Ken Leighton 11:30 a.m., Aug. 27
Believe the Grand Jury. Do NOT Believe the Mayor's Office
A donnybrook is rumbling louder and louder in San Diego. The City revealed that it won't have its financial report for fiscal year 2010, ended June of this year, until June of next year, or six months late. The City has also stopped bond offerings.The City blamed a "computer glitch." Employees have been charging their time to the wrong accounts, claims the mayor's office. Employees used the wrong computer codes, citizens are supposed to believe.
It is time to review a report issued by the San Diego County Grand Jury in June of this year -- and review the City's response to that report. Among many things, the grand jury said, "The City has yet to articulate a structural solution to close the multi-million budget deficit in fiscal year 2010. More than 50% of this gap in financing was filled by using one-time solutions, such as skipping reserve payments and deferring projects...The status quo is not going to resolve the crisis of financial instability, unbalanced budgets and reduction of City obligations, liabilities and debts." The grand jury suggested that the City convene a panel of bankruptcy experts to consider a Chapter 9 bankruptcy filing. On Dec. 11 of 2009, a citizen's task force that had been appointed by Mayor Jerry Sanders, and was made up of establishment members, had also suggested consideration of bankruptcy.
So what was the City's reaction to the grand jury? Chief Operating Officer Jay Goldstone, in a message that is still on the City's website under investor information, sneered that the grand jury is made up of "average citizens offering opinions on matters they may or may not understand or have adequately researched." Mayor Jerry Sanders offered an equally contumelious opinion. That also remains on the City website. Goldstone and Sanders assured investors that the mayor's office is not considering bankruptcy.
The City is also not considering any viable solutions to its own insolvency and its past and present covering up of it.
The books on fiscal year 2010 were closed more than 5 months ago. But a "computer glitch" will prevent a look at those books until June of 2011, citizens are supposed to believe. The auditors will have to wait to look at the books. But properly, outside auditors should not be told when they can look at the books. "I have never heard of a situation in which auditors have to wait until it is convenient for us to have you in," says former City Attorney Mike Aguirre. City officials "are delaying the beginning of the audit so they can still monkey with the books."
Is this hyperbole from Aguirre? Hardly. The grand jury correctly says that such monkey business has been going on for some time. The City has two problems: the deficit is structural, and the leadership has no will to do anything about it. Aguirre stresses two possibilities: 1. That money meant for such functions as water and sewer is being used for paying what the city owes its pension fund; and 2. That the administration "hoped to get [tax] money from Prop. D and channel it back." That is, the receipts from the Prop. D tax increase would be used to paper over the past deficits. Both of these suggestions are far more plausible than a computer glitch or any other excuse being offered by a desperate Sanders administration.