- The Washington Times - Sunday, July 24, 2005

SAN DIEGO (Reuters) — San Diego voters go to the polls Tuesday to decide if a surf shop owner, a former police chief or a businessman will be the new mayor amid turmoil caused by the near-collapse of the city pension fund and the criminal conviction of an interim mayor.

Dick Murphy, a Republican, stepped down July 15 as mayor of the nation’s seventh-largest city in the wake of a financial crisis that prompted Time magazine to name him one of the three worst big-city mayors.

Days later, the interim mayor and a second city council member were convicted of conspiracy, extortion and wire fraud for accepting campaign contributions from a strip club that wanted a city ban on lap dancing rescinded.

The next mayor faces an uphill struggle to undo the damage to the reputation of business-friendly San Diego, once widely seen as a model for municipal governance.

With a population of nearly 1.3 million, San Diego is a longtime Navy town, but its economy diversified in the 1990s as it attracted telecommunications and biotechnology companies.

Eleven candidates are on the ballot for the special election, and council member Donna Frye is the front-runner, garnering about 44 percent support in the latest polls.

The co-owner of a surf shop with her husband, surfing legend Skip Frye, she won more votes than Mr. Murphy as a write-in mayoral candidate last November, but thousands of ballots were disqualified because voters wrote in her name, but did not blacken the bubble next to it.

An old-time liberal and community activist, Mrs. Frye won over voters by saying she would not vote on things she did not understand. If elected, she would be San Diego’s first Democratic mayor in 20 years.

Former police chief and American Red Cross chapter chief Jerry Sanders and businessman Steve Francis, once a Nevada politician, are in a heated battle for second place. Both are Republicans.

If no candidate wins 50 percent of the vote, there will be a runoff between the top two vote-getters.

San Diego’s biggest problems are financial. The pension fund faces an unfunded liability of at least $1.7 billion. The city also has a budget deficit of at least $25 million and has seen its credit rating downgraded because of incomplete audits for fiscal years 2003 and 2004.

The city is being investigated by the Securities and Exchange Commission and federal prosecutors over the failure to disclose the looming deficit when the city sold bonds.

Meanwhile, six current and former trustees of the city pension fund have pleaded not guilty to felony conflict of interest charges linked to decisions about funding the retirement system. Three other trustees have resigned.

Both Mrs. Frye and lawyer Patrick Shea, who is tied for third in the polls, have urged the city to consider some form of bankruptcy.

But opponents, including second-place candidate Mr. Sanders, as well as the San Diego Regional Chamber of Commerce, oppose bankruptcy. They are seeking tighter control of the city’s finances and renegotiating labor contracts to cut costs.

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