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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.

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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.

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The pressure on the "Mare" and city government just continues to build. How much more can they stand? This has all the signs of the last days before a surprise of some sort. As in, they deny any intention of a BK filing right up to the day before the lawyers go to court with the filing. This has happened in the corporate world on many occasions. The stalling says to me that they are just buying a little more time before the filing is made. So, it could happen tomorrow, the day after, the day after Thanksgiving (if the court is open that day.) Since Sanders has staked his reputation on no such filing, where will it leave him? His "spin-meisters" are probably working overtime right now trying to make his excuse(s) plausible.

Yep, when Prop. D failed, it put him in a world of hurt.

Nov. 18, 2010

Response to post #1: Remember that he also said there would be no tax increase while he was mayor. Then he said that without a tax increase there would have to be even more slashes in police and fire service, parks, recreation, libraries, infrastructure, basic maintenance. So he was admitting the City is insolvent; it cannot provide essential services that governments are supposed to provide. Why? The money has been drained off for corporate welfare projects downtown that line the pockets of real estate moguls, the mayor's donors. Best, Don Bauder

Nov. 18, 2010

Yet he still touts the convention center expansion. Something is very wrong here.

Nov. 18, 2010

Of course, they all claim that the center expansion will pay for itself. That is nonsense, of course. I have heard that some are even saying that the football stadium will pay for itself, when even the Chargers admit there isn't a chance of that -- there will be no ancillary development, etc. Best, Don Bauder

Nov. 18, 2010

the deficit is structural, and the leadership has no will to do anything about it.

Sanders should resign or be recalled.

He clearly has no idea- or more likely REFUSES the only solution we have- on how to fix the problem/s in this city.

He is a lame duck waiting to exit the building, which was smoking when he came into office, but is now a 5 alarm fire with the citizens getting burned at every turn.

Nov. 18, 2010

Yes, but to get him recalled there could not be an apathetic population, which San Diego has. Best, Don Bauder

Nov. 18, 2010

Someone, and I cant recall if it was you Don or Pat Flannery said that the City could simply not pay the pensions. the municipalities are different than corporations.

It is the state that can refuse to pay, or repudiate their debts, any debt, because they are immune from prosecution in both state and federal court per the 11th Amendment.

I don't think a muni could get the 11th Am. protection.

Nov. 18, 2010

But what if a city has already trimmed back safety services to the point of extreme danger, ignored infrastructure and maintenance completely, suspended almost all services and still can't pay retirees? That is the case in Prichard. Then what? Best, Don Bauder

Nov. 18, 2010

I say this with tongue in cheek: California could take over San Diego's pension debt and then repudiate it. Best, Don Bauder

Nov. 18, 2010

Don

I am not saying this statement from the City isn't suspect, but if you did any investigative work on SAP OneSD Software/computer system you'd find your toes curling from the waste and massive expense.

What's worse, the ridiculous amount of time squandered by employees who try and make this "Rube Goldberg" software actually do what vendor promised. With close to $50 Million already spent, it's so buggy even the ORKIN Man would throw up his hands from the keyboard, and say who paid for this piece of excrement.

Nov. 18, 2010

Others have told me that the City knew in 2007 that the system didn't work. If true -- and I don't know that it is -- then why didn't San Diego take the suppliers to court and demand they make it work or pay up? Best, Don Bauder

Nov. 18, 2010

Two reasons: Lack of transparency between city departments and its wholly owned corporation DPC and lack of real leadership. The latter being San Diego's real problem since 2005.

Nov. 19, 2010

Those were the problems long before 2005. Best, Don Bauder

Nov. 20, 2010

Don Do you think either Goldsmith or Mayor S knows the meaning of "contumelious?" And if they don't, would they not be too contumacious to admit it?

Nov. 19, 2010

At the 1960 Republican convention, Sen. Everett Dirksen, the Wizard of Ooze, was introducing Herbert Hoover. Intoned Dirksen is his smooth, low voice, "He has been vilified, and drenched in contumely...." He could have said "contumacy," I suppose, but "contumely" was the better word in that context. Best, Don Bauder

Nov. 20, 2010

DPC and lack of real leadership. The latter being San Diego's real problem since 2005.

The lack of leadership starts with Golding.

Nov. 19, 2010

"lack of leadership ??? How About "Reign of Thieves" ?

Nov. 19, 2010

Good point. Best, Don Bauder

Nov. 20, 2010

It didn't start with Golding. But it accelerated then. Best, Don Bauder

Nov. 20, 2010

How about considering that the new SAP OneSD $oftware/computer system was really positioned as the escape goat for all the City's Leaders? Many are hoping to be out of Office (and enjoying their FAT Pensions) before being "caught" with their hand in SD's cookie jar...

Can Citizens call for an outside audit ASAP? I'm surprised that Mike Aguirre has not done this already...

BTW: I bet Senator Kehoe and newly elected Kehoe are both watching this very closely because they both also played big parts in the Money for Power $cam Diego! Don, have you asked them for comments yet?

One last question: Will Sanders pull a Nixon and leave Office saying, "I'm not a crook"?

Nov. 20, 2010

If Sanders left office, who would assume the post? Faulconer? Would that be any improvement. Best, Don Bauder

Nov. 20, 2010

Wouldn't the city have to sell off assets in BK? Torrey Pines golf course should bring about enough to bring the city into solvency. A city that can't provide basic services has no business running golf courses for the rich.

Nov. 20, 2010

I believe there are differences of opinion on selling off assets in a Chapter 9 bankruptcy. But a number of interesting moves can be made. One any judge should make immediately: give Petco Park back to the bondholders. That would save $25 million a year. Beste, Don Bauder

Nov. 20, 2010

A city that cant provide basic services has NO business giving millions to developers to build alleged "affordable housing" which is really "tenement slums w/ no social or aesthetic value" as described by SD Architectural Foundation.

Prop 22 said we cannot touch the billions in property taxes to private developers like Toni Atkins and her wife Jennifer LeSar.

Nov. 22, 2010

Wouldn't the city have to sell off assets in BK? Torrey Pines golf course should bring about enough to bring the city into solvency

NO.

No property is sold off in a Chapter 9 BK, a muni BK.

A CH 9 BK is strictly a cash flow BK, not an assets-liability BK.

And even if this were not the case-you should NEVER sell real property for one time fixes to an on going structural expense. Next year the same structural expense is back but you're out the hard asset.

Nov. 20, 2010

I believe I have heard that before: assets would not be sold in a Chapter 9. The reason SD will have to go into BK is that it has been selling off assets to balance its books instead of facing its fiscal mire. Best, Don Bauder

Nov. 20, 2010
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