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— The San Diego City Council recently adopted the city's $1.5 billion budget, drawing criticism from some quarters that the new spending plan wastes millions of dollars and will result in huge future sewer and water rate increases. One opinion was represented by Scott Barnett, executive director of the San Diego Taxpayers Association. Below are excerpts from an interview conducted last week after the budget was passed.

Q. What kind of financial condition do you think the city's in? The perception held by many seems to be that the city is flush with cash, the economy is up. In short, there is no problem.

A. Well, the economy is certainly better than it was. The city is receiving more revenues, but they're spending more revenues. They spend every new dollar they get, essentially. Their deferred maintenance is some $60 million of crumbling buildings and structures and things like that, [and] they have basically minimal to no emergency reserves in this city.

Q. You made some specific suggestions during this year's budget hearings, many of which were ignored by the city council. Can you run some of those down?

A. Sure. We felt that deferred maintenance is a major issue that's been ignored, and the fact that their emergency reserves are only $6 million, and they should be closer to $50 million. So we suggested two things. Number one, they do a hiring freeze. The city manager likes to say that the number of city employees has been reduced, but they are actually shifting them, primarily to the enterprise funds, so the general-fund employees have been reduced, but they have simply been moved over. They have been hiring, sprinkled through the budget, new employees, and these are primarily employees that are not giving service to the general public; they are bureaucrat staff, city hall staff.

Q. What is an "enterprise fund"?

A. Basically the sewer and the water system are an enterprise fund and should be operated separately and independently from the city budget. The city actually has several enterprise funds - sewer, water, airports, development services (which is the planning department), environmental services (trash pickup), golf enterprise. I may have missed one or two. The city manager has been going in the direction of creating these enterprise funds, but the problem is there is a lot less scrutiny of them by the city council. In fact, at the budget hearing, not one question, not one issue was raised about the enterprise funds, and that's the bulk of the city budget. Out of the $1.5 billion budget, two-thirds are enterprise funds.

Q. What's going on with the sewer and water money?

A. Since 1994, the City has siphoned off almost $50 million in water and sewer revenues - ratepayers' money - into the general fund and is proposing almost another $16 million this year. They're also proposing rate increases; sewer rates are going up 6 percent and water rates are proposed to go up 6 percent. If the $16 million would stay in the water and sewer fund, those rate increases could be reduced by a total of 3 percent. That's $16 million that would stay in the ratepayers' pockets instead of going into the general fund, and that is where we think it should stay.

Q. What do they do with all that money when they take it away from sewers? A. It goes in the huge general fund pot and is not earmarked for anything. It's just lost in the $500 million general fund somewhere. Our position is they should stop that $16 million siphon before they raise water rates as proposed in August and not after the fact.

Q. I guess the city manager would say, "If I can't have that $16 million, I can't balance the budget, and I'd have to cut." Is that a reasonable scenario?

A. Well, it's interesting. When we proposed this recently, the manager said, "Tell us where we're going to find the $16 million." The day before - actually the night before - at the council budget deliberations, the manager miraculously found $10 million of "new revenues," which had not before been found in the budget. All that money he suddenly suggested spending on various city programs. So there was $10 million that they could have used. Secondly, [this year's budget] is $29 million greater in revenues and spending [than last year's budget], so there was $30 million there, plus this additional $10 million. The money was clearly there if the council had given direction to the manager to put that money aside and stop the bleeding from the water and sewer system.

Plus, we went through and suggested a number of specific programs they could look at not funding, for instance $300,000 on upgrading their cable TV and creating their own TV channel here in San Diego. That money certainly didn't have to be spent this year. Hiring more employees, doing the so-called community service centers. You could buy a house in North Park for the amount they're spending yearly on outfitting these community service centers. There are other examples. Hiring special events people for the city manager's staff to deal with the Super Bowl: two people. Last Super Bowl, they didn't have that. Those were actually hired for the Republican convention, out of budget, and now they want to make them full-time for the Super Bowl. $150,000 for two positions that were brought on for the Republican convention, not on budget, and now they're going to roll them over for the Super Bowl and some other projects.

Q. We've heard a lot about deferred maintenance; it's kind of a buzzword now. Is there any estimate of the dollar amount of that, and what specifically does it involve?

A. It's approximately about $58 million. The City has six binders listing everything from changing the pipes on water fountains on Park and Recreation buildings to replacing roofs to the linoleum in lifeguard-tower floors - those are all issues of deferred maintenance. In some cases the public sees them directly and in some cases it's just a state of the working conditions of public employees. From our perspective, deferred maintenance is like a cavity. If you don't take care of it today, it's going to turn into expensive root canal work in later years, and that's what the City is facing, just like they did in the water system. They put off deferred maintenance in the water system; pipes are busting. It costs a lot more money ultimately to repair and replace than if they deal with the problem early on. That's a major responsibility of our public officials to deal with that issue. If you own a house, and your house is leaking, you don't take your roof repair funds and buy new VCRs and a TV set; you repair your roof, and that's what we want the city council to do; take care of our roofs.

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