Video Transcript:

GLORIA PENNER (Host): Here now to give us their opinions on the city budget are the editors. David Rolland is the editor of San Diego City Beat, and Alisa Joyce Barba is the Western Bureau chief for NPR News. So Alisa, we were warned that the cuts would be severe, that the citizens would suffer. Where's the pain?

ALISA BARBA (NPR): We're still waiting. We're still waiting for the pain, Gloria. It hasn't happened yet. I think we're two or three weeks away from feeling, or at least anticipating where the pain is going to be when we hear what happens with the state budget. That's when it's going to hurt.

PENNER: Well the fascinating part is the city approved close to an $83 million - I shouldn't say they approved it - they closed it with $83 million. So should the council and the mayor, David, be given credit for balancing the budget without shaking up the city?

DAVID ROLLAND (San Diego City Beat): I don't think any taxpayers would go overboard in crediting them. I think it's probably their job to do this, so no I won't extend any special gold stars to them for balancing a budget. They kind of have to do it.

PENNER: So why do you think that our elected officials feel that we need to be upset when budget time comes around? I mean, they've been giving us some dire warnings.

ROLLAND: Well it does sound pretty dire when you talk about last fiscal year. I think it was $55 million. Then there was a mid-year cut of about $43 million. Then we were told it was going to be $60 million for the next year, and then another 23 added onto that. So it does sound pretty scary, but there's a writer for City Beat who years ago coined a phrase: "the magic budget fairy." Every time we're told that it's going to Armageddon - to use an expression that's already been used here - something happens. Somebody finds a big pot of money. And this year they found about $18 million that they didn't know existed.

PENNER: That's the amazing thing. What does it tell us? That there's inefficiency in city government?

BARBA: Oh my gosh, who would think? Of course there's vast inefficiencies. I think that what we're looking at here though is a couple different things. One, there was a round of cuts back in December that cut pretty deeply into expenditures, and I think that set us up for where we are today. I also think that the city council was able to pass this budget on the backs of some pretty significant pay cuts for city employees. But it is just round one. And they can sit pretty and look like they've done a very good job, but they're going to be facing more massive cuts down the line. And that's when it's going to, I think, be much more difficult.

PENNER: But do you think - and I'm going ti ask you both of this rather briefly - that taxpayers who don't go to libraries, or use the parks, who don't care about potholes -  do you think that they're really going to be aware of how their money is or isn't being spent?

BARBA: I think so. Yes I do think so, and first of all I don't think that there's a taxpayer out there who doesn't care about potholes.

PENNER: I should have left out potholes.
BARBA: I think people are going to notice. I think they're going to notice in many different ways, but you know we've been predicting this for so long. We really have to wait and see.

PENNER: And you think people are engaged in how their money's being used?

ROLLAND: Not so much, no. I really don't. I think it really has to get bad - and Alisa mentions potholes - that's where people really notice it. You know, when they drive down their street and they're rumbling along, and they're bouncing, driving into holes and that sort of thing, that's when people notice it.

PENNER: Well, the budget was approved seven to one by the city council. Carl DeMaio, one of the newest and youngest council members, was the lone dissenter. We put council member DeMaio on the record about why he didn't support the budget.

CARL DEMAIO (SD City Councilmember): It's not really balanced. This is a budget that is balanced on day one, but it's going to fall apart because of the probable state rates on city general fund revenues. To the tune of $36 million in the general fund for property tax, an additional $24 million in gas tax revenues that go to infrastructure projects - thats $60 million potentially lost to the budget. I felt that we needed to be proactive and put aside a rainy day fund to soften the blow of potential and probable state budget cuts. It is perhaps the best bet you'll ever find outside of Las Vegas. The odds on this - it's a foregone conclusion that the state government is going to raid our funds. And I come to that conclusion because, number one, because they have a ballot measure that was passed in 2004 that the cities and counties supported and allowed them to do it. And number two, if you want to look for even less political willingness to make tough decisions than City Hall in San Diego, go look in Sacramento. Those folks are unwilling to cut waste and inefficiency and take on the labor unions. All the things that we're trying to do down here - and we're making some progress doing - Sacramento is far worse. So of course they're going to come and raid local government funds.

PENNER: So a rainy day fund, which is what the governor wanted us to vote on in the first place a couple months ago - it seems like a no brainer. Does the city have reserve funds?

ROLLAND: No, not to the tune that they would need them if what Carl DeMaio says comes to pass. I don't agree with him that it's a foregone conclusion. The democrats in Sacramento are saying that they would like not to have to take $2 billion in property tax money, and another $700 million in gas tax money. There are going to be ongoing negotiations in Sacramento, it's not a foregone conclusion. If the city were to have to form a contingency plan for the wort case scenario, that would be another $72 million it's estimated. You cannot just come up with a rainy day fund of $72 million, that's going to take some further negotiations.

PENNER: Yeah, but as you mentioned Alisa, restoring the council staff member cuts came from $315 thousand in reserves. So what good are reserves or rainy day funds if everyday is a rainy day, the way it's been recently. 

BARBA: Yeah, it seems to me that we're definitely in the rainy days, though we could use a little rain around here. Again, that same argument is going on in Sacramento. Schwartzenegger wants to put $4 billion aside for a rainy day fund. And Darrel Steinberg thinks that we should be using that now instead of making the kind of drastic cuts we're looking at in health and human services, and instead of raiding local budgets.

PENNER: Is budget making a shell game? Is it moving money around to delay the inevitable?

BARBA: It certainly has been that way in California. I mean, we have this very unfortunate tax structure where we are not allowed to raise the kind of taxes that we can without a two thirds majority. So what governors and legislators have been forced to do for at least a couple decades is move stuff around and wait, and hopefully the next administration will solve it. Well we're kind of at the end of that line right now, and I think thats why we're hearing Governor Schwartzenegger basically predicting that the government is going to shut down in July if we don't come up with a balanced budget.

PENNER: Yeah. What about that? Do think that the government will actually shut down? Is this a threat from the governor that we should take seriously, that he's going to shut the government down if the legislature doesn't come up with a budget?

ROLLAND: Yes, I think it is very serious. The city has debts - it has bills that it has to pay just like everybody else. If we didn't have enough revenue coming in, we would have to shut down part of our lives because we didn't have the money to pay for it.

PENNER: But it's a different thing if you're shutting it down because you've run out of cash - as the state controller has said, that we're going to run out of cash on July 28th - or if you're doing it to say, the way the governor is saying, if there's no budget agreement I'm going to shut down the government.

ROLLAND: Well I think the two are related. I think it has to do with the state's cash flow, the way I understand it. Back to a previous point that you were just saying about shell games and moving things around - it's important to say that's part of the reason that the city of San Diego is in the problem it's in, because it has been doing that for years with it's pension fund and that sort of thing. This past year I think it had to put $163 million into its pension fund to keep it solvent, and that's a much bigger number than it could have been if the city had not been moving money around the way it had been.

PENNER: Okay, just looking ahead. Can the cities and counties escape from getting their revenues raided by the state?

BARBA: I don't think the correct term is really escape. I think that they are bound - they will have some responsibility towards the state budget. I think it will be in the $25 million, maybe the gas tax. I think that that will be able to -  Steinberg and the democrats in the state senate - will be able to protect counties and cities from losing the huge amount that they're talking about.

PENNER: Okay.