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Jerry Sanders sworn in as mayor of San Diego

San Diego city council will swear-in Jerry Sanders today as the new mayor. KPBS reporter Alison St John has more on how Sanders won the chance to turn the city around.

San Diego city council will swear-in Jerry Sanders today as the new mayor. He was elected last month by voters anxious to see the current crisis at city hall brought under control. San Diego is struggling with federal investigations, corruption trials, falling credit ratings, and rock bottom morale. KPBS reporter Alison St John has more on how Sanders won the chance to turn the city around and the unique challenge he's facing.

The city of San Diego has been a ship laboring in stormy seas without a captain at the helm, ever since former mayor Dick Murphy resigned under a cloud last July.

MURPHY: You know a good leader needs to know when its time to move on and I believe its time for me to move on and bring a fresh start to our city.

After Murphy's departure, the race was on for a new mayor. Jerry Sanders, who had name recognition as the city's police chief for 6 years in the 1990s, joined a field of 11 candidates. They each offered to chart a different course to calmer waters. Sanders, a moderate republican, campaigned initially on a platform of sharing the pain

SANDERS We cannot sit down and allow this malaise to continue it is absolutely the time to star moving and we're going to make some painful decisions and that pain is going to be shared between city employees, retires and the rest of the city, there is no other way to do that.

The message of sharing the pain, which implied the possibility of new taxes, was enough to lose Sanders the support of the San Diego Republican party, which threw its weight and money behind the relative newcomer, conservative businessman, Steve Francis. To avoid alienating that constituency altogether, Sanders changed his message and said higher taxes would not be part of his strategy, at least not until citizens saw city hall reining in spending.

This stood him in good stead when Francis got knocked out of the race in the special election in July. Francis gave Sanders his endorsem ent the day after the primary.

FRANCIS: This reputation combined with his commitment for fiscal responsibility and independent from labor unions makes him my choice for next mayor and I would encourage the 56 thousand voters who supported me to support Jerry on Nov 8TH.

That support proved crucial for Sanders, in order to close the gap with the primary frontrunner, democratic councilwoman Donna Frye. Frye was riding a wave of popular support after her extremely narrow defeat to former Mayor Dick Murphy the previous year. She painted Sanders as part of downtown establishment that supported the last two republican mayors on whose watch the current fiscal crisis was created.

Frye: My opponent represents the old San Diego, the people who brought us Susan Golding and Dick Murphy, they are now trying to bring us Mr. Sanders.

Sanders countered that Frye was beholden to a different interest group, labor. The voters who believed labor was behind the pension fund deficit saw it his way. Sanders won in November with 10% more of the vote than Frye.

SANDERS: I appreciate it, San Diegans have chosen to clean house at city hall and make city government more accountable to you and your neighbors

Sanders will officially become the new mayor today. But he will have to prove himself to more than just those who elected him. The national bond rating agencies, that have either downgraded San Diego's rating or suspended it altogether, are watching closely from the sidelines to see what Sanders will do. Without their support the city is teetering on the edge of insolvency, eeking out loans from the Bank of America at higher and higher interest rates.

Amy Doppelt of Fitch's rating agency says Fitch is glad to see the leadership vacuum at San Diego city hall, but one thing about Sanders worries them.

DOPPELT: Of concern to us continues to be the soon to be mayor has discussed bankruptcy as a last resort, as a bargaining position with the labor groups, and even that mention is of concern to us, and that it a very, very bad option for bondholders.

This poses a dilemma for Sanders. Bringing the labor unions back to the negotiating table is a key element of his strategy to bring the budget and pension deficits under control. The threat of bankruptcy is one of the few tools he has to twist their arms buy if he so much as whispers the word, Wall Street blanches.

The new mayor has other Catch 22s to face. Another taboo word is taxes. To pay down the deficit , the city could borrow money by selling pension obligation bonds, assuming the city is readmitted to the bond market later next year. But POBS may not be popular with voters either, since that simply pushes the tax bill to future generations. UCSD political scientist Steve Erie says Sanders may have to rethink some of his campaign promises.

ERIE : Oh I think he will be forced to, cos. remember that the pension crisis is only the tip of the iceberg, we've got a 2 billion deficit infrastructure, how are we going to sooner or later the bill comes due. I think Jerry said what he had to say to get elected but now he may have to do different kinds of things to right the ship of state in San Diego.

Sanders will take the helm at city council today. In January, he becomes San Diego's first strong mayor, the CEO of the city. He will have to lean hard on the tiller in the first few weeks and months to change course, and he has a short term in office: just three years to turn the ship around. Alison St John, KPBS news.