Local Cities Creative with Shrinking Budgets
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MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh. You're listening to These Days in San Diego. In yesterday's speech to a joint session of the California legislature, Governor Schwarzenegger unveiled a grim plan to trim state expenditures by an additional $24 billion. The governor outlined a program that includes more cuts to schools, it cuts low-income children's health care coverage, and closes more than 200 state parks, and this is in addition to a wide range of cuts already imposed by the state legislature. The sad truth behind these figures is that California's counties and many cities are being left to take up the slack and very few are able to afford it. The City of San Diego is faced with a 2010 budget that cuts employee salaries and boosts city fees. And other cities in San Diego County are facing similar budget crunches. KPBS political correspondent Gloria Penner talked to many city leaders around the county to find out what their situation is, and I want to welcome Gloria to These Days. Hi, Gloria.
GLORIA PENNER (KPBS Political Correspondent): Good morning, Maureen. Do I look as though I have a smile on my face?
CAVANAUGH: You do.
PENNER: I do because I don't know whether it was just circumstances or happenstance but the four cities I chose to call, the mayors of the four cities, they don't have very sad stories to tell.
CAVANAUGH: That is very good news. I want to invite our listeners to join our conversation. Do you live in National City or perhaps Del Mar? Are you concerned about how the state's budget crisis will impact the services in your city? You can call us to talk about it, 1-888-895-5727. So as you say, Gloria, you spoke with mayors of a number of smaller…
CAVANAUGH: …cities in the county. Overall, you still have that smile on your face. How does it compare with what the City of San Diego is going through?
PENNER: Well, they sure don't see to have the same angst that the City of San Diego does. I spoke to Art Madrid of La Mesa—just to give you size numbers—has 60,000 people and 9.2 square miles. I spoke with Ron Morrison, 65,000 people, nine square miles, about the same size as La Mesa, although he says it's the densest city in the county.
CAVANAUGH: And that's National City.
PENNER: And that's National City, thank you. Carlsbad, this is a big one: 42 square miles, quite large, with over 100,000 people. And then the smallest city in the county is Del Mar and that has 2 square miles and 4,500 people. So I did a big range and what I found, Maureen, was that these mayors and their staffs are proactive. The people in those communities who are involved in how the city functions have been meeting, have been meeting for the last couple of years and they’ve worked out a system so that they are not going to feel huge cuts. I mean, the cities aren't going to grow but neither are they going to have their services shrink enormously. So I was really impressed. If I can take what the mayors said as the honest truth, then I'm really impressed.
CAVANAUGH: Well, before we get into the specifics…
CAVANAUGH: …of the various cities, I want to ask you another overall question.
CAVANAUGH: Because what we've been hearing is that counties and cities are not going to be getting the money that they usually get from their property taxes and from their sales tax revenues and, therefore, their budgets are going to be shrinking, they're going to have no ways to get more money, and city services and projects are going to suffer. And this is, perhaps, not what you found when you were doing your survey.
PENNER: Well, no, I wouldn't say didn't find that. The state has said that it wants to borrow about two billion dollars from the cities and other local districts in California. And most of these mayors don't believe it's really borrowing; they think that that money's never going to get paid back and they are not happy about that at all. And I can tell you more about their feelings and what they plan to do. So, yes, they see that there are going to be some hits and, in some cases, the hits are going to be pretty large. But as I said, they kind of planned for difficult times. So, to give you an example, in 2006 National City actually passed a one percent sales tax. Now that's a pretty hefty tax, and yet the voters went for it. In fact, 2008, two years later, the Libertarians put on the National City ballot a measure to repeal that sales tax and more voters voted against repealing it than originally voted for voting for the original tax in the first place. So it sounds as though National City was pretty happy with its one percent sales tax, and it came to be true. I mean, it gave National City a nice big cushion. Mayor Ron Morrison told me that Plaza Bonita, which reaps in a lot of that sales tax, is going gangbusters, that was his word, and that you can't find parking there. So you have a big shopping center, you have an increase in sales tax, they're now up to, I think it's nine and three-quarters percent, that's a pretty high sales tax. But they're getting a lot of it back and it's helping them.
