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San Diego Mayor to Leave Office Amid Probes

Pension System Deficits Have Led to Federal Inquiries

By Amy Argetsinger and Kimberly Edds
Washington Post Staff Writers
Tuesday, April 26, 2005; Page A05

LOS ANGELES, April 25 -- Just months after emerging from a tumultuous reelection race, the mayor of San Diego announced Monday that he will step down this summer amid federal probes of the city's deficit-ridden pension system and calls for his removal.

Dick Murphy, 62, a Republican and former judge, said at a televised news conference that the nation's seventh-largest city "needs a fresh start."

"A good leader knows when it is time to move on," he said.

The mayor said he will leave office July 15 after completing work on next year's budget and giving the City Council time to arrange a special election in November for his successor. The council could choose to appoint a mayor to serve out the rest of Murphy's term.

Murphy's announcement came a week after Time magazine named him one of the three worst big-city mayors in the country, and as some of his foes were publicly pondering a recall effort, saying the mayor had let the city drift toward the brink of bankruptcy. Wall Street firms have downgraded or dropped the city's credit ratings, and federal officials are conducting multiple investigations into the pension crisis that could lead to criminal charges against city officials.

Yet few expected that Murphy, a dry and deliberate former corporate lawyer, would resign. First elected in 2000, he barely eked out a victory last fall after a brutal three-way race that included a last-minute write-in challenge from a maverick City Council member. After a vote count that dragged on for weeks, Murphy was declared the winner when a judge ruled that thousands of ballots cast for council member Donna Frye, a local surf-shop owner and environmentalist, were invalid.

As he stood at the news conference surrounded by family and staff, Murphy cited that bruising campaign, as well as a voter-approved change in government that, starting next year, will shift more day-to-day power over city operations to the mayor.

"I now believe to be effective, the city will need a mayor who is elected by a majority of the people and who has a clear mandate to take this city forward," Murphy said in his four-minute speech.

For years, San Diego was known as a bastion of efficient government and fiscal conservatism. But problems began several years ago when council members voted to increase benefits to city employees while also decreasing the city's contributions to the pension fund. After the market downturn hammered the city's investments, its $3.6 billion retirement system was left with a nearly $1.4 billion deficit.

Over the past year, the city has plugged the gap with millions of dollars from its general fund, forcing deep cuts in city services. With the FBI and the Securities and Exchange Commission investigating potential securities fraud and public corruption, the city has had a hard time borrowing money for vital water and sewer upgrades.

Last week, the newly elected city attorney, Michael Aguirre, called for the mayor's removal after the pension board he appointed refused to grant a waiver of attorney-client privileges that would allow it to release documents to federal investigators. Next week, the city manager will release the first projections for a 2006 budget that observers say could be ugly.

"The sad part about this is it is self-inflicted," said Diann Shipione, a former pension board trustee who first alerted the city to the system's problems. "The situation could have been corrected many times over in the past few years."

Frye, meanwhile, said she will seek the mayor's office again. "We have an opportunity for new leadership and to change the direction we've been moving in," she said.

Under city rules, Murphy's place will be taken until the next election by Michael Zucchet, a council member who serves as deputy mayor. But Zucchet's political career also hangs in the balance: Next month, he and another council member are scheduled to stand trial on federal charges that they accepted bribes from a strip-club owner to relax the city's no-touch rules for clubs.

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