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Mayor outlines plan to pay down pension deficit

San Diego Mayor Jerry Sanders wants to leverage millions of dollars in tobacco money to help pay down the city's billion dollar pension deficit. KPBS reporter Alison St John has more.

The latest idea to borrow money involves using tobacco settlement dollars, a relatively secure source of financing, as collateral to sell bonds. Mayor Sanders hopes the plan will reduce the pension deficit fast.

Sanders: "We believe that leveraging the $10.3 million in tobacco revenue will allow us to obtain approximately $100 million. This is $100 million our city would then contribute towards our pension obligation."

Using tobacco settlement money allows the city to sell bonds even before audits for the last three years are approved.

The mayor says programs currently funded with tobacco money won't lose their funding. The tobacco money will secure the loan but the loan will actually be paid off by extra money the city employees recently pledged to contribute to their pension plans. Alison St John, KPBS News.

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