Three Steps to Financial Recovery

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Three Steps to Financial Recovery
STEP ONE Restore Public Trust Elect a New Mayor,
Bring Financial Recovery Initiatives to Public
Vote, and Settle Federal Investigations
STEP TWO The Citizens Financial Recovery
Ordinance Five-Year Plan to Balance the Budget
and Pay Off the Pension Debt
STEP THREE Balanced Budget Accountability
Initiative Prevent Future Fiscal Crises Through
City Charter Changes
Financial Recovery Within Five Years
San Diego Financial Recovery Plan
www.sandiegobudget.org
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The City of San Diego TodayA City in Crisis

• Pension Debt of 1.4B (plus health and contingent
  benefits)
• Annual Budget Deficitstoday and as far as the
  eye can see!
• No Audit Suspended Credit
• 600 Million in Unfunded Current Infrastructure
  Needs
• Cloud of Suspicion with the Federal
  Investigations
• Lack of Public Trust in City Government
• Political In-Fighting

San Diego Financial Recovery Plan
www.sandiegobudget.org
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An Alternative Vision for San Diego in 5 Years

• Restore the Citys Financial Health
• Deliver the Quality of Life Services that
  Citizens Rightly Expect
• Regain the Citys Reputation
• Rebuild the Publics Trust

San Diego Financial Recovery Plan
www.sandiegobudget.org
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City Managers 5-Year Financial Forecast
San Diego Financial Recovery Plan
www.sandiegobudget.org
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Flaws in the City Budget Process

• Accounting flaws and gimmicks
• Intentional Deficit Accounts in each city
  department
• No track record of being rightlet alone sticking
  toexpenditure forecasts
• Promises of tough choices today not matching
  budget results reported tomorrow

San Diego Financial Recovery Plan
www.sandiegobudget.org
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Explosive Growth in Labor Costs

• More City Workers
• 2100 increase in number of city employees since
  1994
• Higher City Salaries
• City workers earning more than 100k per year
  increased from 489 to 644 in past year!
• Excessive City Overtime
• The tale of the 242,000 fire captain
• Explosive City Benefits
• Pension and Health Care

San Diego Financial Recovery Plan
www.sandiegobudget.org
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Increase in General Fund Revenue vs. Increase in
Personnel Expenses
San Diego Financial Recovery Plan
www.sandiegobudget.org
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Projected Savings if Labor is Restrained to 71
of the General Fund
55M Per Year SAVINGS If Restrained to 71
San Diego Financial Recovery Plan
www.sandiegobudget.org
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The cost of city labor has increased to 78 of
the General Fund -- If we were at 71 today, in
just ONE year, we could
FULLY fund the Library Dept at 36,263,410 in
FY05 with 19,725,376 to spare
Or
COMPLETELY replace the entire Police Department
vehicle fleet at 34,512,000 with 21,054,882 to
spare
Or
FULLY fund the Public Safety Communications
Project for the next two years at 53,005,036
with 2,383,750 to spare
Or
FULLY fund the fleet needs of the Fire-Rescue
Department for the next five years at 36,890,000
with 19,098,786 to spare
San Diego Financial Recovery Plan
www.sandiegobudget.org
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STEP ONERestore the Public Trust

• 1. A New Mayor with the Mandate of the People
• 2. Commit to a Public Vote on Recovery
  Initiatives this Fall
• 3. Negotiate Settlement with Federal
  Investigators
• SDCERS Complianceor New Board (30 Days)
• Negotiate Penalty with SEC
• Removal of City Officials Responsible for Crisis
• 4. Appoint Financial Recovery Team

San Diego Financial Recovery Plan
www.sandiegobudget.org
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STEP TWOCitizens Financial Recovery Ordinance

• 1. Establish Accountability for Payoff of Pension
  Debt (Five Years)
• 2. Renegotiate Benefits to Reduce Pension
  Liabilities (50 of Solution)
• 3. Labor Cost Containment and Restructuring
  Reforms (50 of Solution)
• Impose Caps on City Labor Costs for Next Five
  Years
• Adopt San Diego Citizens Budget Cost Saving
  Measures (including Asset Management)
• Use Revenue Growth to Provide Restore Funds to
  Pension System
• 4. Excess Tax Revenues to Infrastructure
  Reinvestment Fund

San Diego Financial Recovery Plan
www.sandiegobudget.org
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STEP THREEBalanced Budget Accountability
Initiative

• 1. Quarterly Balanced Budget Reconciliation
• 2. Annual Appropriations Limit
• 3. Election of City Comptroller
• 4. Performance and Cost Efficiency Bid-to-Goal
  Program
• 5. Cost of Service Audit of City Enterprise and
  Special Funds
• 6. Voter Approval of Future Pension Obligations

San Diego Financial Recovery Plan
www.sandiegobudget.org
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226 "Options" Saving 45 Million to 120 Million
to theGeneral Fund
See all 226 options for yourself at
www.sandiegobudget.org
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San Diego in 5 YearsCommitting to the Vision

• Restore the Citys Financial Health
• Deliver the Quality of Life Services that
  Citizens Rightly Expect
• Regain the Citys Reputation
• Rebuild the Publics Trust

San Diego Financial Recovery Plan
www.sandiegobudget.org
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Three Steps to Financial Recovery
STEP ONE Restore Public Trust Elect a New Mayor,
Bring Financial Recovery Initiatives to Public
Vote, and Settle Federal Investigations
STEP TWO The Citizens Financial Recovery
Ordinance Five-Year Plan to Balance the Budget
and Pay Off the Pension Debt
STEP THREE Balanced Budget Accountability
Initiative Prevent Future Fiscal Crises Through
City Charter Changes
Financial Recovery Within Five Years
San Diego Financial Recovery Plan
www.sandiegobudget.org