90 down—1,006 to go

Quite a mess was waiting for Jerry Sanders when he was sworn in as mayor last December.

The fiscal crisis threatening to force San Diego into bankruptcy was only symptomatic of a larger and darker culture of mismanagement, ineptitude and corruption at City Hall-the depths of which are still being measured by state and federal investigators.

The preceding year claimed the careers of a mayor, two members of the City Council, a city manager and several other high-ranking officials. Federal and state prosecutors indicted some of them-convicting two (sort of)-and indicated they may not be finished.

Day-to-day operations of city government resembled a very public bar brawl, with City Attorney Mike Aguirre taking on all comers, including members of a crippled City Council and a horde of paid consultants.

Atop the woeful heap lay a poorly planned transition to a new form of government, a time bomb set to detonate-ready or not-on the first day of 2006.

It was enough to make one ask why Sanders, or anyone else, would want the job. Yet, if there was ever an environment for the seeds of change to germinate, it was amongst the deepening fertilizer at City Hall.

The day after he won the November election, Sanders began sowing the seeds he hopes will bring about that change, announcing a “plan of action” and self imposing a 90-day deadline for starting to “clean house at City Hall.”

That deadline expired last week. So far Sanders has:

* Curtailed discretionary spending by requiring that all consulting contracts, salary increases and non-essential spending receive his approval.

* Asked all city departments, excluding fire and police, to prepare plans for a 10-percent budget cut.

* Launched two controversial ballot proposals requiring voter approval of future benefits enhancements for city employees and paving the way for more outsourcing of city services.

* Begun an assessment of city-owned property.

* Met with federal officials to assess the status of their ongoing investigations of city finances and criminal wrongdoing, though his inquiries have received an icy reception.

* Met with hired consultants regarding the city's long-delayed audits but failed to establish a firm deadline schedule. Instead, Sanders said Kroll, a company hired to probe city finances, indicated it will complete its investigation “by May,” but is “still working on getting some information from the pension system, which is outside of my purview.” Sanders said his staffers are helping to get that information, and “my understanding is that when [Kroll] gets that done, KPMG is not too far behind.”

Auditing firm KPMG has been working since 2004 to reconcile the city's annual financial statements dating back to 2003. The firm has refused to release those audits without Kroll's report. The city can't borrow money without completed audits.

Despite campaign promises, Sanders was unable to persuade employee labor unions to begin renegotiations in January over retirement benefits granted to employees in 2002. Although Sanders says he's optimistic, union officials haven't indicated that they plan to return to the bargaining table on that issue.

To implement his overall plan, Sanders brought in a team of highly paid executives. Some are newcomers to municipal government, like Chief Operating Officer Ronne Froman, while others are longtime city officials or familiar faces from former Mayor Susan Golding's administration, like two of his top political advisors, Fred Sainz and Kris Michel.

They quickly began the behind-the-scenes process of “re-engineering government”-reassessing the way city employees perform and think about their jobs with an eye for increased efficiency and customer service-while at the same time working out most of the kinks in a new-to-San Diego style of government that shifted executive powers from a city manager to the mayor.

Although the mayor may be focused on his 90-day achievements-a savvy strategy that plays well in the media-some of his most significant impacts to date weren't a part of his official action plan. To wit, Sanders, a likeable figure with a slow, deliberate speaking style and grandfatherly charm, has proved a calming influence at City Hall.

Careful to avoid the pitfalls of his predecessor, Dick Murphy, Sanders has maintained communication with the outside world, holding regular press conferences to explain the city's fiscal woes and other mishaps-rather than letting them fester in darkness.

And Sanders has had plenty of explaining to do while facing a string of troubling revelations that have shown City Hall to be in worse shape than anyone imagined. City officials didn't know how much real estate the city owned or what it was being used for. They had lost track of city contracts. And, most embarrassingly, no one knew how many employees worked for the city.

Even more troubling, San Diego was forced to temporarily delay state-mandated improvements of its water and wastewater infrastructure after planned funding sources dried up. Sanders secured private bonds to continue the most crucial projects, but with the original dollars missing from the water and sewer funds, he had little choice but to float the possibility of a future rate increase.