CAVANAUGH: Now in your conversation with Mayor Morrison of National City, did he say that any services are going to be curtailed or are they anticipating any layoffs?
PENNER: No. He says there will be no pay increases, the base salaries will remain the same but, on the other hand, because their top jobs, their city manager, their police chief, he said, are paid the lowest base pay in the county, there are going to be bonuses. And that's the way they do it in National City. They don't increase the base pay but when they have the money and when they feel the person deserves it and the job deserves it, they give bonuses. So he said that he expects both of them will get about a $25,000.00 bonus this year.
CAVANAUGH: Do they have any plans in National City to increase their revenues, maybe boost that sales tax even higher or do anything like that? Or do they see themselves in a pretty good holding position?
PENNER: No, no, they are not planning to increase that sales tax any higher. I think that their sense is that if they can hold the line on city salaries, they'll be in good shape. Again, they were proactive. A couple of years ago, they went to four-days a week at city hall, four days, ten hours a day and that saved them a lot of money. So I found that National City seems to be in pretty good shape.
CAVANAUGH: Well, let's move up the coast…
CAVANAUGH: …to the smallest city that you talked about: Del Mar. You spoke with Mayor Crystal Crawford and how will the budget cuts, the state budget cuts, impact that city?
PENNER: Well, she just came back from a big series of workshops and in that series of workshops, she said that they – it's a two-year budget. They've moved to a two-year budget. It's balanced, there are no cuts in services. They've eliminated some vacant positions and that's it. They have 50 city employees. Two out of the 50, those positions will be eliminated. She said that they took apart the city operation and they put it back together. They looked at every department. Remember when in the City of San Diego, Mayor Jerry Sanders talked about reengineering the city and the way city worked and then we didn't hear much about it after he lost some staff. Well, apparently in Del Mar, they did it but, of course, they only have 4,500 people, they only have two square miles but, meanwhile, they did look at every department, how they were doing business and, she said, they made the city lean and mean. And if the state comes after its eight percent, they would lose $400,000.00 out of nine million dollars but the truth is that they are well-managed, they're not hiring, there'll be no raises and they're even looking at combining some public safety efforts, perhaps consolidating them with other communities. So they're ready.
CAVANAUGH: Well, good news in Del Mar.
PENNER: Oh, I have one other thing…
PENNER: …I wanted to throw in. I was looking at the Del Mar Fairgrounds because we heard that it's possible that the state's going to sell that off. And I thought, boy, this has to be a pot of gold for the City of Del Mar. And she said, actually it isn't; they get nothing from the parking and, you know, that parking lot is always filled, especially when the racetrack's in season. And she says they don't get much from the handle on the racetrack. The handle is a portion of what it is that the racetrack takes in…
CAVANAUGH: Right, right.
PENNER: …for events, you know. They don't get much from that and they don't get much from sales tax. So it sounds like the Del Mar Fairgrounds, the Del Mar Racetrack doesn't really give that much money to the City of Del Mar.
CAVANAUGH: So it wouldn't be a hardship if the state has to sell it.
PENNER: I guess not. But she says, you know, we should be looking at possibly what we should do about Proposition 13. She's the only mayor who raised that. But then, of course, she's the only mayor I spoke to who's actually going to throw her hat in the ring and run for the state legislature. I love it, she said, how do we put the shine back in the Golden State and I'm wondering if that's going to be her motto when she runs for the state legislature.
CAVANAUGH: Well, you also spoke with Mayor Bud Lewis of the City of Carlsbad. Well, what shape is the City of Carlsbad in?
