The Coast News Group
Community Commentary

COMMUNITY COMMENTARY: If Encinitas is financially solid, then why is our infrastructure broke?

Sources: 2009 Encinitas Annual Financial Report, or AFR, and the October 2009 CalPERs Actuarial Pension Study for Encinitas, or CAP.

Encinitas Mayor Dan Dalager has recently assured voters that our city is in excellent financial shape. If so, then why are the roads and beach access such a mess?
Now if you trust the state of California, or CalPERs, pension system, the Standard and Poor’s, or S&P, rating agency, the opinions of future pension recipients (i.e., city management), off balance sheet accounting that ignores all retiree debts and road maintenance deficits (AFR p. 5), and also believe that real estate values and retail sales are presently skyrocketing; then and only then is there a chance that our city is not broke.
All of our city’s scary liabilities are tucked deep in the AFR by the city and rubber stamped by the fraudulent S&P rating agency in order to keep the massive Ponzi scheme going. These S&P AA+ credit ratings enable our city to borrow more money so that certain developers can get pet projects and city employees can continue accruing taxpayer guaranteed multi-million dollar pensions.
The current value of the promised pension benefits is $64,973,397 — what we owe (CAP p.11). But the current assets that the city has at CalPERs to pay those benefits are only $35,862,082 — this is what we have saved (CAP p.11). Thus the true unfunded pension liability is $29 million — this is our pension “debt” today. However, CalPERs lost a lot of our tax money and uses accounting fraud to avoid recognizing the pension losses so that cities can further underfund the pensions to save cash (CAP p. 6 to 8). Thus their “Actuarial Asset Valuation” of $35 million for our city is artificially inflated — just like a 2007 home appraisal.
To make things much worse, the accrued pension liability doubled between 2004 and 2008 (CAP p. 15). In addition to pensions, the city has a nonpension or Other Post Employment Benefits (“OPEB”) retiree debt of $10 million (AFR p. 68 to 69).
These retiree obligations are very problematic because taxpayers are obligated, by law, to pay these exploding city retiree debts before the city can fund any services, including police. Therefore they are much more toxic than bank loans or bonds and all $39 million ($29 million + $10 million) of this is excluded from the city’s analysis — just like AIG and Enron did before their “surprise” demise.
In fiscal 2009 our city took in about $55,773,570 (AFR p.72) in tax revenues but had a net loss of $3,591,849 (AFR p. 73). In addition, they spent only $484,530 (AFR p. 73) on street maintenance, which is less than they spent on the Parks and Recreation’s administration (AFR p.73). Due to this chronic neglect of our streets the city has accrued a deferred road maintenance debt of $17 million ( This very material liability is also not included in the city’s analysis — this is like not telling a home appraiser that your roof caved in.
Thus Dan Dalager and City Hall have obligated the taxpayers of Encinitas to at least $56 million ($39 million retiree debt + $17 million street debt) in current unfunded off balance sheet liabilities or “hidden debts.” This giant “credit card balance” is being withheld from the public while the city only has a contingency reserve fund of around $9,601,583 (AFR p. 62). In addition to all this mess our total long-term debts are $172,467,502 (AFR p.115).
Dan’s only hope is that he and Kristin Gaspar get elected so that they can launch a second “lease-revenue bond” scam to fund the popular Hall Property Sports Park. However, as with the initial $22,645,000 raised (AFR p.56), City Hall will likely devise methods to divert those funds to pay their annual pension liabilities and cover operating expenses while they continue to accrue multimillion dollar pension payouts for themselves.
By bilking new revenue sources (taxes and bonds) to make minimum payments on massive “off balance sheet” liabilities they will be able to grow the pension beast larger while giving taxpayers the illusion that our city is fine — classic Bernie Maddoff.

Taxpayer, homeowner and father of four


anonymous November 2, 2010 at 11:27 am

The city has tons of high paid GIS people and the city just got their hundred thousand dollar report taht says the city had underfunded streets maintenance. Ask the city to give you a map of the streets in bad shape.

anonymous November 1, 2010 at 6:56 pm

How about old 101 through Leucadia. Its a mess!!

I drive encinitas November 1, 2010 at 6:39 pm

Collective Memory, where are these bad roads you intimate exist? I drive regularly all over the 20 or so square miles in Encinitas, name an area where roads are bad.

collective memory November 1, 2010 at 1:28 pm

Except in Encinitas the council was warned to stop drinking the cool-aid and they blew off the community and went on a drinking binge. Drive around coastal Encinitas to see how bad the roads are. The city’s own report says they have been underfunding road repair. The council admits it needs a million bucks to fix beacons.

voice of reason November 1, 2010 at 12:56 pm

Are the roads and beach access in Encinitas such a mess? I think not (If you want bad roads, drive in the City of San Diego.) That said, the pension obligation is problematic, but the problem is wide-spread at all levels from social security on down to tiny Encinitas. Virtually every government entity is suffering because we all drank the cool aid of guaranteed double digit returns and ever escalating property values. Could our leaders have made better decisions, absolutely (especially easy to answer in hindsight). This is a serious issue, but this piece is just another vocal minority pre-election hit piece on Dalager and Gaspar.

jentaxpayer October 31, 2010 at 5:57 pm

This is a very serious article. This hidden debt obligation negates any future projects that do not guarantee a huge revenue stream. The pension debt is unbelievable. This makes the Hall Sports Park project look positively foolish. We basically have a city with a $172,467,502 long term debt and $9,601,583 in cash reserves.
If either Gaspar or Dalager are elected and push through another lease revenue bond (which does not require voter approval) that would just be gross negligence. I hope that the people who are paying attention are the ones who are voting. If Gaspar is elected I hope she grows and develops a mind of her own, and doesn’t depend on her endorser Jerome Stocks to do her thinking.

danny Boy October 31, 2010 at 3:21 pm

ya got any appliances fer me?? I gots a vote ta exchange fer it!!

ain’t beun meyer gud??!~~~

observor October 31, 2010 at 3:18 pm

This is the legacy of $tocks, Bond and Dalager. On November 10th, they will approve the rezoning of the Pacific View School site and deliver it over to the developers. Gone forever will be the golden opportunity for the community to acquire an absolutely unique piece of coastal property for municipal use. This property is within walking distance to Moonlight Beach and adjacent to the coast – one of a kind. Instead of a public park or community use facilities, it will become another ugly mess like the Pacific Station eyesore downtown.. This is the continuing legacy of the trio of thieves – $tocks, Bond and Dalager.

They all need to go!

Encinitas Voter October 31, 2010 at 12:01 pm

Dalager is a crook and need to share a cell next to Duke Cunningham!

McDermott October 30, 2010 at 11:51 am

City of Encinitas Salary and 2009 Compensation Listings
Please visit this link that was put up by the state (Encinitas would not share this 411) to see how nearly every employee has been able to greatly exceed and even double their "maximum salary" – not exactly sound fiscal management by our mayor.

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