City's Budget Worse Than Reported?
Report Says City At Least $65 Million In Debt

POSTED: 4:39 pm PDT April 6, 2004
UPDATED: 8:17 am PDT April 7, 2004

SAN DIEGO -- Outgoing San Diego City Manager Mike Uberauga recently forecasted a $24 million budget deficit for the city. However, 10News has acquired information that contradicts that figure by a considerable amount.

The Performance Institute, a bi-partisan watch dog group, has issued a report after digging into the city's budget for five years.

The report reveals the city is at least $65 million in the hole and is using a shell game to move money around, 10News reported.

"It's an accounting gimmick to show that he's getting money, that he's getting revenue, when in fact, it's not new revenue. It's an accounting shift. It's only on paper," says Performance Institute President Carl de Maio (pictured, right).

De Maio says the city council, mayor, city manager and finance director are not being completely honest with the public.

"This is a pattern of behavior at City Hall and I believe the mayor and council are equally involved as the city manager is. It doesn't matter if you change the city manager. Certainly, the mayor and council are endorsing this kind of deceit," de Maio says.

He calls it Monopoly money.

For example, the city is earmarking $7 million in additional fees for city services that are not even approved by city council.

The city also hopes to get $14.7 million in revenue from the state. De Maio says Gov. Arnold Schwarzenegger is not about to give that money to San Diego.

City officials are also counting on $530,000 of federal dollars for reimbursement of services used to fight the Cedar Fire, even though Federal Emergency Management Agency has already denied the claim.

There's still more funny money, de Maio says. He says $10 million comes from a tax-shift using money the city will actually receive in fiscal year 2005, but put toward the 2004 budget.

City finance director Lisa Irvine says the city is in "accordance with generally accepted accounting principles."

"Because we are generating money in fiscal 2004 that we really don't receive until fiscal year 2005, we're allowing a shifting of money to fiscal year 2004," Irvine said.

However, de Maio says it's just gimmickry and even the most generous estimate brings the city's budget deficit to $65 million.

Irvine admits the shortfall could be a lot larger in the end, but she says the city will deal with it.

"Just like if you had a budget and you or your spouse lost your job, you have to role with the punches. That's what we have to do," she said.

The city is asking for an 11 percent increase in its 2005 budget despite the major deficit it faces this year.

De Maio says he is outraged the city would even consider such an enormous increase considering it current financial predicament.

He says he wouldn't be surprised if the current deficit goes above $100 million.