Case study Sandy Eggo: How citizen advocacy can fix flawed municipal government
Depicted: Carl DeMaio (Left) with California Insider
Carl DeMaio of Reform California explains how he took on entrenched interests in San Diego to deliver common sense reform of a corrupt, imperious City Hall regime—and won. From an interview on California Insider.
Carl DeMaio: San Diego was on the brink of bankruptcy, and I basically was a businessman at the time. And I said, “Well, I'm just going to start a campaign to force City Hall to clean its act up.” And that's exactly what happened. We uncovered the financial crisis in San Diego.
[Host] Siyamak Khorrami: San Diego was almost going to be bankrupt?
CDM: Bankrupt, yes. They basically cooked their books. They issued false and misleading financial statements. They engaged in securities fraud. The SEC came in and investigated. The FBI, the DOJ. The New York Times called them “Enron-by-the-Sea.” And what happened was they falsified their financials. They lied to investors. They were barred from the securities markets for five years as a punishment. They also were on the brink of bankruptcy because they had massive pension obligations and financial losses; and at the same time, the services were being cut dramatically.
And so I came in, and I said, “We need to clean house at City Hall. The people who did this to us lied to us. The people who did this to us do not want to take on the powerful interest groups [that] tell us we need to raise taxes and cut services. And we have a plan to avoid bankruptcy without tax increases, without service cuts.” And—
SK: So the leaders of the city at that time, they wanted to cut services, and that was the solution to not go back—
CDM: Republican and Democrat. They both got together and said, “Hey, we don't need to fill potholes. We don't need to have police officers. We don't need to have library hours, fire stations, and after school programs restored. What we can do is we can raise taxes.”
And my response was, “No, you need to take on the labor unions that have bloated pensions, bloated salaries, and massive bureaucracy. So they need to be reformed. And we also need to cut the corporate welfare.” The developers were using the city development agencies to basically divert property tax revenue that would have ordinarily gone to the general fund for fire stations and police officers and pothole repairs—that was going to subsidize their developments downtown and in various other areas.
And I said, “No. What we need to do is get the dollars back to the core services. We need to be efficient, which means our labor costs must be benchmarked to no better, no worse than the local labor market. And that's how we ought to operate.” We had to take on both the Republican and Democrat political establishment to get that done. I was in a superminority. So I'm going to Sacramento [now as an assemblymember] to be in the superminority; but [similarly,] on San Diego City Council, I was on the losing end of a 6–2 supermajority Democrat-held Council.
And what we did was we laid out a plan. You don't get politicians to do the right thing by giving them the facts or giving them a plan of solutions. They won't do it. You have to light a fire. And right now, the reasons why they act are only because their contributors or special interest groups—anyone who's going to be important to their next political election—want something or demand something. That's when they'll act.
SK: And they're probably more present, right? They’re probably constant—
CDM: Oh, the lobbyists and the union bosses and the political super PAC operatives, they are there every day whispering in their ear. I liken it to that cartoon from the 1970s and '80s of the devil that pops up on the shoulder of the character and says, “Do it, do it.” [Politicians] don't have an angel. Who's the angel? The voice of the people. The voice of the people has to be heard.
And so, what we did in San Diego is instead of just giving them a plan and giving them facts and letting them know, “You don't need to raise taxes, you don't need to cut services, you don't need to go bankrupt; you can actually just do reform. It's going to be tough, but you can do reform”—the only way we got that Democrat supermajority [of] politicians to go along with the right plan was to put pressure on them from the outside. So what we did through my PAC, Reform California—[né] Reform San Diego—is we went around the city and did town halls, educated the voters, and just continued to pummel those politicians at City Hall until they did the right thing.
So we actually got my budget proposals through Council every year on a bipartisan vote. We got a unanimous vote for the labor contract in the first 90 days I was in office. And there were gasps from the audience. It was late at night. The only people sitting in the audience were the lobbyists and the labor union bosses, who all wanted us to not make the changes. We came out of closed session, and we did the right thing. We had a unanimous vote to basically cut the labor costs 6%—
SK: So everybody voted for it.
CDM: A unanimous vote. And people said, “What’d you do behind closed doors that led everyone to finally do the right thing?” I said, “I don't kiss and tell.”
Watch the whole thing here.
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