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Budget Concerns Top DeMaio’s List

Audio

Aired 12/10/09

San Diego City Councilmember Carl DeMaio has been in office one year. We ask him about the accomplishments of the year past, the current and on-going budget crisis, his views on outsourcing city services, his relationship with the Mayor and what he hopes to see for the city in 2010.

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh. You're listening to These Days on KPBS. This has been a rough financial year for many people and institutions and the City of San Diego is no exception. A package of budget cuts to the tune of $179 million proposed by Mayor Jerry Sanders won preliminary approval by the city council yesterday on a 7 to 1 vote. The lone dissenting voter is my guest today, Councilman Carl DeMaio. In a series of interviews on These Days, we're speaking with all the members of the San Diego City Council to hear about their districts, their concerns and their hopes for the city's future. Councilman DeMaio represents District 5, and he’s here in the studio with me. Good morning, Councilman DeMaio.

CARL DEMAIO (Representative 5th District, San Diego City Council): Good morning.

CAVANAUGH: Thanks for coming in.

DEMAIO: Thanks for having me.

CAVANAUGH: You are a first term council member, elected last year. I’d like our listeners to know a little bit about the district you represent. What areas are in the 5th District?

DEMAIO: Well, the 5th District basically encompasses communities along the I-15 in the northern part of the city. We include Mira Mesa, Scripps Ranch, Carmel Mountain Ranch, Sabre Springs, Rancho Bernardo, and something I’m very proud of, San Pasqual Valley, which is the largest open space area in the city. It has actual agriculture. There are farms up there and we’re very proud of that open space. It’s certainly an important part of the heritage of our city.

CAVANAUGH: That’s part of the demographic of your district. I wonder if you could tell us a little bit more in terms of demographic and income.

DEMAIO: Well, these are working families. I’ve heard from people who live on fixed income in some of our retirement communities, such as in Rancho Bernardo, and new homeowners, families just starting out. And they are great communities. There’s a lot of volunteerism, there’s a lot of engagement in local activities, whether it’s the Friends of the Library or Park & Recreation programs. And these families are under a lot of pressure right now because of the bad economy. They also have seen their services from their city fall into disrepair, and that is very frustrating for them. They see the infrastructure falling into disrepair. A lot of these communities were new 20 years ago, 30 years ago, and the City has not maintained that infrastructure and so that’s starting to be felt in these communities. So they really want to see a change in direction. They want to see the City’s finances fixed, obviously, but they also want to see city government work again to get back to the basics and provide those things that impact their quality of life.

CAVANAUGH: Now even before you were elected, you were a voice in San Diego politics for many years, known as the City Hall watchdog.

DEMAIO: Watchdog.

CAVANAUGH: Now, are you a native San Diegan?

DEMAIO: No, I actually was raised in Orange County and when my mother passed away when I was a teenage, the Jesuits took me in, into their – a boarding school in Washington, D.C. and took care of me for seven years. So I really have been given a lot in my life and I’m committed to public service and giving back. In addition to being the City Hall watchdog here in San Diego for the past seven or eight years and calling out the City on its financial problems as early as 2003, I also ran the largest good government group in the nation, the Performance Institute. We work with cities and counties across the country on efficiencies and budget reform. I’ve, you know, been able to work with over 3000 cities and counties on implementing reforms and helping them balance their budget. And also I’ve been involved on a lot of state and national efforts to really improve accountability, transparency, and efficiency in government decision making.

CAVANAUGH: And you’re also a small businessman, is that right?

DEMAIO: Yes, I owned two companies and sold them in 2007. And I know what it’s like to have to meet payroll, and to make tough decisions, and to have an obligation to work – look out for not only your customers’ best interest but those best interests of your employees. So these are tough decisions that we have to make in the City of San Diego but I bring that small business background into the job that I’ve been assigned now.

CAVANAUGH: I’d like to talk a little bit about the budget and the budget cut proposals and the vote yesterday. Seven other members of the San Diego City Council voted for the mayor’s budget cuts and you did not. Many of the others said they had to basically hold their noses but they did it for the good of the city. Why didn’t you feel the same way?

DEMAIO: Well, I commend them for taking the actions they did yesterday. They were difficult decisions, we need to bring spending in line with revenues. But this is where I had a problem, I didn’t feel that we had done enough to deal with the structural imbalance in the City’s budget. And this is exactly why I ran for office, why I am in office. It is my main focus, which is restoring our city’s finances for real. No more accounting gimmicks. I had a problem with the $200 million deficit with more than half of that being filled with one-time monies. Maureen, that would be like you taking your personal money and saying I have my mortgage payment coming up next month, I can’t afford it because I’m not earning enough in salary, I’ve never earned enough in salary, but I can make that payment if I can sell my car. Well, Maureen, that might get you through this next one month but what are you doing to bring your total long term expenditures in line with your income? Nothing has been done to address that problem. So while I commend the mayor and the council for acting early and making these initial reductions, we still have to replace those one-time monies with real structural reform in the city’s budget through efficiencies and, yes, through pension and retiree healthcare reform.

