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City’s Stuck Between Rock, Hard Place as KPMG Again Delays Final 2003 Audit



Editor’s Notebook , Thomas York

Outside auditor KPMG has alerted San Diego city officials that it won’t be delivering its final , and official , audit of fiscal 2003 as promised on Feb. 16.

The announcement puts the powers that be at City Hall between a rock and a hard place, as everyone struggles to pull the city from fiscal crisis.

The city can’t sell bonds in the public marketplace till KPMG issues the audit. So it goes without the millions of dollars needed to repair such things as the water system, which seems to spring a leak weekly.

KPMG said the report would be ready within 10 days of the promised date. But Comptroller Greg Levin is doubtful. He says it will take the city weeks to review the audit before it can be issued, so the report is still a few weeks away.

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Third Year

The audit is approaching its third year, and thus far KPMG has written 15 drafts, each of which has required revisions.

The auditor has already missed two other deadlines for issuing a final report.

And with each deadline missed, the cost escalates , all borne by taxpayers.

KPMG has spent $26 million alone on investigators needed to help reconcile the ledgers. This sum does not include an additional $20 million-plus spent by Kroll Inc. investigating details of the back-room wheeling and dealing that created the epic $1 billion pension deficit.

So, why can’t the city prod auditors to move faster?

Each draft raises questions about 2003’s financial statements, admittedly in shambles when KPMG first arrived on the scene. Short of starting over and bringing in a new auditing firm, there is little that can be done.


One Bit Of Fallout

Had previous generations of elected officials played by the book, no audit would be needed and millions of dollars would be available for such things as more cops patrolling the streets and children’s swim programs in poor neighborhoods.

We’re paying for general incompetence, if not outright malfeasance, and will continue to pay well into the first decade of the 21st century.

– – –

Mayor Jerry Sanders has threatened to go to the voters, if the City Council doesn’t allow him the ability to make changes to the budget without its approval.

The issue came up last week when council members voted 5-3 to force the mayor to seek their approval before making any changes to the budget.

The issue originally erupted when Sanders sliced funding for children’s swim programs at public pools.

The council says the mayor can’t veer from what’s been OK’d, but Sanders contends that under the strong mayor system adopted by voters, he has the authority to make changes.

Sanders issued a release in which he said the action “is completely inconsistent with the city’s charter and an affront to the citizens of this community who approved the strong mayor form of government.”

He added that the “in your face move toward voters … reverses the many positive actions this council has taken toward reform.”

We agree. It might be time to go to the voters again to get the matter settled.

– – –

With the Super Bowl quickly receding into the rearview mirror, let’s take a moment to consider what could be here in San Diego. The most recent edition of professional football’s classic game generated hundreds of millions in benefits for Miami, host for the game.

There’s no reason to believe that San Diego couldn’t become part of the rotation if this fair city only had a stadium fit to host the NFL’s championship game.

To be sure, the city’s mired in a financial crisis that will take years to solve, but civic leaders should be looking at the future as well as the past.


What We Could Expect

If we had a stadium that met the NFL’s requirements, we could expect to have the Super Bowl every five or so years.

If the life of a stadium is 30 years, we could expect to host five to six Super Bowls. Thus, the financial gain over those three decades could be worth billions to the region.

Elected officials , we include Mayor Jerry Sanders among them , don’t appear to understand the importance of building a stadium for the Chargers.

If we need proof of that impact, we only need look at Petco Park. It’s brought about the resurgence of East Village, as well as the Gaslamp Quarter and the rest of the city.

Just think what a new football stadium could bring.


Thomas York is editor of the San Diego Business Journal.

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