by MARK GABRISH
CONLAN
Copyright © 2012 by Mark Gabrish Conlan for Zenger’s
Newsmagazine • All rights reserved
San Diego’s
residents want their city government to provide a wide array of services — but
they don’t want to pay the taxes needed to finance them. That’s the bottom line
Vladimir Kogan, co-author of Paradise Plundered, brought to the predominantly Queer San Diego Democrats for Equality
at their regular meeting July 26. Kogan, who recently completed his Ph.D. at
the University of California at San Diego (UCSD) and is leaving town to take a
teaching job at Ohio State University, and co-authors Steven P. Erie of UCSD
and Scott A. MacKenzie of UC Davis, published Paradise Plundered last year. The book tells a story of a city governed
by a tightly-knit downtown elite that has resisted all efforts at genuine
reform, and in his talk Kogan focused on the city’s 20-years-in-the-making pension
crisis and how the city’s elites have managed to preserve their power by
scapegoating city workers and their unions for San Diego’s financial problems.
“We have been
cutting hours at recreation centers, and yet we’re talking about building a new
football stadium,” Kogan said. “We’ve been cutting hours at branch libraries
and yet we’re building a new $200 million downtown library. We don’t have money
to maintain Balboa Park, but we’re building a Convention Center expansion.”
Those seemingly contradictory policies, said Kogan, are evidence that San Diego
doesn’t have one city government, but two: “a big government that provides
benefits for a handful of people, and small government for everyone else.”
Kogan said that the explanations for San Diego’s fiscal crises from both the
Right and Left — City Councilmember Carl DeMaio’s blaming them on “greedy union
workers and labor bosses” and former City Councilmember Donna Frye and former
City Attorney Mike Aguirre attributing them to “corrupt or stupid public officials”
— are both overly simplistic.
Instead, Kogan
and his co-authors attribute San Diego’s fiscal dysfunction to three much
broader and more enduring traits. First, Kogan said, is “political culture at
the mass level.” While San Diegans are relatively liberal culturally, much like
people in the state’s other major coastal cities, Los Angeles and San
Francisco, “fiscally we have a very
conservative electorate,” Kogan said. “In the last 20 years we have not passed any tax increases and have approved only one bond
measure.” Second is the fact that San Diego is what Kogan calls “a
quintessential branch-plant town.” While many major corporations have offices
in the city, only a few are headquartered here — so many businesspeople don’t
take an interest in civic affairs because they’re hoping to be promoted and
move somewhere else. Third is the city’s decision to base its economy largely
on tourism instead of manufacturing, which means the elites “only invest in infrastructure for people coming in from
out of town.”
Kogan also
identified two complicating factors in San Diego’s politics: California’s
tradition of direct democracy — particularly the initiative process, which
allows both grass-roots voter organizations and well-heeled special interests
to bypass elected officials and make laws themselves — and the city’s shift to
district-only City Council elections in the 1980’s. He blamed the “gridlock”
that has afflicted San Diego’s politics largely on initiatives and the uneasy
combination of district-elected Councilmembers and a citywide-elected Mayor.
“With these constraints, it doesn’t matter so much who the officials are,”
Kogan said.
San Diego’s
fiscal problems, like the rest of California’s, really began in June 1978, when
the state’s voters approved Proposition 13, Kogan said. Sold to voters as a way
to keep property taxes from rising so they weren’t forced out of their homes
due to paper increases in the homes’ value, Proposition 13 also made it much
more difficult to raise taxes in California. It required voter approval for new
local taxes and said that tax increases aimed at a specific purpose — say,
police, fire or other public-safety programs — needed a two-thirds vote. It
also transferred property-tax revenue from cities, counties and other local agencies
to the state, which worked out a formula for distributing them to local
governments based on what they had been spending in the past. This
discriminated against San Diego, Kogan explained, because its budget was
already so low relative to its population that “when we had to make cuts, they
were especially painful because we had very little fat.”
When Proposition
13 passed, Pete Wilson was Mayor of San Diego, and one of the first things he
did in response was to persuade city employees to end their participation in
Social Security and Medicare, Kogan said. “In order to make the deal sweeter,
he said the city would give [its employees] free health care for life,” Kogan
explained. “The employees voted for this, but the city never set aside any
money to fund the employees’ health care. Instead, they took the money from the
pension funds.”
Throughout the
1980’s and 1990’s, according to Kogan, this pattern continued: a mayor, city
council and city manager would find that the city’s budget was dangerously out
of balance, and they’d raid the workers’ pension funds to cover the shortfall.
When Susan Golding became mayor in 1993, she was committed to expanding the
Convention Center to accommodate the 1996 Republican National Convention and
building a new downtown ballpark for the San Diego Padres, which just added to
the city’s financial burden and the temptation to cover the deficits with
pension money. Twice, in 1996 and 2002, the city passed proposals to reduce its
contributions to the pension funds — and got city workers and their unions to
agree by promising them higher benefits the city wasn’t paying for and, as it
turned out, couldn’t pay for.
These proposals
were based on the hope that investment income from the pension fund would rise
fast enough to cover the debts — but the recession in the early 2000’s put an
end to that. According to Kogan, the city actually started losing money on the pension fund’s investments in 2001. His
figures indicate that pension costs for San Diego have risen from five percent
of the city’s budget in 1997 to over 20 percent today, and that the city owes
$2.2 billion more in pensions than it can afford. Kogan also said that the
overpayments to city workers — the extra pension money the city promised and
couldn’t or wouldn’t supply — accounts for only $350 million, less than 15
percent of the total. The remainder is due to the city underfunding the pension
system and the pension fund’s investment losses in the last two recessions.
In the June 2012
mayoral primary, Councilmember DeMaio made a pension “reform” initiative a
major focus of his campaign and got city voters to approve it by a 2-1 margin.
The initiative eliminates guaranteed-benefit pensions for all new city employees except police officers and shifts
them into a plan similar to the 401(k) individual investment accounts all too
familiar to most private-sector workers who get offered retirement plans at
all. It also imposes a five-year freeze on so-called “pensionable” pay for all
city workers — after they’ve already gone five years without a raise. Kogan
argued that DeMaio’s “reform” would actually cost the city more money than the
deal Mayor Jerry Sanders negotiated with the city workers’ unions in 2007, and
it won’t do anything to reduce the $2.2 billion pension shortfall because it
comes from current employees.
What it’s going
to do, Kogan argued, is make it harder for the city to attract and retain
qualified employees. “We’re going to be competing against other cities for
skilled employees — cops, firefighters, engineers — and we’ll probably be
paying for them with non-pensionable ‘bonuses,’” Kogan said. “It’s not clear
this measure will solve the problems we have.”
Who deserves the
blame for San Diego’s ongoing financial problems? “Public officials and public
employees,” said Kogan, “but mostly the voters who for a long time believed
they could get the services people get in San Francisco and Long Beach without
paying comparable taxes. In order to be a viable political candidate in San
Diego, you had to go along with this something-for-nothing fantasy, and the way
they got away with it was to use the pension system as a piggybank.” Kogan also
said that now that that’s not a viable option, the city is creating the
illusion of a “balanced” budget by cutting back on infrastructure — adding to
San Diego’s sorry reputation as a city of potholes. “If you have a candidate
who says they have a magic solution — and both [general-election mayoral
candidates, DeMaio and Bob Filner] do — they’re wrong,” Kogan summed up. “It’s
going to be higher taxes, lower services or both.”
