How much debt are we talking about?
It's amazing how many things the city has debt for. This year's budget says they have $30 million in yearly payments on that debt. But that doesn't include the proposed downtown library. It doesn't include the North Embarcadero, which is about another $5 million a year. It doesn't include the Naval Training Center. It also does not include another $5 million of debt that the city had incurred on police decentralization.
You add all these things up, and you have a lot of General Fund debt. And in a few more years if the ballpark bonds are issued and the library goes full ahead, you know, the city could be looking at doubling its annual General Fund debt payments up to potentially $50 to $60 million, which is a tremendous amount of debt supported by the General Fund.
Do you think the police are going to get a pay raise during the council and mayoral races? Of course. And if they get one, the fire will get one, and then the other unions will get one, so that could even outstrip the revenues more.
Any other examples of the city abusing its credit?
This year there was a large ballyhoo about the council doubling the street maintenance budget for the next couple of years. You know how they did that? A credit card. They basically issued additional debt of about, I think, $16 million in commercial paper, and they're paying it off with future transit tax revenues, from the half-cent sales tax that the city gets each year [about $20 million dollars a year] to bond for that. So they're not even using that as cash. They're doing additional debt to pay off for that short-term note. So, you know, even those great ballyhooed additional funds for street resurfacing are being done with debt. When you add it up, the city already has -- between gas tax, transit taxes -- probably close to $60 million of revenues they could use yearly to redo streets and so forth, but they've been diverting it to other programs.
I thought the city had a lot of land it owned called "Pueblo Land" from the old Spanish land-grant days and was going to sell it off to make the annual payments on a big bond issue that was used to build some new police stations a few years back. Do they have any Pueblo Land left to make the payments?
Very little. From what the auditor's office showed us, by next fiscal year they will have to rely on general revenues [about $5 million a year] because all the land, the Pueblo Land, will essentially be sold. Now the city always can sell other lands, like water-department land. But that's supposed to go in the water utility [fund] and other types of things. Of course, you know they have golf courses and things like that, which we would certainly say they should consider selling, but that's a big political issue.
How many more years will the city have to pay on the police station debt?
It's at least, boy, I think it's at least under five to ten years or something. And the city has a habit of advancing funds. Like, for the convention center, they ended up using $29 million from various sources, including Balboa Park funds. And they transferred, I think it was about $5 million or $6 million over to the convention center.
Then when the convention center bonds were issued, the Balboa Park fund was paid back from that bond money, correct?
This is classic. They paid the money back from the convention center to the Balboa Park fund. And it was in there for a millisecond, and they immediately transferred it out to build another police station out at, I think, 25th and Imperial. We wrote them a letter on this, and they said they will pay it back based on future grants they hope to get from the state. Well, if they don't get 'em, then those Balboa Park projects may be out or delayed.
So whose fault is all of this mismanagement?
Partly it's the structure of our government, to be honest. I think the fact that with the term limits and the impact of district elections -- although, I think district elections served a purpose in that finally the districts south of 8, they started getting something, whereas before they got nothing. If you'd see what's happened in the districts south of 8, now there's been a tremendous increase in just services. So I think that's important, but because of the term limits and district elections, the focus has been almost totally on the neighborhood services at the exclusion of good financial management.
And you have a city manager then who becomes the most powerful person in the city of San Diego. I'll give you an example. A few years ago, our former city manager, who's one of the most brilliant maneuverers in the world. I'm sure he in a past life was in the Sultan's palace, whispering in the ear of the Sultan. A councilmember wanted a new fire truck, a brush truck. And it wasn't in the budget, and they'd already gone to a budget hearing, and it was blocked.
And this councilmember went to the city manager and said, "What do I do?" And the city manager said, "Don't worry. I'll put in the appropriations ordinance." Which is the ordinance the council passes after the ballot budget is approved, which is all the detailed transfers and detailed minutiae of the actual implementation of the budget. Nobody reads it. Certainly no one on the city council, none of the city staff, probably two people in financial management read it, and maybe the auditor, and nobody else reads it at all.
He put it in there. So when the appropriations ordinance was approved unanimously, this person got a fire truck. That is essentially, I believe, a corruption of the system you have. An action was taken behind closed doors between a city councilmember and the city manager.