By ELLIOT SPAGAT
Associated Press Writer
SAN DIEGO- Sandi Lehan bought her first home in December, but she worries she’ll soon be unable to afford it. A new union contract proposed as the city struggles with a costly pension scandal could cut her police officer’s pay as much as $500 a month, she says.
“I’m scared to death because I might not be able to make my house payments,” said Lehan, an eight-year Police Department veteran and single mother of three who might soon consider taking a job elsewhere.
Another resident, Alek Cunningham, is bothered by the growing number of potholes in his beachfront neighborhood. “You’ve got to hold on to your coffee to make sure it doesn’t spill over the dashboard,” he complained.
The nation’s seventh-largest city _ dubbed “America’s Finest City” on its government Web site _ has fallen on hard times.
Its unfunded pension liability _ the gap between the value of its pension assets and its obligation to retirees _ has swelled to $1.37 billion after decisions were made in recent years to sidestep payments to the fund and still enhance benefits.
The debacle has led to criminal conflict of interest charges against six current and former pension fund trustees and sparked the resignation of Mayor Dick Murphy as the city cuts costs in order to pump money into the troubled fund.
“When things go wrong, it seems like they just pile up,” said real estate mogul Malin Burnham, one of several business leaders urging the city to consider filing for bankruptcy protection. “It’s embarrassing that the great city of San Diego doesn’t have its act together.”
As obligations to retirees grow, city services are shrinking.
Firefighters are taking pay cuts. Libraries are bracing for shorter hours. And many old sewer pipes aren’t being replaced _ despite a federal order to fix the dilapidated system.
Outside City Hall, San Diego is still riding high on a vibrant economy, revitalized downtown and booming housing market. It remains one of the nation’s hottest vacation spots, thanks to near-perfect weather, inviting beaches and the San Diego Zoo.
But the financial problems are casting clouds over the sun-drenched city of 1.3 million people.
Murphy said he will step down July 15 to give the city “a fresh start.” But his interim replacement, Councilman Michael Zucchet, is on trial along with Councilman Ralph Inzunza on charges of taking illegal campaign contributions from a strip-club owner.
City Hall is proposing a $2.37 billion budget for fiscal 2006 that slashes spending by 4.7 percent. Hardest hit are big-ticket projects. The city stopped replacing water and sewer pipes in December, and the densely populated Mission Valley area is going without a badly needed new fire station.
The municipal mess will likely dominate the July 26 election to replace Murphy. When wealthy Republican businessman Steve Francis announced his candidacy, he said he was ashamed, embarrassed and angry at city leaders.
His opponents so far are former Police Chief Jerry Sanders, a Republican, and Democratic Councilwoman Donna Frye, a surf-shop owner who ran an enormously successful write-in mayoral campaign that nearly beat Murphy in November. A judge tossed out more than 5,000 ballots on which voters failed to darken an oval next to Frye’s name, tipping the election to Murphy.
The new mayor will have more authority over budgeting and personnel under a measure approved by voters last year.
April Boling, former chairwoman of a panel that advised Murphy on the pension fund problem, thinks it’s time for the change.
“Part of the problem is so many people’s hands are in the pie,” she said. “No one person is in charge.”
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Associated Press Writer Seth Hettena contributed to this report.