Aguirre: “Bankruptcy is the best answer to the City’s financial problems”
There's a lot of fiscal dialogue going on in the wake of Prop D's failure and former City Attorney Mike Aguirre thinks the timing for his bankruptcy argument is better than ever.
This is hardly the first time that Aguirre has made the argument for the City of San Diego to file for municipal bankruptcy. Reorganization offers an option for the city that has several positive attributes.
City leaders have rejected his plan at every turn, but now, Aguirre thinks he's got more ammunition than ever. The fact that during the Proposition D campaign, proponents including Mayor Sanders, according to Aguirre, made the argument for him, “they are talking about life-threatening changes, that makes the case for insolvency.”
“Bankruptcy protection,” says Aguirre, “would provide the City with instantaneous relief because the moment you file, you only have to recognize the City's legally created pension benefits which means the burden of proving the right to collect what has been established as illegal benefits falls to the pensioners and to the employees.”
But what about the stigma of reorganization in terms of the credit markets? Aguirre says, “by filing for reorganization and making an immediate plan, it would affirm to our bond holders our ability to pay our debt and by agreeing not to make the illegal benefits, strengthen our financial status in terms of making payments on our bonds, strengthening the City's overall financial health.”
With next year's city contribution to the pension system far less, Aguirre says the 70-million dollar budget shortfall could be eviscerated without the drastic cuts that have been threatened.
Although Aguirre applauded Council Member Carl DeMaio, who led the anti-Prop D campaign, for coming up with a lot of good ideas and for addressing the current crisis. But, he says, selling off some of the city's assets is not one of them.
A spokesperson for Mayor Sanders says Prop D's failure didn't change the Mayor's view on bankruptcy, it just not an option.
Earlier this year, Sanders told the city's bondholders his opposition to it has never been stronger and that no credible argument can be made for it.