PENNER: Mayor Bud Lewis oversees over a hundred thousand people and 42 square miles, and he says—this is his mantra: We are careful. There will be–again, we heard this before—no expansion of staff. And what he's done is, they've put a lot of projects on hold. There was supposed to be some major parks developed, some swimming complexes—you know, Carlsbad is a lovely city—but they've put them on hold. Their money is coming in from 4,000 hotel rooms that generate, generally, about $15 million a year. Now it's down, you know, the visitor industry is down. It's down to about nine million. But they've not had to increase taxes. He's still at seven and three-quarters, which I think is the general tax around San Diego County. He says that they're not really fearful of increasing taxes but he doesn't really think he needs to, that they're just keeping everything stable. When I told him about National City's bonus program, he said—twice—to each his own. So he obviously has his own feelings about bonuses. I asked him if he might lose valuable city workers if he doesn't increase salaries or come up with some kind of a bonus program and he's really kind of, you know, good old school. He said, if folks want to try somewhere else and can find a better place, so be it.
CAVANAUGH: Especially in this job market, right?
PENNER: Absolutely. He says he will support spending on whatever equipment is needed for public safety but not for expansion of personnel. So if anybody out there is looking for a job working for the City of Carlsbad, forget about it.
CAVANAUGH: Let's move to the east county and La Mesa. You spoke with La Mesa Mayor Art Madrid, and what did he say about cuts to the city budget? Or are they thinking of laying people off in La Mesa?
PENNER: Well, you're going to hear it again: proactive. He said La Mesa saw the handwriting on the wall two years ago and had 55 meetings with the public. There was no fat left to cut, no belt left to tighten, so they passed a three-quarters of a cent sales tax, that's on a hundred dollar purchase, that's 75 cents. And now their sales tax is up to nine and a quarter. La Mesa is basically saying that our primary source of revenue is sales tax, Costco, Sam's Club, Walmarts. He thinks property tax is going to be down almost three percent, and 50 national brand stores in La Mesa have closed. That concerns them but they still feel as though they're going to make it. No layoffs. Now he said they have the lowest ratio of employees to residents in the state and he said they're going to protect city services. If people passed that sales tax, they pledged they would protect city services. So they may have to defer maintenance in parks, they may not be able to trim medians, they may not be able to replace police cars or fire trucks, and, of course, there's a job freeze but, you know, they're going to make it.
CAVANAUGH: Well, we are running out of time but I do want to give you a chance to tell us, even though they had good news, all these mayors, for their own cities, they didn't have such friendly things to say about how the state is handling its budget crisis.
PENNER: That's right. Ron Morrison said, you know, it's unfair, the state requires the cities to have balanced budgets by June thirtieth or our funds will get cut off but the state can go on for as long as it wants. La Mesa is protesting. They have a Save Our Cities website. And he, and Art Madrid says that what's happened up in Sacramento, it's become so politically strident that it's a jihad up there and the losers are the 38 million people in the state, so he's quite upset with that. Crystal Crawford, mayor of Del Mar, well she got so upset last February when the state hit this impasse in the budget she decided to run for the legislature. It's going to be tough for her. She's a Democrat in a district that has 42% Republican to about 37% Democrats, and the smallest city. So that's where we are. And Bud Lewis of Carlsbad, he's joining the protest. He said the state and the feds are not responsible with their reserves and he says, you know, it wasn't all Gray Davis's fault, it was the legislators sending pork back to their districts.
CAVANAUGH: I think there are some people who might agree with those mayors.
PENNER: I think so, too.
CAVANAUGH: I want to thank you so much, Gloria, for coming in and telling us about the smaller cities and how they're handling the budget crisis…
PENNER: You're welcome.
CAVANAUGH: …in San Diego County. Gloria Penner is KPBS political correspondent, host of "Editors Roundtable" on KPBS. You can read her weekly blog, Political Fix, on our website, kpbs.org. And be sure to watch KPBS Television's new weekly news show, San Diego Week. It is hosted by Gloria. It's on Friday nights at seven. Stay with us. Comedian Paula Poundstone coming up next on These Days.