CAVANAUGH: I see, so I – and you and other people have pointed out that a lot of these budget cuts are deferred projects and payments, just…

DEMAIO: And raiding reserves, raiding reserves and the one-time fixes.

CAVANAUGH: To close that budget gap.

DEMAIO: Yes.

CAVANAUGH: What kinds of structural reforms, though, could we have implemented in the time we needed to do it in order to make that, you know, to make sure that the City was – stayed fiscally sound?

DEMAIO: Well, let me first point out that people always say, hey, we know that this isn’t the right solution but we don’t have time so let’s just do it. That’s not an answer. What we do need is to put forward a framework for reform and to really take action, not just give lip service to it but to really make concrete actions. The first thing that we need to do over the next 18 months—and what I proposed yesterday—was a process in that framework for reform. I said, look, I take you at your word, council, that you really want to make structural reform. But let’s really hold ourselves accountable; let’s create a fiscal recovery reserve account and every dollar we save through managed competition, outsourcing, efficiency reviews, performance audits, and, yes, reforming pension and retiree healthcare benefits, every dollar that we save should go into that account rather than being spent to basically substitute for those one-time accounting moves. That way, as we enter the FY ’12 budget, which we’re already $80 million in deficit, we will have balanced that budget and, in a structural manner, achieved the reforms that San Diegans want in the City’s budget.

CAVANAUGH: I want to talk to you a little bit more about the structural reforms but I want to get – I want to just close the idea of these budget reform measures that the mayor has introduced. What do you think of them, particularly the cuts to public safety personnel?

DEMAIO: Well, I think some of them – We have to make the cuts – We have to be proactive and make reductions now in spending, so I applaud the mayor for doing that. I do have concerns about specific reductions because I’m always not only looking at saving money but improving the performance of our city departments. So I am troubled by, for example, the replacement of civilian positions with sworn police officers. It may be the only thing that we can do but I would like to look at other options and really look at the department from the standpoint of not only cost savings but improving the performance. That’s really what I know taxpayers want us to do, and we see this happening in nonprofits and in businesses. It’s not just cutting, it’s redesigning the way you provide the service so you’re getting more but spending less, or at least trying to preserve as much of the service level as possible. In tough economic times, it’s going to be hard to get more but we can at least try to shield those services from any impact by rethinking how the city department works and that’s what I’m committed to.

CAVANAUGH: In the process of rethinking how city departments work, I think a lot of people would agree with you that cuts can be made. However, even as a taxpayers advocate, I wonder if you agree that as many people argue that San Diego will never become really strong and sound fiscally until voters realize that they have to pay more to support city services.

DEMAIO: Well, let me tackle that head on. I agree, we need more revenues. And I’d bring my small business hat to the table here. Whenever we had a budget downturn in my companies, and, you know, in the economic cycle you do – With my two companies, whenever one was doing great, the other one was struggling. And so never during that downturn did I say the problem with my company’s budget was that my customers weren’t paying enough. And my solution wasn’t to raise the price, my solution was to, obviously, cut costs but also to get out there and hustle, sales, marketing, provide better value, even in some cases provide discounts so you bring in more customers. Now let me translate that analogy into government. Government shouldn’t be raising taxes and fees on working families and small businesses. That just makes it harder for them to survive; it raises the cost of operating. It drives jobs out of the region. What we need to think about is how do we create a jobs friendly environment? I held a small business summit last Thursday and the question I was asking them was what can we do, as a City government, better to help you survive the tough economy? And, Maureen, what I heard was a lot having to do with making the City departments more friendly in terms of helping small businesses through the process. Time is money. And for a small business owner to sit there while they’re waiting to get through a regulatory process or to get a permit or a license and to be given the runaround, it really makes it harder for them to succeed. And so there are some things that we can do to make it more friendly for job creation and retention in our region, and that, Maureen, helps us sustain revenue growth long term.

CAVANAUGH: Now, I know one of your major ideas, one of your concerns, one of the things you’d like to see happen is more managed competition, more outsourcing of city services.

DEMAIO: Well, the competition. I’m not wed just to blindly saying we need to outsource.

CAVANAUGH: Umm-hmm.

DEMAIO: But I do want competition because whether the city workers win that competition or a private firm wins, we see the cost savings and better ways of providing the service through the competition.

CAVANAUGH: What do you think should happen to speed up outsourcing? Because, of course, the voters approved the idea of outsourcing city services but it really sort of hasn’t been implemented.

