San Diego Mayor Calls for Sacrifice - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

San Diego Mayor Calls for Sacrifice

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SAN DIEGO (CNS) - Painful decisions lie ahead and San Diegans will have to accept reality as city officials attempt to confront the ongoing impacts of the mounting national recession on municipal finances, Mayor Jerry Sanders said Wednesday night in his annual "State of the City Address."

"We are grappling with a global financial crisis whose effects are felt across our land -- in cities and statehouses, at businesses and nonprofits, by retired couples and young families," Sanders said.

"This is a historic challenge. It demands strong leadership. As your mayor, I will keep our focus on the fundamental role of government, and on fortifying our economy to create jobs."

"We will meet this crisis with tough fiscal discipline, with honesty and transparency," Sanders said.

For the second consecutive year, the one-hour speech was delivered before a packed house at the historic Balboa Theatre in downtown San Diego.

The speech comes one day after Sanders announced a milestone in the city's return to the bond market. He said Tuesday that the first public bond offering attempted by the city in more than five years generated $157 million to refinance existing water infrastructure debt at more favorable interest rates.

San Diego will realize $8.7 million in savings over the next 12 years because it sold the bonds at lower interest rates, Sanders said.

Sanders touted the achievement during Wednesday's speech.

"By putting substance before showmanship and by pursuing meaningful andlasting reforms, we've restored our credibility and won back the confidence of Wall Street," Sanders said.

In 2003, the Standard & Poor's credit rating agency suspended San Diego's credit rating after it was discovered that the city failed to properly disclose to potential investors the scope of its $1 billion pension system deficit.

It wasn't until May that Standard & Poor's restored the city's credit rating. All three major credit rating companies have since followed suit.

The bulk of Sanders' speech focused on the city's finances.

Sanders recently called for $43 million in budget cuts that threatened libraries and recreation centers to help close a mid-year spending shortfall caused by declining tax revenue.

Sanders has said San Diego will face a shortfall of at least $54 million in the coming fiscal year, and cautioned that the problem could persist into the foreseeable future.

"When the recession hit home last year, we took painful steps to close a mid-year deficit in our operating budget, over the objections of those who won't accept the truth," Sanders said.

"This year, an even larger deficit looms, Sacramento is more likely to hurt us than help us, and we'll again need to make painful decisions," he said. "That scenario could repeat itself, next year and the year after."

"That's our reality," Sanders said. "But it will not prevent us from moving forward."

Sanders warned that the investment losses that have buffeted San Diego's pension system could lead to larger annual payments, likening the contribution to an "ever-widening crater."

Sanders said the recession has "compounded" the mistakes of his predecessors.

"The size of those payments is the legacy of previous administrations, which recklessly underfunded the pension system so they could continue to expand popular programs and give out pay raises without accepting responsibility for those costs," Sanders said.

"They gambled that a rising economy would cover their tracks," he said. "But it couldn't, not even in good times."

Sanders will pursue new concessions during negotiations with municipal unions.

"We'll be seeking long-term solutions in our retirement benefits in a manner that balances the interests of employees and taxpayers, and brings our benefits into alignment with our economic reality," Sanders said.

Sanders also called for cooperation from the public as the city trims services to solve its financial problems.

"The challenge we face today is maintaining services established in an era when labor costs were low and our tax stream was not being diverted by the state or siphoned off by expensive mandates and pension payments," Sanders said.

Sanders said he will propose more ways to scale back the size of city government, but said after three years of deep cuts there are "fewer opportunities for significant savings."

Change is needed at the city's scandal-plagued redevelopment agencies, the Centre City Development Corp. and the Southeastern Economic Development Corp., Sanders said.

Sanders said he will present the City Council with a plan that "protects taxpayers and strengthens city oversight" of the redevelopment agencies, but dismissed the idea of shutting them down.

"The work of redevelopment agencies has been vital to the progress of this city, and it is not yet done," Sanders said.

Raising fees the public pays for city services may also be needed to recover from the recession, Sanders said.

"Asking the public for more money, whether it's extra coins for a parking meter or a few dollars more to dump trash in a landfill, is almost always an occasion for controversy," Sanders acknowledged.

While the city can't depend on Washington, D.C. to solve its problems, Sanders said he will pursue the city's "rightful share" of a proposed national economic stimulus package.

Sanders said he will also champion projects that generate new jobs such as expanding the Convention Center, improving Lindbergh Field and building a third border crossing on Otay Mesa.

Sanders also pledged to work with the San Diego Chargers to "help ensure that professional football has a bright future in our region."

San Diego needs to become a leader in the emerging "clean tech" industries by fostering efforts to combat global warming, enhance the water supply and reduce the consumption of energy, Sanders said.

Sanders said the city has entered into a "perilous era" due to ongoing drought and federal court rulings that limits the amount of water that can be pumped into the region from Northern California.

By the spring, Sanders said, San Diego may have to impose mandatory water conservation efforts.

"Every effort is being made to ensure mandatory water reductions are fair, and that they recognize conservation practices that have already been taken," Sanders said. "Perhaps the surest measure of their fairness is that they'll make nobody happy."

Despite the grim economic situation San Diego faces, Sanders concluded his speech by saying he is optimistic.

"Our problems are not much different than the problems of countless families as they cope with the effects of this recession -- stretching their budgets, worrying about their future, wondering if their children will know the same opportunities they knew," Sanders said.

But, he said, to vigorous applause, that "on our worst day, those of us who live in San Diego are better off than so many others."

"We should always remember that," Sanders said.


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