A report released today on San Diego's financial condition showed that the city has left the derisive "Enron by the Sea" description far behind and is much better off than other municipalities with similarly sized populations.
The City Auditor's Office used 10 standard measurements of a public entity's financial condition to document San Diego's rise since 2005, a year when some mayoral candidates talked about declaring bankruptcy.
The results of the measurements, which display a government's ability to finances its services on a continuing basis, were compared to Philadelphia, Phoenix, San Jose and three cities in Texas — Austin, Dallas and San Antonio.
"The city of San Diego's overall financial condition — in the areas of financial position, revenues, and debt — has improved markedly over the last 10 years, especially when compared to other cities of similar population size," the auditors wrote in their conclusion. "Our audit results show that San Diego is in a stronger position today than it was 10 years ago."
According to the auditors, ratios for debt coverage, multiple revenue sources, solvency and liquidity were strong in 2014, and the other ratios scored well when compared to the other six cities. Eight of 10 ratios had positive trend lines, with liquidity showing marked improvement over the past decade.
In a chart showing scores for each of the 10 measurements, San Diego's financial picture came out twice as good in 2014 as its closest competitor among the benchmark cities.
Illustrating San Diego's improved finances over recent years, San Diego's short-term position in 2005 was far below the average of the six benchmark cities. It had closed the gap significantly by 2009, as the recession began to impact municipal finances nationwide.
By 2012, San Diego's ability to handle unforeseen needs over the short term passed the average and remained above the norm the next three years — and that's in one of the city's weaker categories.
Similar trends were seen in the capacity to pay off short-term obligations, the ratio between tax and general revenues, and debt service compared to operating costs.
"The city's financial health is strong and getting stronger because of the fiscal reforms enacted by city leaders and approved by San Diego voters in recent years," said Mayor Kevin Faulconer.
"By tackling tough issues that were too long ignored, we are now able to invest in our neighborhoods, expand city services, hire more police officers and pave more roads like never before," he said. "The city must remain faithful to the fiscal reforms and best practices in order for its financial health to remain strong, and I'm committed to doing just that."
Todd Gloria, chairman of the City Council's Budget Committee, said the audit validates "the hard work and responsible decision-making" of council members, the Independent Budget Analyst and city employees over the last several years.
"San Diego is facing challenging issues, including our need for infrastructure funding, and how we face those will be critical to our financial condition," Gloria said. "As the economy continues to rebound, it is imperative that current and future city leaders consider likely financial market cycles and the long-term fiscal impacts of their decisions so San Diego remains in this positive position."
San Diego lagged in one measurement, the change in net value of its capital assets, like city-owned buildings. Recent reports have shown the city falling far behind in needed maintenance and repair.
