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Kroll report recommendations — will they save the city ?

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Aired 4/19/09

San Diego Mayor Jerry Sanders will hold a Town Hall Meeting this week to respond to the $20 million Kroll Report. The report has been the topic of water cooler conversations around San Diego since it was released earlier this month. It blames the City's massive financial problem on a culture of political expediency. KPBS reporter Alison St John speaks with some keen observers of the city about the report's recommendations for the future.

The Kroll report offers 25 pages of recommendations -- things the city should do to restore Wall Street's confidence. San Diego has been banned from the Bond market for two years. Has city hall learned its lesson?

Lynn Turner, one of the lead consultants who wrote the report, was dubious.

TURNER: "We do have concerns about whether the city has the commitment to make these changes."

The report recommends changes to make the city more fiscally responsible, with better budgeting training, and software, but mostly by adding several layers of independent oversight.

Murtaza Baxamusa, director of research and policy at the Center on Policy Initiatives has read the report from cover to cover, even analyzed its footnotes.

BAXAMUSA: "There are basically two kinds of remediation suggested: one is really cleaning up the books, but then there is a deeper policy level -- clean up your act."

The city suffered from chronic mismanagement, but Baxamusa says incompetence is one thing but political hanky panky is another.

BAXAMUSA: "It is clear from the Kroll report there were two kinds of fuzziness being created sometimes deliberate, sometime accidental, but that fuzziness was being created in accounting procedures so the city council wouldn't really understand what was going on, and then there was fuzziness being created at a policy level...there were some people deliberately manipulating things, so there were business interests being served by this fuzziness."

Baxamusa wonders if yet more layers of government bureaucracy is going to make a difference. The Kroll report recommends new oversight bodies like an external monitor, an independent audit committee and a disclosure practices working group.

Attorney Pat Shea says new governance structures wont get at the root of the problem. Shea ran for mayoral. He's the husband of Dianne Shippionne who blew the whistle on the city's pension under funding plan.

PAT SHEA: "All the reports and all the other stuff is not going to matter we're not going to make any progress. We really need to get to the point where people talk straight and do things for the right reason. Are we there yet? I don't think so."

Shea says city council members show little sign of repentance or of mending their ways. In fact, the city has been given these kind of recommendations before, says April Boling, a member of former Mayor Dick Muprhy's reform committees. Boling says the city was warned about its pension deficit, and its deferred maintenance problems.

BOLING: "It's all the same because they've never been addressed - nothing's changed. In 2002 a we first went - we the Blue Ribbon committee - went to the council and said these are your sore spots. Here we are in 2006. We still have the same sore spots and they're not getting better. In fact, I would suggest all of them are worse."

Would appointing an external monitor help the situation? That is one of the Kroll report's primary recommendations.

Boling: "We do not need to spend money on a glorified baby sitter when we don't have enough police on the streets."

Boling says the mayor should be capable of making the tough decisions. As a fiscal conservative, she supports deep cuts to government and employee benefits.

On the other side of political spectrum, former democratic congressman, Lionel Van Deerlin, sees the pressure on the mayor to raise more revenues.

VAN DEERLIN: "One point that the Kroll report makes is that we've tried to get by on the cheap."

Van Deerlin says the problem was the city council couldn't face the political heat of asking voters for a tax increase.

VAN DEERLIN: "The council instead of facing up to necessity of finding a way to finance a more generous pension system, went into closed session, and decided to do it illegally. Whether a majority knew it was illegal was almost beside the point. The moment they went into closed session should have told everybody they were up to no good."

Dick Vortman, the interim president of San Diego's Chamber of Commerce and a former member of the city's pension reform committee, worries that city officials are still concealing the true nature of the city's fiscal problems.

DICK VORTMAN: "My sense is the recommendations are very necessary and they're good, but they're not sufficiency cause it doesn't do the next step. Can we afford what we've already promised? Do they really think they can generate revenues to cover those costs? If yes, wonderful, if no, then what are we going to do about it?"

San Diego Mayor Jerry Sanders has said he's open to all the report's recommended changes, however much they cost the city. But even if the mayor follows the Kroll report's recommendations to the letter, those changes won't make the difficult political choices needed to pull the city out of its financial tailspin.

Alison St John, KPBS News.

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