San Diego City Council Tackles The Structural Deficit
Monday, February 22, 2010
San Diego city council today agreed to a dozen guiding principals designed to eventually eliminate the city's ongoing structural deficit. The structural deficit is created because the city's revenues do not match its spending.
The council agreed to principals suggested by the Independent Budget Analyst. They include looking for new revenues as well as cutting spending, charging fees that cover the cost of services, and reducing pension and health care costs.
They agreed to maintain a reserve fund of no less than 7 percent of the General Fund, and only approve new facilities or programs if they aren't funded through the General Fund. Council President Ben Hueso modified this to allow new programs if they are necessary to meet high priority needs.
April Boling, a CPA who has run for council and headed the Taxpayers Association, urged the council to put a real number on the gap between revenues and expenditure.
"You need to be able to say to the citizens of San Diego, 'Well yes, we did balance this budget, but please note that in the process, the deferred maintenance is going up.'" Boling told the council. "It was balanced on the back of the silent deficit, which is really what is happening."
Boling pointed out that while the city is now funding its pension fund, it is not fully funding future retiree health care obligations or paying for regular maintenance on buildings and roads.
The council modified the language of the principals that commit to begin to fully fund retiree health care and deferred maintenance, adding the words, "develop a plan" to begin to fully fund those obligations.
The council agreed to get a dollar estimate of the deferred maintenance backlog.