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Wednesday, Jul 17, 2024

Murphy: S.D. Still A Great Place to Do Business

Mayor Dick Murphy has had a particularly tumultuous year in office, with San Diego’s pension crisis, related investigations by the FBI, the Securities and Exchange Commission and the U.S. attorney’s office, and national media scrutiny at odds with San Diego’s image as America’s Finest City.

“Election year hyperbole,” Murphy, 61, said during a recent interview. “I think we do have a serious problem with under-funding the pension plan, but for this to get national notoriety, I believe, is caused by politics.”

The city’s cash-strapped pension fund, with a $1.17 billion deficit and two major reports on the city’s finances are fueling a heated mayoral contest among Murphy, county Supervisor Ron Roberts and City Councilwoman Donna Frye, a late entry as a write-in candidate for the Nov. 2 election.

And there is much fuel.

September alone saw the release of the city’s Pension Reform Committee report. This was followed by the report of the law firm Vinson & Elkins, commissioned by the City Council, into whether the city had failed to meet disclosure obligations concerning its funding of the San Diego City Employees’ Retirement System.

Since that time, the City Council has moved forward on a recommendation by Vinson & Elkins to adopt standards styled after the Sarbanes-Oxley Act of 2002, created to monitor company accounting practices after a series of high-profile corporate scandals.

Murphy said this approach should go a long way toward taking heat off an ongoing investigation by the SEC.

“I would think that would convince the SEC that we are serious about addressing their concerns,” he said. “It is unprecedented. We believe it is the first time this has been done in America and probably would set a standard for how the SEC deals with other municipalities in the future.

“The Vinson & Elkins report says that the problem was that nobody in city government really took the overall responsibility for disclosure,” he said, “that the city hired outside accounting firms to do footnotes in our financial statements that were incorrect, the city hired outside attorneys.

“Nobody was really in charge of it and that led to sloppy disclosures. The report said they could find no evidence of intentional misrepresentation, but the city did a lousy job.”

Murphy, who lives in Del Cerro, said he is fixing the problem.

In addition to adopting some of the Vinson & Elkins disclosure recommendations, he is pushing other measures in what he said is a comprehensive plan. This includes two ballot measures, Proposition G, which he said will pay down the deficit over 15 years; and Proposition H, which restructures the retirement board; his proposal to borrow $600 million over three years to reduce the pension deficit, approved by the City Council on Oct. 5; and his proposed wage freeze for city employees.

“This frees up $40 million a year that would otherwise be paid in salaries to contribute toward the pension plan contribution,” he said. “If we don’t have a 4 & #733; percent pay raise every year, the projected deficit is significantly less. Even having a salary freeze for two years would bring down the projected deficit.”

Business And Bad Press

As for all the media scrutiny by the likes of the New York Times, the Washington Post and the Los Angeles Times, and its potential effect on attracting new business to San Diego, Murphy said he thought it would have “virtually no impact.”

“Business comes to San Diego because we have a healthy business environment and a terrific quality of life,” he said. “The pension under-funding problem is a problem, but it is a small part of being a great city.

“It’s not going to have any negative impact on the biotech industry,” Murphy said. “They come here because we have some great research institutions, we have a lot of talented people, and it’s a great place to live. They’re not going to be discouraged coming here because the city has a pension under-funding problem.”

It’s all part of the ups and downs of government, he said.

“In 2001, the crisis was terrorism; in 2002, the crisis was a bad economy; in 2003, the crisis was the fires; in 2004, the crisis was the pension plan. This city has got so many positive things going for it the number one biotech city in America; this summer, the highest hotel occupancy rate than any city in America. We have the largest military complex in America. This is a very healthy economy with a lot of talented people to draw from, a lot of research institutions to generate ideas. And they are virtually unaffected by one problem in a city that has a dozen things going for it.”

Murphy also discounts any dampening of tourism because of the bad publicity.

“I think that the publicity of the New York Times and Washington Post’s untrue potential bankruptcy has tarnished our image in the financial community,” he said. “But there’s been no slowdown of tourists coming here. They don’t care. We’ve got great weather and terrific hotels and it’s a fun place to visit. They’re not going to stop coming here.”

