"There's plenty of money. They just don't direct it in the right way," said Moretti, 52. "We live in a desert. Why do we have street medians with grass while we're overburdened and overtaxed? I don't have any benefits. If I get sick, I have to work. If I don't work, I don't get anything."
Uneasy about the direction the city was taking, the board of directors of the Chamber of Commerce started to brainstorm for new revenue sources. Support for Murphy has begun to waver as the business community questions whether he can maneuver through the fiscal firestorm.
San Diego Mayor Dick Murphy gesticulates as he describes how fingers of blame are pointed in all directions when problems occur.
(Nelvin Cepeda -- San Diego Union Tribune)
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Murphy denied the city is facing bankruptcy and accused critics of blowing the financial problems out of proportion.
"We just passed a balanced budget without raising taxes, we are meeting our financial obligations, and we have a plan in place to deal with the unfunded liability of the pension system," Murphy said. "There is no question that in retrospect the city made a bad decision to underfund the pension plan. But we are addressing the issue, we have taken action and we are doing things to fix it."
In a draft of its final report, the pension committee concluded San Diego is caught in a "perfect storm." Several factors collided to thrust the city into financial crisis.
Riding high with the stock market boom, city leaders increased benefits for workers, allowing employees to retire earlier with more money. At the same time, they reduced the amount the city pays to the pension fund, which consists of interest from investments and city contributions. For years the system was funded at 100 percent; now it is at 67 percent.
When the market dropped, the city ended up with less money and bigger bills. Other California cities were hit hard, but everyone expected San Diego to be prepared.
"It was a combination of factors that all came together at the same time. This was not a result of a downturn in the market," said April Boling, a certified public accountant who heads the pension committee.
Conflicting advice prompted city leaders to improve pension benefits without them fully understanding how much the increased benefits would cost, Boling said.
The city manager and the city auditor retired under fire as the financial picture deteriorated. The pension board has sued its counsel, accusing the firm of providing inadequate advice. Retirees worried that they won't get their pensions have sued the city.
The average pension has doubled over the last decade. The sweetening of benefits included a deferred retirement option plan, which lets an employee delay retirement and create a special account earning 8 percent interest and a 2 percent annual cost-of-living adjustment in their pension. High-paid employees could receive nearly $1 million on retirement under the plan.
The pension reform panel is recommending a rollback of the 2002 benefit increases for all new hires, but that could be tough for the mayor and City Council members. The powerful public employee unions have resisted any reduction in the benefits, and every council member enjoys union support.
"It's going to be a very interesting next 60 days, especially if you like knock-down, drag-out politics," Mitchell said.
