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Councilmember Donna Frye, consistently the only member of the body to have a grasp of economics, today (March 20) sent a letter to Mayor Jerry Sanders, stating that the actual budget deficit could be $60 million, not the $45 million that the City reports. She asks Sanders and Jay Goldstone, chief operating officer, to provide her the most recent budget deficit numbers. (This does not include the disastrous pension situation. What's owed for the pension is done with a two-year lag. If new information were included, the realistic deficit would be at least $100 million higher, she says.) Frye says she spoke with Independent Budget Analyst Andrea Tevlin, who said she had been told by Goldstone that the actual deficit is more like $60 million. "When was Mr. Goldstone planning to tell councilmembers and the public?" asks Frye. She also wrote a letter today to Council President Ben Hueso about the $103 million bond that Sanders announced yesterday. The bond includes almost $4.9 million in interest-only payments through June of next year. Then the City will pay a higher interest rate. This is the kind of kinky mortgage that has gotten the entire society in deep trouble. Former City Attorney Mike Aguirre had opposed the bond issuance, saying the public should vote on it. It became an issue in the election that he lost. Says Frye, "I am very concerned that it is a private placement, there is a two year interest-only teaser rate, no revenue source has been identified to pay for this." Frye says that when the council initially OK'd the bond (she voted against it) in April of last year, the council was going to see it again if the projects to be financed changed. She believes there have been such changes. "This is an end run around the public" which should have been given a chance to vote on the issue, she says.

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Comments

Burwell March 20, 2009 @ 3:18 p.m.

The actual budget deficit this year will turn out to be between $125 and $150 million. Almost 25% of city workers will lose their jobs by 12/31/2009. Those that remain on the city payroll will see their pay slashed by 20% or more. The $60 million deficit is based on the City's desperate hope that it receives at least $100 million from Congress. In a month or so the Governor will hold a press conference and announce there was a dramatic drop in tax receipts from the 2008 tax season, and call for draconian budget cuts to close the gap. The City will not receive much help from Congress, maybe $30 million at most to pay police and firefighters, and the City's spending will be slashed to the bone.

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SurfPuppy619 March 20, 2009 @ 5:03 p.m.

She also wrote a letter today to Council President Ben Hueso about the $103 million bond that Sanders announced yesterday. The bond includes almost $4.9 million in interest-only payments through June of next year.

Stupidest thing I have ever seen.

Borrowing at a 5+% interst rate to cover basic every day operating expenses. That proves we have untrained chimps running this City.

It is also, like Aguirre said, illegal because it is bascially a debt that is being taken on without a vote of the people.

Someone tell KFC Sanders to cut everyone's pay at the City by 15%-then kill the pension plan and put everyone back into SS.

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Don Bauder March 20, 2009 @ 6:38 p.m.

Response to post #1: The subject is the 2010 budget, not 2009. Sorry I did not make that clear. I think the City is in very bad fiscal shape but I don't think it's as dire as you say. The administration will hold off on layoffs as long as it can. Mayor Sanders doesn't face problems; he is just waiting this one out. The Schwarzenegger and U.S. government scenarios you sketch are certainly possible, and would be a real blow to San Diego -- no question about that. I think only Donna Frye understands the gravity of this situation. Best, Don Bauder

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Don Bauder March 20, 2009 @ 6:41 p.m.

Response to post #2: The bond is stupid, yes, and the people should have had the chance to vote on it. Don't count on Sanders doing anything about excessive pay and fringes of City employees. He will refuse to face that situation. Best, Don Bauder

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