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Pocket Change: Experts chime in on the ‘State of the City’

San Diego may have entered a new year but the problems of previous years still linger with talks of solving a “structural deficit” still hot in City Hall.

Mayor Jerry Sanders will offer his thoughts and, more importantly, his plan, in his fifth State of the City address Wednesday. His speech comes 30 days after the City Council adopted his budget plan - an attempt to close the city’s $179 million deficit this fiscal year. Among some of the controversial moves in his budget were the elimination of 500 city positions, 200 of which were actually filled, cuts to library hours and less maintenance at local beaches.

But Sanders has to deal with more issues that exceed the city’s limit - like the possibility (which is always in existence) of the California government taking or borrowing funds from local municipalities. In fact, the severity of the state budget is so extreme - local leaders are lobbying for a ballot to block the state from borrowing funds.

On Wednesday though, San Diegans and others who are being affected by the city’s economy, will look to the mayor for guidance.

Our SDNN Pocket Change experts chime in on what they expect from Sanders while pointing out some of the struggles he now faces as the leader of the country’s ninth largest city.

At this point it is fair to say that Sanders “owns” San Diego’s fiscal situation. Conferred new powers by the transition to the Strong Mayor system, he has overseen the completion of the long-stalled Kroll report, implemented a new pension plan for new hires, carried out restructuring of 30-plus functional areas and released four fiscal forecasts. He hasn’t gotten everything, most notably movement toward being able to carry out managed competitions for key city services and had to work with “challenging” City Attorney Mike Aguirre between 2005 and 2008. He has had a City Council that hasn’t been entirely ideologically aligned with him when it comes to how to balance the budget. But having spent nearly 1,500 days and counting as San Diego’s mayor, one can only conclude that it is “his city hall.”

Simmering in the background is the sobering report released last week by the City’s Independent Budget Analyst. She states that in 18 months the City will face a $77 million deficit - one which she anticipates, “will increase as updated information becomes available related to the City’s major revenue sources, as well as possible changes to original cost savings associated with proposed service reductions.”

Economic recovery will hopefully close some of that gap, but it would be unprecedented to see it entirely close through incremental increases in tax revenues. With seemingly all the one-time fixes, deferrals and shifts exhausted, cuts of unprecedented levels, and potential new taxes long held politically unviable, will have to be on the table. City employees will be asked to contemplate unprecedented reductions in overall compensation and benefits. As a member of the “Citizen’s Fiscal Sustainability Taskforce” recently said, “it is time for the concept of ‘sacred cows’ and ‘impossibilities’ to be put out to pasture.”

Doing that will, however, require the mayor to face another difficult political reality. Most San Diegans, who will be required to suffer the effects of service reductions or approve at the ballot most tax increases, still have not been awakened to the stark reality of the city’s fiscal situation. Budget forums at City Hall and in the community were sparsely attended. Councilmembers called a budget that balanced through $100 million in one-time shifts, the best one they had seen during their tenure. Articles about our local American Idol finalist get hundreds of comments. Dry posts, such as this, about budget wonkery, a handful.

Having spent four-plus years leading the city, Wednesday’s State of the City address is the opportunity for Sanders to engage his constituents in the most sobering of dialogues. The mayor, in reality owning the fiscal situation, has to own it in his own words. He can’t blame the past or a former city attorney because, if he does, people will rightly ask for those culprits to bear the budget pain, rather than soberly accept that that the piper has finally got to be paid. With responsibility accepted, he can then lay out the road map and calendar for how he will proceed in 2010 to get us from where we sit today - out of one time budget tricks, shifts, and still confronted with a nearly $100 million deficit - to a city with a structural sound balance poised to once again dream big.

Murtaza Baxamusa, Ph.D., AICP, director of research and policy for the Center on Policy Initiatives:

If there was an animal to describe the mayor’s state of being in the State of the City address, it would be the tiger. Probably an old Siberian tiger marking his territory, whose growl is resonant, whose diet is stray stag (and occasionally a wild boar), and whose beaming bulk awes its privileged audience. Not only that the tiger is an apt animal for welcoming the Chinese year ahead, but that it epitomizes the valiance and the vanity in the show this week.

This is the fifth State of the City address by Mayor Jerry Sanders, and I expect some of the same themes as previous years, about water projects, rising retiree healthcare costs, promoting green technology, stopping the state from taking local revenue, and building some projects in downtown. But there are three factors that are different this time for our Siberian tiger. These are the territory, the timing, and the triumph.

Firstly, the council-mayor political territory has changed. The previous years saw a power conflict between the city council and the mayor, with disagreements on key budgetary issues such as funding of parks, libraries and community policing. This year, with the approval of the 18-month budget, we are seeing a great deal of cooperation between not just individuals, but the institutions of the legislative and executive branches. Perhaps, these political animals are waiting for the “Strong Mayor” approval on the ballot, before they flash their feline fangs, or perhaps the old cats are getting tired, but Wednesday will be a day of reconciliation.

Secondly, the economic times are different. Unlike in the past, when the mayor could sound optimistic and hope that things will work out, this year will need action. The combination of the highest unemployment and poverty rates in recent history has taken a toll on city residents. At every level of government, the public is expecting job creation policies. Public investments will become the focus of economic recovery.

Lastly, expect no triumphant leaps in tune with “Kumbaya” in the background. This year begins with sincere labor negotiations (having done everything legally possible in the past), honest projections of the structural deficit ($77 million and counting), and pragmatic deliberations on revenue measures. The service cuts approved in December were severe, but the Mayor and Council will be given a reprieve for all of 2010 from making these sorts of unpleasant decisions. Isn’t it a nice year ahead?

Hoa Quach is the political editor for the San Diego News Network. Follow her on Twitter or add her on Facebook.