standard & Poor's Ratings Services suspended its rating for San Diego in September, saying the absence of the 2003 audit "creates uncertainty over the city's true financial condition."

This, coupled with federal investigations into city finances, has hobbled the city's ability to sell bonds to raise cash for projects large and small. Even when the city re-enters the bond markets, it will face a new complication: On Friday, City Attorney Michael Aguirre concluded in a report that benefits spanning the past decade were granted illegally and are therefore void. The report is nonbinding, but the conclusions would have to be disclosed in documents provided to prospective investors in San Diego bonds.

[NEBUCHADNEZZAR1961]

Pensions. Too bad Arnold caved into the government employees on the pension reform. Now the whole state faces this problem! Way to go Arnold!!

[Hildy]

Everytime I hear about how much the city workers get I become enraged! But it's our fault. How did we let this happen?

[infidel29]

What is it about Mayors named Murphy.

Come San Diego, join Pittsburgh in Mayor Murphy(D) induced bankpuptcy. You'll like it. /sarc

[monkeywrench]

"Everytime I hear about how much the city workers get I become enraged! But it's our fault. How did we let this happen?"

Absolutely correct! I'm convinced it's happening all over the country, not just in Ca. I'm also convinced only 'we the people' can really put a stop to this sort of thing. It's gone too far for any one man to deal with.

[Hildy]

Why can't they just can't 401K's like everyone else. My sister-in-law is a big shot at our local VA making her a federal employee. She'll be retiring next year at the age of 57 with a full pension. Again, why? Why are they so special? They still use the business models from the 1950's and we're all paying for it.

[John Jorsett]

Too bad Arnold caved into the government employees on the pension reform. Now the whole state faces this problem! Way to go Arnold!!

According to him, it had drafting errors that let the opposition claim it would lead to disabled/KIA public safety officers and their survivors to not get benefits. Better to abandon the flawed version and rewrite it to eliminate the language in question. If one believes him (and so far I have no reason not to), it'll be back. I'll wait for him to renege on this promise before I get upset.

[John Jorsett]

Everytime I hear about how much the city workers get I become enraged! But it's our fault. How did we let this happen?

The City Council has become an unaccountable body, and the only solution is to ditch the incumbents. We'd have thrown out the mayor in the last election, except for the illegal write-in candidacy of Donna Frye which split the anti-Murphy vote. The cozy arrangement where the former City Attorney and present Registrar said it was ok is another glaring example of the extent we need to clean house. I expect one or more recall elections soon, and we'll be rid of some of these highbinders when they're thrown in prison due to their complicity in the crimes for which there are no less than 3 separate investigations underway. The trick is going to be finding replacements who aren't just clones of these scuzzballs. I'm not sure whether City Attorney Mike Aguirre will be a net plus or minus in all this, but the noise and stir he's making makes me want to cheer him on, even though he's a litigious, inflated, egomaniacal blowhard. It says a lot that, compared to the City Council, he looks like the good guy.

[Hildy]

he's a litigious, inflated, egomaniacal blowhard

Well, I agree with you on that. But something tells me nothing will happen to these crooks. They should be in jail for what they've done.

[newzjunkey]

Get a grip. Arnold was handed legislation by a GOP lawmaker who left a Jupiter-sized hole for the unions to drive through with police, fire and widows are their stalking horses. Arnold will be back with this. Everyone knows this *MUST* happen. He's being hammered in a union-funded media blitz like I can't remember seeing in state history. They're appealing to conservatives to try to scuttle the redistricting initiative, they're appealing to the Wal-Mart moms with LIES about education dollars and more. He lost this round because of a 'fair practices' board ruling. He sued and won only a week or two ago clearing the way for him to be more involved.

