San Diego San Diegans have just seen what life under a strong mayor system will be like. Thank goodness, an attempted coup last week was planned so mindlessly and executed so clumsily that future such attempts will probably fail.
The battle is between principle and principal. City attorney Michael Aguirre and those around him are facing reality: the city is broke. As a matter of principle, city employees' excessive retirement benefits must be cut. The employees are standing on principal: their own. They want the manna to continue flowing.
They have enlisted the city's establishment to help them. No one should be surprised. The city's red ink results from an unholy alliance between the business establishment and city hall. The overlords get their corporate welfare -- subsidized stadiums, shopping centers, housing developments, and multifarious other goodies -- and the councilmembers and bureaucrats make it happen. So the business community looks the other way when city employees get overly generous wages and retirement benefits. What the hell: it's the taxpayers' money.
But paradoxically, much good will come of last week's ham-handed coup attempt. "It was an attempt to kill off the pension investigation. They are looking out for their own economic interests and trying to save their behinds from prosecution. It backfired," says Aguirre. On Friday, he released an interim report indicating that the worst of the pension abuses -- the deferred retirement option plan, retroactive benefit boosts, and employees' ability to purchase years of service at a discount -- are illegal and therefore void. If employees don't cooperate in slicing ill-gained benefits, bankruptcy lurks. Taxpayers may have to carry part of the burden. Thanks in part to the Keystone Kops coup attempt that strengthened Aguirre's hand, the report may well resonate with the public.
On April 5, District Attorney Bonnie Dumanis, clearly fronting for those overcompensated employees, tried to set a trap for Aguirre. She went to city council, along with Sheriff Bill Kolender and police chief William Lansdowne, and made an elaborate PowerPoint presentation, saying that her office could handle misdemeanor prosecutions that are now the responsibility of the city attorney. She claimed it would save the city money.
But the timing gave the whole scheme away. "It's a power play," says Ed Miller, who was district attorney for 24 years, leaving in 1995. "They are trying to shut off Mike Aguirre's criminal jurisdiction; it would limit what he could do" in his pension investigation.
"They could not have found a better way to make themselves look corrupt and make people sympathize with Mike Aguirre," says Jim Mills, former president pro tem of the California senate. "Their timing was terrible -- arousing everyone's suspicions. Nobody would believe it was just a coincidence that they would bring this topic up at this time. By making herself a tool of these rascals, Bonnie Dumanis has made herself vulnerable. She has committed ceremonial hara-kiri for their benefit. They have made what was a black comedy into a farce."
In a recent speech, Dumanis referred to Kolender as her mentor. Mills formerly thought Kolender was savvy politically. Last week's cloddish coup attempt has caused him to change his mind.
"Mike Aguirre is a threat to [Mayor Dick] Murphy," says Dave Stutz, retired deputy district attorney. "So Kolender orchestrates this dog-and-pony show without Bonnie even giving a courtesy call to Mike beforehand. Bonnie is their pawn."
One reason Mills suspects that the business establishment is behind the attempted coup is that the San Diego County Taxpayers Association wrote Dumanis on April 4 to tub-thump for it. She included the letter in her promotional packet. The taxpayers association only represents a handful of the wealthiest taxpayers. Historically, its actions have been antithetical to the interests of average taxpayers. It backed the Chargers' 60,000-seat guarantee and the ballpark.
Another reason that the establishment's fingerprints are all over the attempt to thwart reform is that two days after the oafish coup attempt, Kolender hosted a fundraiser for Dumanis at the Town and Country. The invitation revealed that among her backers are establishment stalwarts Larry and Steve Cushman, Dominic Alessio, Murray Galinson, Jack McGrory, Ben Haddad, and John Witt, along with courtiers George Mitrovich, Charlie Bird, and Jessie Knight. (See Matt Potter's column for more information on the shindig.)
"This city is going back to the days of C. Arnholt Smith, with power bosses," says one of San Diego's most prominent citizens, asking for anonymity. The Dumanis/Kolender caper is just one example of the establishment "getting control of the mayor under this strong-mayor thing."
"The top law-enforcement officials are sending an unambiguous message that they want to stop Mike Aguirre from investigating crime," says former councilmember Bruce Henderson, who also sees the downtown overlords pulling the strings. "They want to destroy Mike Aguirre by devastating his budget."
Agrees councilmember Donna Frye, "It was a very blatant attempt to make sure the city attorney's budget is reduced; [Dumanis] is at the least trying to gut the investigation."
The report released Friday, written by Deputy District Attorney Don McGrath, concludes that the city council and pension board, in underfunding the pension plan beginning in 1996, violated state conflict-of-interest laws, the state constitution, and both the city charter and municipal code.
It cites certain abuses that were "void from their inception." First is the deferred retirement option plan, by which employees get roughly double their salary for their last five years, then retire with both a lump sum and monthly benefit. Here's how abusive it is: some city officials are getting lump sums under this program of more than $1 million, in addition to $150,000 or more annual retirement benefits. The city spends $16 million a year just paying interest on the $200 million now deposited in this program. But the city spends a mere $800,000 a year repairing potholes.
The report also slaps the practice of granting fatter employee benefits retroactively and permitting employees to purchase years of service at a steep discount.
The retirement fund is $1.5 billion in the hole. The city could slash services even more so that it can plunk in more funds. If the plan is to be 90 percent funded, the city would have to put in $1.06 billion in one year or $529 million in each of two years. That's not practical, says the report. Employees and taxpayers may have to share the pain equally. If that can't be accomplished politically, bankruptcy may be the only option. One critical step is get the city's labor unions to select among various benefit reduction options.
This won't be easy. There will be more coup attempts. "The pension underfunding deals have always been nothing more than a fraud -- a fraud on the employees and a fraud on the taxpayers," says Diann Shipione, the former pension board member who blew the whistle on the whole mess. "At some point, someone winds up holding an empty bag. Aguirre's report confirms the bag's really empty. The whole thing is just disgusting."
Meanwhile, Aguirre's enemies are taking potshots at him for being so bold and sometimes overreacting to public criticism. Says Mills: "People say Mike Aguirre is a loose cannon. But he is shooting at all the right targets."