DEMAIO: Yeah, and the reason why it hasn’t been implemented that because the labor unions have been very effective at using state labor law, the need to meet and confer every single decision to thwart the process. And they’ve had help, frankly, from some members of the city council that have basically given them accommodation. I think we ought to implement the will of the voters faithfully and particularly because we need to save the money to balance the budget. And so what I’m looking for is an honest and a fair and a transparent process to do that. I don’t want to tip the scales in anyone’s direction. It should be completely a level playing field but we must do the competition. So as you mentioned, in 2006 voters overwhelmingly, by 63%, approved Proposition C and now, more than 3 years later, not one dollar, not one position, not one program has been reviewed using competitive bidding. I don’t think that’s acceptable. I think voters are fed up. That’s why in November I introduced a ballot measure to amend the City Charter to put more teeth in the requirements of competitive bidding by putting us on an accountability schedule, a timeline, if you will, of specific services that need to be competed during a set period of time.

CAVANAUGH: Since there is such institutional opposition towards the idea of outsourcing, wouldn’t it just make more sense to try to maximize the City’s present workforce, get the most out of the people who are working for the city and not spend a lot of time and perhaps money even getting bids and competitive – going through that whole process.

DEMAIO: Well, we are – we need to do both. For example, when I came into office, my budget plan, which I released in January, just a month into office, said we need to close that year’s – the budget deficit by trimming salaries and benefits. And so I laid out a number of ideas for making the city workforce more economical and my colleagues, the mayor and the council, agreed to that approach and I really appreciated that. We unanimously adopted the labor contracts and that was a huge step forward. There’s more to be done, as you mentioned. We can make more gains in efficiencies in that regard. But competition actually helps us achieve those savings because when you’re sitting in a competition, the city workers look at their costs, the number of workers it takes to do a service plus their benefits and their salaries and they say, wait a minute, if we keep these salaries and benefits and the size of the workforce we have for this function, we won’t win the competition. So competition is actually the action-forcing mechanism for some of those other changes that you talk about. That’s why I want people to know I don’t support blind outsourcing. I support a management approach to making city government more efficient. Competition is one angle to achieve that result.

CAVANAUGH: I see why you say that because we have heard these horror stories of outsourced services that used to be done by government and not saving any money and being done very poorly.

DEMAIO: Absolutely, and that’s why one of the things that I keep pushing on is the need for contract transparency to hold contractors accountable for their quality and their price. And I’ve encouraged each city department not to bring what I call T&M contracts, time and material contracts. That’s like a lawyer billing against the client. What I want are fixed price contracts, firm, fixed price, performance based contracts. And that’s a mode of contracting that has been implemented in cities, counties and the federal government across the country. We need to do those sorts of contract management innovations here in San Diego.

CAVANAUGH: Speaking of transparency, one of your four policy goals that you list on your website is open and honest government. And I wonder how you would grade the City, particularly the mayor’s office for openness and honestly in 2009?

DEMAIO: I would give them an improving grade from when I took office. My partner in that goal of open and honest government is Councilmember Donne Frye and we’ve worked together on this for many years. It’s a bipartisan issue. We believe that taxpayers deserve the truth, deserve full access to information and decision making processes, and they should be able to participate in that process. We have proposed a number of changes to the city council rules and I appreciate the fact that my colleagues have joined in making those changes: more evening meetings, more access to the city council docket, set time periods for city council members on comment so that we can provide for more public testimony. So these things make it a more transparent and open body. I post my calendar online every month because I believe people should know who I’m meeting with and why. And, finally, we need to make progress on campaign finance rules and ethics reform. Ms. Frye and I have proposed that ethics commissioners be appointed in an independent manner rather than by city politicians. You know, who has watchdogs selected by the very people they’re supposed to watch? So we are – we have additional reforms on the table and I hope to generate more support with the council and the mayor in achieving those goals but I would give them an improving score. They probably started out a few years ago with a complete ‘F’ because they were issuing false and misleading financial statements, and today I would give them a ‘C’ but a grade that is improving. I’d like to get them to an ‘A.’ I’d like us to be a model for openness and transparency in government.

CAVANAUGH: I’m speaking with District 5 representative San Diego City Councilman Carl DeMaio. And Councilman DeMaio, we just finished talking about the idea of having a Chargers stadium built with some public monies in downtown San Diego. Now you were on this program before and we heard about your opposition to the idea of building a central library downtown. What is your feeling about this proposal even if it’s in its early stages for a Chargers stadium downtown?