Sanders responded to each of these revelations by launching investigations, some of which have begun to bear fruit. Others are expected to do so in the coming weeks. But the mayor said he's able to draw some conclusions as to what went wrong, pointing to previous budget cuts in employee training, updating software and maintaining computers.

“The systems had totally broken down in the city,” he said. “This organization has been broken. It's been neglected.

“It's inexcusable.”

While dealing with the unforeseen, Sanders also managed what was previously thought impossible-taming San Diego's frenetic city attorney. Despite Aguirre's portrayal of Sanders as a Murphy clone during the campaign, these days the pair practically skips arm-in-arm from one event to the next, where they take turns praising each other in saccharine tones. That's left many wondering what kind of deal the duo cut, but ask Aguirre and he'll tell you that not only is he simply respecting the will of the people but that Sanders is “the real deal.”

And Aguirre isn't the only one singing Sanders' praises. His former mayoral opponent, City Councilmember Donna Frye, hasn't agreed with the mayor on every policy issue, but she turned up at a press conference last week to voice her approval of his overall style.

Aside from union turmoil, the only notable tension so far has been between the mayor and City Council President Scott Peters, who has expressed mild irritation at the short amount of time Sanders gave the City Council to consider his ballot proposals.

Peters has suggested that voter approval of pension increases may be a waste of time and money, given the current political climate. Sanders said he wants to capitalize on the public's awareness of the pension issue to ensure un-funded benefits are never granted again.

Unfortunately, the mayor hasn't enjoyed such sunny relations with the city's employee labor unions. He's been unable to persuade the two unions representing white- and blue-collar city workers to even discuss the possibility of giving up a portion of benefits granted by the city in 2002. Although those benefits, which city officials granted without a source of funding, were long ago identified as a major contributor to the city's nearly $2 billion pension deficit, union leaders maintain they are essentially the private property of city employees and nothing short of a court order-and maybe not even that-will convince them otherwise.

Facing spiraling legal fees and hoping to short-circuit several already-initiated court battles that could take years to resolve, Sanders and Aguirre proposed last week that the unions consider allowing a retired federal judge to mediate a solution with the city. Although no final decisions have been made, union officials were initially wary of that plan.

While Sanders continues to apply pressure to the unions, he's facing his own squeeze, in the form of an annual pension bill, that could engulf as much as one third of the city's general fund, money used to pay for public safety and other basic city services. Sanders is set to present the City Council with a draft budget on April 14, but he won't find out how much the city owes, or what his budget is, until the board members at the retirement system-the same people delaying the Kroll report-present the bill. Originally scheduled for sometime close to March 1, that has since been postponed until March 17.

“I'm pissed,” bristled Sanders when asked about the delay. “This is not a game. This is not brinksmanship.... Let's put the personality crap aside. [The retirement board] could work with us much more closely.”

Shortly after taking office, Sanders called on retirement-board members to resign, but they ignored his request.

Once Sanders knows how much the city owes, he'll have to persuade members of the City Council, who handed him their relatively optimistic budget priorities in January, to approve his budget, which, depending on the size of the pension payment-which itself depends on the nonexistent negotiations with the unions-will likely include fee increases for city residents, laying off city workers and making major cuts to libraries, parks and other non-essential services.

It's a delicate balance that can easily be upset. If Sanders fails, the city could be headed for bankruptcy, which the mayor previously indicated would be a last resort if he can't reduce city costs or convince the unions to make concessions.

But according to their official calendars, Sanders, Froman and Jay Goldstone, the city's chief financial officer, have all met with Pat Shea, an attorney who represented various parties when Orange County went belly up in 1994 and who more recently ran against Sanders while pushing a pro-bankruptcy platform.

Shea told CityBeat he briefed Froman and Goldstone on the option of municipal bankruptcy during a January meeting, but Sainz, the mayor's spokesperson, said the meeting was offered only as a “forum” for Shea to “present his ideas” which “in no way, shape or form do we endorse.”

At least not in the first 90 days.