After a year in which it didn't seem like anything worse could happen to this city -- a former beacon of good government now dimmed by federal corruption probes, deep deficits and election controversies -- this was the week it did.

Mayor Dick Murphy officially stepped down as planned July 15, a move that thwarted a burgeoning recall effort. Three days later, the council member appointed to succeed him was convicted of taking bribes from a strip-club owner, along with a second council member.

Now the nation's seventh-largest city is grappling with a serious vacuum of power -- three vacancies on its nine-member council. Some observers fear that San Diego will be ill-equipped to deal with problems that could send it to the brink of bankruptcy in the next several months.

"It's a financial crisis in the midst of a circus atmosphere. City government is in complete paralysis," said Carl DeMaio, director of the Performance Institute, a San Diego-based think tank that has studied the city's budgeting process.

He added: "Every time I think San Diego is out of shoes, another one drops."

Exactly how long the City by the Sea will sail on with a rump council at the helm is unclear. Voters will go to the polls on Tuesday in a special election to choose a new mayor, and it is possible that one will emerge from the crowd of 11 candidates with the majority needed to win. But it is equally possible that the mayoral contest will be decided by a November runoff.

Meanwhile, an election to replace the two council members has not been scheduled but is unlikely to occur before November. The council is left with six members, but any action will require five votes -- a majority of the usual nine-member panel -- to pass.

"It makes it a lot more difficult to get work done," said Toni Atkins, who was appointed mayor pro tem by fellow council members Monday to preside over meetings for the next week until a deputy mayor can be named.

San Diego coasted for years with a reputation as one of the nation's best-run cities -- a bastion of fiscal conservatism and a thriving economy. Yet for the past several years, a crisis was quietly brewing, after a move by the council to increase benefits to city employees while decreasing the city's contributions to the pension fund.

The decision appeared sound as long as the economy was soaring. But when a market downturn pummeled the city's investments, its $3.6 billion retirement system was left with a deficit of nearly $1.4 billion. When the shortfall was discovered, the city plugged it 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 fraud and public corruption, Wall Street firms have downgraded or dropped San Diego's credit ratings. Unable to borrow money at affordable rates, the city has had to defer vital water and sewer upgrades.

The furor nearly unseated Murphy, a former judge who was first elected mayor in 2000. He barely won reelection last fall after a brutal three-way race that turned into a months-long vote count and court battle regarding ballots cast for an insurgent write-in candidate who nearly upset him. He announced in April that he would step down, a week after the pension board he appointed refused to grant a waiver of attorney-client privilege that would allow it to release documents to federal investigators.

But Murphy's designated replacement -- Michael Zucchet, the council member he had appointed his deputy mayor -- had troubles of his own. After an 11-week trial on federal charges related to a scheme to trade money for votes to repeal the city's no-touching law for strip clubs, Zucchet and another council member, Ralph Inzunza, were convicted Monday of conspiracy, extortion and fraud. Both men quickly resigned from the council; they will be sentenced in November.

The verdict stunned the city and its elected leaders. But Carl Luna, a professor of political science at San Diego Mesa College, says they should have been ready for it.

"It's part of what we've been doing in San Diego for a while: keeping our head in the sand," he said. The council should have been preparing for such a crisis of leadership, he said, but with a tradition of genteel, chummy relations, "they didn't want to do anything to undercut" their fellow members.

Mayor Pro Tem Atkins noted that the city has survived other crises, including another period when the council was reduced by one-third. She said she does not think the city is teetering on the edge of bankruptcy. "That's a last resort," she said, citing consultants recently brought in to analyze the city's fiscal future. "We think it's unlikely, and we don't want to do it."

She pledged that the remaining council members will do everything they can do get the city back on track: "We still have the ability to solve these problems."

City and county officials across the country are watching San Diego closely, DeMaio said, not just to see how it solves those problems but to examine how they occurred in the first place.

"Nobody thought this could happen in San Diego," he said.

Dick Murphy, shown hugging a staff member goodbye, stepped down as mayor of San Diego last week. Murphy resigned in the face of a drive to recall him. Michael Zucchet, who replaced Murphy, was convicted of taking bribes.