“Even if you take the city bureaucracy’s denials of fund raids as fact, an independent audit of these funds would put to rest the public’s concern that these funds have been possibly misused to cover up a General Fund budget deficit. If the Council cannot muster five votes to open its books and do this audit it would be a clear signal that transparency is dead at City Hall,” noted Performance Institute President Carl DeMaio who has been leading a review of the city’s budget practices.

Included as part of the 10 accountability and budget reforms in the San Diego Citizens’ Budget Plan, the criteria proposed by the Institute for the audit would focus on two key issues:
• Internal Services Charges: Review every charge to Enterprise Funds under Service Level Agreements or other transfer for any support or direct service to 1) identify the full amount of funds transferred into the General Fund for each kind of support service 2) verify that the charges incurred by the Enterprise or Special fund consistent with the full cost of service to the General Fund and 3) compare the charges incurred by the Enterprise or Special Fund with prevailing market rates charged for similar services.
• Personnel Assignments: Identify every city employee that is subsidized in whole or in part by an Enterprise or Special Fund—as well as the date the position was transferred from the General Fund. In addition, the audit should identify the job responsibilities performed by the employee to ensure they are fully in accordance with the purposes of the Enterprise or Special Fund to which their expense is charged.

At a City Council hearing on June 8, DeMaio detailed the raids on the water and sewer funds and issued a call for an independent audit of the city’s enterprise funds. Any inappropriate or excessive transfers from these enterprise funds are clearly prohibited under Proposition 218’s amendments to the State Constitution. DeMaio credited the leadership of Council Member Donna Frye in getting the audit added to the Council’s agenda today. “We are thrilled that Donna Frye is taking the leadership role in advancing this audit. We call on the Mayor and the Council to follow her positive lead and create an independent audit of the water, sewer and other enterprise funds so the public can rest assured that their fees are going to appropriate uses,” DeMaio said.

“It took a federal investigation and civil lawsuit before the City would admit to underfunding its Pension Fund. If this independent audit is not approved today, it might take the same to restore confidence in the city’s Enterprise and Special Funds,” concluded DeMaio. Based here in San Diego, the Institute is a national government reform think tank that promotes the principles of performance, transparency, competition and accountability in government. Additional information on the San Diego Citizens’ Budget Project can be found at www.sandiegobudget.org.

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