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San Diego mayor-elect focuses on financial stability

Posted on: Friday, 11 November 2005, 22:03 CST

By Marty Graham

SAN DIEGO (Reuters) - San Diego mayor elect Jerry Sanders on Friday pledged to bring transparency to the city's troubled finances in the midst of government probes and a $1.7 billion city pension fund shortfall.

But bankruptcy will remain on the table until labor negotiations with city unions wrap up, Sanders said in an interview. He added that he aims for city employees to make major concessions given the city's wobbly finances.

Since winning office on Tuesday, Sanders has promised to take tough measures to address the financial woes facing San Diego, once a model of municipal governance that some analysts say has become an "Enron by the sea."

Former Mayor Dick Murphy left office in July as the city's financial troubles mounted, resigning after Time magazine named him one of the worst big U.S. city mayors. City Councilman Michael Zucchet stepped in, then resigned days later after being convicted of conspiracy and wire fraud. A federal judge overturned Zucchet's conviction and acquitted him on Thursday.

The U.S. Securities and Exchange Commission and the U.S. Attorney's Office have been investigating the city's pension fund debacle since February 2004, and the San Diego County district attorney has charged six former city employees with felony conflict of interest for allegedly letting the city defer payments to the fund while increasing pension benefits, including their own.

"On election day, San Diegans chose a new path for the city, one that will lead to financial stability, transparent decision-making, and a restoration of public trust in city government," Sanders said in an interview.

"The cultural reform at City Hall will start immediately, the day I take office," Sanders added.

Wall Street analysts welcomed his determination but said they will wait and see if Sanders can put affairs in order at San Diego's City Hall - and they continue to demand the city produce overdue fiscal audits for 2003 and 2004.

San Diego has been shut out of the debt market because its finances are a mess and it has yet to make public the audits.

"They've got a mayor and that's good," said Amy Doppelt, a bond analyst at Fitch Ratings. "We still need to see audits and to know that their financial culture has changed."

Additionally, talk of having San Diego declare bankruptcy must end before the city's standing in the debt market improves, Doppelt said.

City employees learned on Thursday that Sanders, a Republican and former city policy chief, intends to freeze their wages for the next four years.

His new chief of staff, retired U.S. Navy Admiral Ronne Froman, told reporters that if city workers are looking for raises, they should quit and look for jobs elsewhere.

Sanders, who assumes office on December 5, has said previously that he plants to fire 100 middle managers on the city payroll and require city employees to take unpaid furloughs and pay more for benefits.

He has also he wants to push their retirement age to 60 from 55 and close the city's pension plan to future hires. The future hires would be offered retirement packages similar to those in the private sector.

(Reporting by Marty Graham in San Diego)

Source: REUTERS

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