DEMAIO: Now, your listeners, if they follow some of the issues that I’ve been trying to fight for will know that I’m not for a brand new city hall and I am against proceeding forward at this moment with a new downtown library because of our budget problems. We’ve laid out ways that we can transfer those monies through the redevelopment agency to help the general fund and fund branch libraries. That being said, I’m not against every public works project. I do appreciate those projects that have an economic impact not just in the jobs they create but in terms of supporting our economy long term. As Mr. Fabiani noted on this program earlier, we are currently operating Qualcomm Stadium at a $15 million annual loss. It’s the worst contract that we’re in. You know, as a businessman, I come in and I look at various business lines, this is a loser of a business line. We are shedding dollars every year. So of course I’m willing and even eager to entertain any sort of proposal that will reduce our operating costs for the stadium that we currently have. I’m very, very optimistic about these negotiations. My hope is that we will really emphasize public-private partnerships, not having taxpayers fund or subsidize the stadium but rather bringing together business and government to try to achieve that outcome. So I’m cautiously optimistic. I’d love to see their ideas, particularly as it relates to reducing our operating costs on the current stadium.

CAVANAUGH: Now you find – I’m wondering if you found San Diego’s experiment with the strong mayor form of government succeeding. To explain, the strong mayor form of government takes the mayor off the council into a policy and administrative role.

DEMAIO: Implementation role, right.

CAVANAUGH: Yes. Is that working the way you’d like to see it?

DEMAIO: Well, it’s not worked the way it should because the strong mayor structure that we have currently—and it’s a temporary structure—does not give the mayor real checks and balances vis-à-vis the city council. For example, the mayor had a veto but it’s symbolic, the same number of votes to pass a measure are needed to override the veto whereas the president and the governor have vetoes with a two-thirds override requirement. I think we need to move in that direction of giving the mayor a real veto. And voters have agreed that they would like to entertain this reform. In 2008, they passed a measure asking to vote on the strong mayor reform in June 2010 and that ballot measure coming up in this next election will make the strong mayor form of government permanent, would add a ninth council seat to end deadlocks. Right now we can have deadlocks at four-four and that’s not good. And it gives the mayor a key tool to advance fiscal reform and provide checks and balances in a system of government of co-equal branches and that is that two-thirds veto, so I think that it’s too early to judge the strong mayor measure because we really haven’t had a proper functioning strong mayor. The voters will have an opportunity to really achieve that in June 2010.

CAVANAUGH: Will you vote to reestablish the strong mayor…

DEMAIO: Abs…

CAVANAUGH: …when it comes up?

DEMAIO: Not only – I don’t even think that it’s discretionary. The voters have already said they want to vote on this ballot measure. I intend to play a very active role in the campaign to pass that measure. I believe that we need to continue our efforts to reform city government and that measure is a critical component of restoring confidence, accountability and integrity to San Diego city hall.

CAVANAUGH: Now you have voted against – getting back to the budget, you have voted against this preliminary approval. Will you vote the final vote next Monday, will you also vote against the budget cuts? Or have you made your statement?

DEMAIO: No, I have voted against this budget because of the use of one-time monies and the lack of more progress on structural reform. If in the next several days we see mechanisms put into the budget package that really move us closer on structural reform, then absolutely I may support the budget but the only thing we’ve seen thus far are people saying, yeah, let’s talk about it over the next 18 months. I’m not interested in just talk, I’m interested in action and I believe San Diego voters want action.

CAVANAUGH: I wonder, since you are a first term city councilman, what is the most confusing thing you’ve found about the way city hall operates?

DEMAIO: Well, I would say there’s a lot of confusing things about the way city hall operates, and that’s one of the things that I’m trying to change is the process ought to be predictable, it ought to be transparent, and it ought to be efficient. I would say that one of the toughest things has been seeing an echo chamber effect at city – in city government. They really sometimes get removed from public sentiment because you’re down there and the lobbyists show up and the special interests show up and it’s bam, bam, bam. It’s always staff driven reports. That’s one of the reasons why, as part of my campaign, I walked so many homes, was to listen to people at their door. And every week my office walks to 1000 to 1500 homes. We’ve almost walked our entire district over the past year. And I’ve done those walks as well with my staff. We hold a lot of town halls to get public input. I want to bring city government out of city hall and into the neighborhood. It’s really a way of keeping your finger on the pulse but getting great ideas from people who aren’t part of the echo chamber, who come up with a fresh perspective on how to do things and it’s one of the things that I set into office with that mindset. In my office, there’s a poster on the wall and it’s a Kool-Aid jar and it says ‘Don’t Drink the Kool-Aid.’ A lot of times people go into office with the best intentions but they really lose touch with what is really happening on the front lines, and that’s really one of the things that I’m dedicated to avoiding in my term in office.

CAVANAUGH: We’re out of time. I want to thank you so much for speaking with us today.

DEMAIO: Thank you, Maureen.

CAVANAUGH: I’ve been speaking with San Diego City Councilman Carl DeMaio who represents the 5th District in San Diego. And we’d love you to post your comments at KPBS.org/TheseDays. Thank you for listening and stay with us for hour two coming up in just a few minutes right here on KPBS.

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