Solana Beach officials respond to mailer about city’s financial problems

By Claire Harlin

As Election Day inches closer and the Solana Beach City Council race heats up, it’s likely residents have received at least one of a handful of mailers that have been sent out or received a forwarded email or two in their inbox. As with any race, contention is building, fingers are pointing and information — both accurate and inaccurate — is flying, and it’s up to voters to weed through it. One particular joint campaign flyer sent out by candidates Vickie Driver, Daniel Powell and Paul Frankel, however, likely has caused the most stir, even at City Hall.

The mailer says the city is in “serious financial trouble” and points to budget deficits and high litigation costs spent defending lawsuits, in addition to calling out City Councilmember and candidate Lesa Heebner specifically for increasing taxes and fees — including a $3,000 home remodeling fee, a 30-percent increase in the hotel tax, a trash fee, increases in two business fees and a new business tax.

City Manager David Ott said the city’s financial trouble was “significantly overstated” in the mailer, which also attributed the city’s borrowing of $3 million from the city’s sanitation fund to being a means to cover increased employee pension costs that were a result of the “overly-generous benefits approved by Lesa Heebner.”

The city’s unfunded pension liability of just over $3 million began accumulating in 1986, according to a memo by Councilman Tom Campbell. Although Solana Beach was the first city in the region to implement full pension reform, the city was still faced with a bill to CALPERS (California Public Employees Retirement System), and had the city paid the pension administrator at its interest rate of 7.75 percent, interest would have totaled more than $1 million, Ott said. It made financial sense, he said, to borrow the money from the sanitation fund because it was at a lower interest rate and the city would be able to pay it off in eight years as opposed to 12.

“It was a prudent, well thought-out financial move to save the city money and increase our investment return on the sanitation fund at the same time,” Ott said.

In response to the city’s litigation costs, which the mailer showed jumping from $10,761 to $552,477 since 2008, Ott said, “One year you may have litigation but another you may not.”

He said much of that increase can be attributed to one particularly expensive case, in which the city was sued under the claim that sewer lines were leaking and causing inundation. The city won the case and Ott said that the city has not only received about $30,000 reimbursed but it saved itself from having to pay more than $1.2 million in property damages and the other side’s legal fees.

In Campbell’s memo, he also called inaccurate the mailer’s claim that there have been budget deficits in 2005, 2007, 2009, 2010 and 2011. He said Solana Beach has “weathered the stormy recession” and is “the envy of most small cities.”

He said in 2009 and 2010 the city did budget for a deficit to prevent cutting back services, but in every other year from 2003 to 2011 the city operated under a budget surplus.