[newzjunkey]

It's not JUST "according to him" it's also according to the AUTHOR of the GOP legislation upon which the petition is based! While there aren't errors in fact, there is HUGE PR wiggle room that has been exploited by the unions. The unions and Dems focus-grouped this sucker and knew *exactly* how to demonize the effort and Arnold. This was a POLITICAL image problem that the GOP professionals SHOULD have be able to see and help Arnold avoid. They didn't. They want to sabotage him because he doesn't pass their litmus tests.

Stop buying into their bullsh!t and get off your butt and help Arnold and sane Californians fix these messes because we must concede the state to Mexico.

[newzjunkey]

The City Council has become an unaccountable body, and the only solution is to ditch the incumbents.

Indeed. What's truly pathetic is how many ran unopposed in the primary and didn't even have to runoff. It's just like when the bombshell came that they didn't bother reading the Charger deal. That city council was reelected almost by acclimation.

I'm still aghast at the shenanigans with Frye's candidacy in order to knock off the only legal opponent, Ron Roberts.

[WestVirginiaRebel]

This is the sort of thing that makes me nostalgic for the days of Roger Hedgecock.

[hedgetrimmer]

I visited Ramona last summer. Had a great time.

[hedgetrimmer]

Pensions are a big part of the problem. But the "smart growth" policies in play in San Diego county are designed to bust the county government and force the area into an unconstitutional regional government, IMO.

[goldstategop]

Arnold did the right thing. It would have dragged down to defeat the rest of his reform agenda. The pension bill was flawed and you don't want to be cast as taking away benefits from widows and orphans. So it was better to kill a badly written proposal than to destroy the other things that'll make California a better place. You don't want to go up against the unions and let them goad voters into rejecting everything.

(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)

[NEBUCHADNEZZAR1961]

Get a grip? Boy, I guess if I were you I too would feel asinine for having voted for that phoney.

You should get a grip. How much money did Arnold veto last year? Zip, zero, nada. He went for increased spending and more borrowing. Face it, he's part of the problem, not the solution.

[t2plus1]

I have read some of the postings about the pension problems in San Diego. Do not confuse that mismanaged mess with PERS, the state pension that Arnold tried to destroy. Even Newt admonished him to lay off.

Fact: PERS is one of the best run pension funds in the country. As of February 2005, PERS investment portfolio market value: $186 billion and growing. Last year employee contributions: $1.8 billion. Last year payment to retirees: $7.5 billion. Last years investments returned: $24 billion. PERS is not a failing system as suggested by the governor. It is clearly successful, profitable, and self-sustaining.

I don't understand why ordinary citizens align themselves with the powerful and wealthy corporations against their middle class neighbors. Instead of fighting people who have a decent salary and pension, we should be trying to extend these benefits because right now, the middle class is losing ground, rapidly. Since 2000, the average household income lost approximately $1500.

401Ks are just another sign of middle class decline. Instead of an old fashioned pension with guaranteed retirement benefits, 401Ks only guarnatee that participants make payments, but there is no guarantee the money will be there when it's time to retire. To date, my 401K fund is still about 3/4 of what it was before the market bubble. And, 401Ks are vulnerable to employer theft. According to the Wall Street Journal, employer theft was up 3700% last year leaving employees with no protection and no money. Only 55,000 firms are large enough for mandated audit of their plans, while over 600,000 plans are open to looting. This is not the direction we should wish for ourselves or for state employees.

There is no economical reason for Arnold to change PERS to a risky 401K plan, therefore it must be that he is aligning himself with the have-mores, the corporate wealthy instead of the people of this state he vowed to help. I suggest there are two reasons:
1) In the next 10 years baby boomers will be cashing in their own 401Ks and the market will drop unless infused with new money. Just as the main reason for Social Security privatization is to get more money into the stock market, a great risk to participants, Arnold also wants to help float the Wall Street Gang at the expense of state employees.
2) PERS has been very outspoken in its demands for corporate accountability. It does not invest in corporations that are not open. Corporations want PERS money, but they don't want nosy middle class stock holders wielding power in their board rooms. By destroying PERS, this powerful beacon for the middle class is eliminated.