As for an increase in the marketing budget for the San Diego Convention & Visitors Bureau, Murphy said, “It’s too early to make any commitments.”

Murphy’s trademark cool did start to heat up when the subject of bankruptcy came up.

“Those out predicting bankruptcy are wrong and irresponsible,” he flatly stated. “We just passed a balanced budget this year, the economy is booming, the city’s revenues are going up about 10 percent a year, the city has billions of dollars in assets.”

Murphy is equally perturbed that so much attention has been focused on the pension problem, but none of his accomplishments during his four years in office.

“You notice we don’t get a whole lot of criticism on other issues, because, quite frankly, we’ve done a good job on most issues,” he said.

Among those he cites are the successful opening of Petco Park in Downtown San Diego, the opening of state Route 56, dealing with sewer spills and “battling with the Chargers” over their deal with the city.

“The year I came into office, the city had 365 sewer spills one a day,” he said. “We put a lot of time and effort into that. It was bad for the quality of life, bad for the tourism industry. We raised sewer rates, we fixed the pipes that were bad, we cleaned the rest of the system.”

As for the Chargers, “When I came into office, we had a Chargers ticket guarantee that everybody thought was horrible,” Murphy said. “It took us three and a half years of battling with the Chargers, but we finally have a new lease.”

Murphy also cites the increase in affordable housing as an accomplishment.

“The city of San Diego has created 3,000 affordable housing units in the last two years, which is triple what any prior mayor and council have done,” he said. “In addition, our City of Villages smart growth plan should help meet future housing demand.”

As for the city’s energy needs, Murphy said San Diego is moving toward energy independence , one of his 10 goals announced during his January 2001 State of the City speech.

“We set a target of generating 50 megawatts of electricity from solar and other renewable resources within the next 10 years, and we are well on our way to reaching that goal.”

The subject of base closures gets Murphy steamed.

“I see the BRAC (Base Realignment and Closure) process as the most serious threat to the welfare of San Diego’s economy,” he said. “San Diego’s military facilities are the third most important economic sector in the region. If they were to close down several of those facilities, it would hurt San Diego economically.”

Strong Leadership

The strong mayor system , a proposal now on the ballot , would, among other things, transform the current council-manager form of government to a mayor-council form for a five-year trial period beginning Jan. 1, 2006.

The mayor would have hiring and firing power, and would have greater authority over city officers and employees, except those recognized in the charter as being independent.

Murphy believes he would govern better under such a system.

“Those who understand our system of government understand that I am not the CEO of the city,” he said. “It’s difficult for me to make promises, because I always have to get five votes from the City Council to do anything.”

While those opposing the ballot measure say it would make the mayor less accountable, Murphy disagrees.

“I think I’d be more accountable,” he said. “Now I get too much of the credit and too much of the blame for everything that happens in the city. I would have the ability to hire and fire city employees. If financial disclosures are inaccurate, I can hire and fire those who do a bad job.

“From a legislative and policy perspective, I have influence. But in terms of running the bureaucracy, I have very little.”

City Councilwoman Frye, who opposes the strong mayor system, has also been critical of what she considers to be too many closed-door sessions of City Council.

“We hired Vinson & Elkins, we gave them every document, we let them interview every person at the city, we didn’t hide anything,” Murphy said. “To claim that we’re trying to hide something is inaccurate. We meet in closed session on things that California law says are appropriate. We follow the advice of the city attorney on that.”

With all of the controversy swirling around Murphy, a former San Diego Superior Court judge, he has no regrets about finally deciding after a period of doubt , to seek a second term.

“I think it was the right decision,” he said. “And I do enjoy being mayor. But the political campaign has not been pleasant. I don’t enjoy running for political office. I don’t enjoy the fund raising in particular.”

And, no, even with all the heat, he’d rather be in the kitchen than back in the courtroom.

“Being a judge is one of the best careers in America,” said Murphy. “But it has one limitation, and that is as a trial judge, you cannot affect the destiny of anybody other than those in your courtroom. There is so much you can do to make your community a better place as mayor than you could ever do as a judge.”


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