Carl DeMaio details San Diego’s fall from grace and its path to resurection.
Ten years ago, San Diego was considered one of the best run cities in America. The seventh-largest city in the country was long seen as a bastion of fiscal responsibility and balanced budgets, friendly to business, tourists and the military. That picture has since come crumbling down in a hail of mismanagement, corruption and scandal. In a widely documented fall from grace, San Diego is now teetering on the edge of bankruptcy–with a budget shortfall, a suspended credit rating and a $2 billion or larger hole in its municipal pension plan.
It turns out that San Diego had been covering up fiscal problems for years. Officials began raiding water and sewer funds in the mid 1990’s to cover up deficits. At the same time, the city budget began to swell as spending exploded. Once raids on water and sewer funds were insufficient to cover up the annual operating deficit, the City decided to raid its pension fund—starting in 1996. To do so, it needed to buy the cooperation of the leaders of the city’s powerful unions. The solution? In exchange for the city getting to shortchange its required pension payment, the city employees got a nice increase in pension benefits.
Enter Mayor Dick Murphy, a Republican elected in 2000. Murphy presided over the construction of a taxpayer-funded baseball stadium, pushed through plans for a new downtown library, and approved pay for city workers. Realizing that the budget could not be balanced for real, Murphy used accounting gimmicks to cover up the financial problems, spiked water and sewer fees by 30%, and accelerated the city’s underfunding of the pension system. In 2002, Murphy once again gave the labor unions a massive increase in benefits—in exchange for continuing the pension underfunding scheme. Politically, labor unions were quite happy. By this point, they had gained control of the City Council and had a nominally Republican Mayor in their pocket. The opportunity was now ripe to push for a tax increase. In 2004, Mayor Murphy and the labor-dominated City Council claimed that tax and fee increases would be the only way to address the City’s budget shortfall—which they claimed was a modest $20 million.
Republicans and RINOs in particular need to take note.
What can conservatives learn from the San Diego meltdown? The biggest key to good government is transparency. Tax and spend politicians will always hold up images of police cars, playgrounds and paramedics, promising a litany of pie-in-the sky services in exchange for just a little bigger piece of your paycheck. Government reformers must expose this as a false choice, and to do so, we must get in the trenches. If conservatives perpetually fight tax battles on this footing, the war will be lost. The fight has to be fought using solid research on how much it costs government to do simple processes or provide services. It must be fought by exposing inefficiency, waste, and poor results. If you shine a light on government at these levels, the people will look—and chances are they will not like what they see. And chances are, they will demand better.