San Diego Adolf Hitler called Eva Braun morally depraved because she chewed gum. Al Capone expelled a gang member for failing to observe the Sabbath. Charles Ponzi fired an underling for fudging on his expense account.
These are extreme examples, but you get the point. Those who commit grievous sins deflect attention by attacking those who commit minor ones.
Something similar is going on in San Diego. Mayor Dick Murphy and city government colleagues have pressured the ruling establishment to smear the Performance Institute, a think tank that has offered numerous good suggestions for reforming city finances. It's a clear indication that the city's financial cancer can't be cured from the inside. The only progress will be made by federal officials investigating the city both criminally and civilly.
The San Diego County Taxpayers Association and the San Diego Regional Chamber of Commerce -- both of which championed the Chargers' 60,000-seat guarantee and downtown ballpark, among other civic sieves -- last month dropped their support for the institute, citing a few alleged minuscule errors in its analyses.
For example, the institute points out that Phoenix has the same size budget as San Diego. It's comparable in other ways. If San Diego's mayor and council spent the equivalent amount on aides that Phoenix spends, there would be a $4.5 million savings, says Carl DeMaio, head of the institute.
"But the numbers quoted for Phoenix are a few years old," complains Lisa Briggs, executive director of the taxpayers association. Similarly, when DeMaio compared certain San Diego spending with Baltimore and Atlanta, the numbers for those cities were somewhat askew, she charges.
In some cases, the institute "is not doing thorough research, has not footnoted things," says Mitch Mitchell, vice president of the chamber.
DeMaio strongly denies that any of these numbers are inaccurate or the comparisons invidious. But even if the Phoenix numbers are somewhat out of date, San Diego's mayor and council are still spending far too much. If the Atlanta and Baltimore numbers are a bit off, that is hardly a venal sin: there is no such thing as an apples-to-apples comparison among cities. Also, San Diego government has denied information to DeMaio and complained when he went directly to city employees for reform suggestions.
Murphy's chief of staff, John Kern, "had voiced concern about the Performance Institute," says Briggs, who also fielded complaints from the city manager and finance director. Here is a city under criminal investigation for cooking the books and misleading its bondholders. San Diego's deliberate underfunding of its pension system, as well as its egregious accounting machinations, have put it on the financial brink. Yet its officials hoot at an institute that may have made minor errors and, says Mitchell, has taken "an antagonistic approach."
In San Diego, the honest players get sent to the penalty box; city officials plus the downtown corporate-welfare crowd -- in concert with organized labor -- work to besmirch reformers. It's very much like the vilification of Diann Shipione, who two years ago blew the whistle on the pension mess. This denigration has abated somewhat, particularly since last month, both the New York Times and Fortune magazine prominently featured San Diego in stories about the handful of cities with the worst self-inflicted pension quagmires. Shipione was quoted in both. Had she not challenged the honesty of a sewer-bond prospectus last year, the city would never have confessed its accounting/disclosure sins in January.
DeMaio has offered a list of 219 reform options the city could pursue. All are good; some are excellent. None will be unanimously hailed. There are too many pressure groups for that. But some must be adopted, or the city will indeed go into bankruptcy.
Here are some examples: Today, motorcycle cops get bonuses for washing their vehicles each week. "If you hired neighborhood kids to wash motorcycles, the savings would be $250,000 a year," says DeMaio. Also, the city does its own maintenance on police vehicles. The average cost per vehicle is $8,848. That comes to $12.5 million a year. If the job were outsourced, the city could save $4.5 million, says the institute.
The institute believes in competition between the public and private sector. Both would bid on a job. If the government could do it cheaper and better, it would get the work. "Competition between employees and outsourcing usually leads to 10 to 30 percent savings," he says.
His group has the backing of the libertarian Reason Foundation, although DeMaio himself is a Republican who has worked for President Bush and Governor Schwarzenegger on budget issues. Libertarians are especially keen on outsourcing. "DeMaio is not pushing privatization hard enough," says Richard Rider, San Diego's most outspoken libertarian. "The only way to get rid of the pension problem is to get rid of public employees."
But others argue -- cogently in many cases -- that privatization is no panacea. DeMaio says that the city and outside vendors could bid on maintenance of Mission Bay and Torrey Pines golf courses. Savings could be $950,000 to $2.8 million. However, councilmember Donna Frye, a Democrat, says, "The fact is that until October, the Mission Bay golf course was leased to a private entity. The city could not reach an agreement with the leaseholder and took the golf course over. It was a mess and hard to find out who was accountable."
Counters DeMaio, "My sources say the reason the city canceled the contract is it needed to find employment for people in groundskeeping. It canceled the contract so it didn't have to lay off city workers."
Frye also disagrees with suggestions to have more commercialization of the beaches, such as billboards on lifeguard towers. But DeMaio and Frye have great respect for one another. "She told me, 'Don't let the turkeys get you down. Don't view yourself from the downtown crowd's eyes,' " says DeMaio, who was warned by a city government insider, "You are not respecting social norms, not respecting the tribe."
"I have looked at some of his ideas, and there are some errors. Some of the suggested changes are oversimplified, and some are valid," says Frye. "That's no different than the city manager's report." She will be working with DeMaio.
Only that kind of give-and-take will lead to the massive changes that are desperately needed. But the overlords don't want give-and-take. They only take. "We proposed weaning the convention center off its subsidy over a four-year period," says DeMaio, who believes the corporate-welfare moochers won't like that. Similarly, he wants developers to spend more on infrastructure (such as building new fire stations). And he has a plan to boost fees of large trash haulers, although their payments would fall if they did more recycling.
Otherwise, DeMaio has not yet taken on corporate welfare, mainly because he has concentrated on the general fund, and the corporate giveaways are concentrated in enterprise funds and special projects. The establishment's worry "is that DeMaio is not controllable," says former councilmember Bruce Henderson. "There isn't much in his suggestions that ruffle [establishment] feathers, but their concern is that tomorrow he will ruffle feathers."
He does ruffle labor's feathers. He wants to get rid of the egregious Deferred Retirement Option Plan by which city employees almost double their pay in their last five years and walk off with both fat monthly retirement checks and generous lump sums.
So labor is hopping mad. And the establishment is wary, "because in the last ten years, the corporate-welfare people got into bed with labor -- to sell the ballpark, for example," says Henderson.
As long as the business establishment, unions, and government leaders oppose reforms, there will be no internal pressure to clean up the city's accounting. San Diego will continue to plunder water and sewer funds and switch the money to the general fund, raising sewer and water rates and obviating a tax-increase vote that would require two-thirds approval. The city will go on counting revenues in current years that truly belong in the following year.
Only criminal indictments and civil penalties might thwart such activities. Once again, as in the 1960s and 1970s, it will take the federal government to cleanse San Diego. The smearing of Carl DeMaio makes that clear.