Dollars Without Sense

For 25 years, Harvey Ross has rooted out the waste and lies of politicians and bureaucrats. But some say he's too lost in the line items to see the big picture

Asked about his personal life, Rose reveals only enough details to fill a who's who entry. He likes going to the movies and loves the 49ers.

Rose, 59, grew up in New Jersey and Florida, the son of a grocer. He graduated from the University of Miami in 1958 with a degree in business administration, and during two years in the Air Force, Rose served as a chaplain's assistant and studied for his accountant's license. Once certified, he entered government service as an auditor at the federal General Accounting Office. He moved on to Los Angeles and worked for the city administrator before coming to San Francisco in 1971 to work directly for the Board of Supervisors.

Two years into his job, Rose left the city to take the prestigious post of California Auditor General (he answered a want ad in the Wall Street Journal). But Rose wasn't ready for the bigtime world of backroom politics. In 1975, Assemblyman Robie Wilson, a Southern California Democrat, asked Rose to suppress a report on the state of the budget reserves. "It would be embarrassing for the Democrats," Rose remembers Wilson telling him. "So let me get this straight: If the report embarrassed the Republicans it would be okay to release it?" Rose asked Wilson, who, as chair of the joint legislative audit committee, held Rose's job in his hands. Amazingly, Wilson said yes, it would be okay to release the report if it hurt the Republicans.

"He tried to make a deal with me where I wouldn't go to the press," Rose says. "I told him to go to hell." Wilson had Rose fired shortly thereafter and the budget analyst returned to San Francisco.

Although Rose is happy to make small talk, his attention quickly returns to the subject of the city's ongoing budget follies, which date back to the days of Mayor Dianne Feinstein.

"Let me get right to the point: The problem is that the city has never faced up to making its annual revenues meet its annual expenditures," Rose says.

The underlying cause of the deficit is quite simple, he says: Proposition 13, the statewide referendum that froze property tax levels at 1974 levels and allowed only nominal annual increases. (The city treasury has also been hurt by the recession.)

Rose calls Prop. 13 a "meat-ax approach." Meat ax or not, Prop. 13 presents a fiscal reality that city officials have never accepted. In the shopworn lexicon of A.A., the mayor and the supervisors are in deep, deep denial. Which is easy to understand. In order to compile a fearless inventory of the city's fiscal woes, Rose says, the supervisors would have to confront three politically repulsive options -- cut government, cut labor costs or raise taxes.

So instead of biting the bullet, mayors and supervisors nibble on it. Roll it around in their mouths. Suck on it like candy.

Or, to extend the A.A. metaphor, they employ "avoidance techniques" and "negotiate." Feinstein drained the city's surplus accounts to "balance" the budget. Her successor, Art Agnos, raised a few taxes but froze wages of city employees, which at the time were set against the average paid by public and private concerns in the Bay Area. A year later, when the freeze came off, Agnos had to match that two-year hike in average wages, as did Mayor Frank Jordan when he was elected.

The trend continues, says Rose, as Jordan imitates his predecessors by presenting the board with "phony budgets" that are deliberately based on foolish assumptions about incoming revenue and expected outlay.

Lately, the Board of Supervisors has devised its own avoidance techniques, some of which harken back to Feinstein. The supes have raided pots of money that shouldn't be touched to balance the budget: Last year, they tapped the airport's reserve and the year before hit the city's pension fund.

In principle, balancing the budget is no more complex than balancing a checkbook. So why do the city's elected officials mount such a protracted drama each year? Why don't the supervisors and the mayor (and the press) learn from the mistakes of past years? Why does the city return to the starting line each year, nary an inch closer to the intractable budget problem's resolution?

You can't blame the budget farce on Rose; in many ways he's a bystander. He just keeps his head down and crunches the numbers. If you'd seen what Rose has seen over the past decade, you'd keep your head down, too.

In Act I of the annual budget farce, Rose, the mayor's budget director and the city controller meet each spring to calculate revenues and expenditures. Without fail, they predict a massive deficit for the approaching fiscal year, which runs from July 1 to June 30. (The early, but by no means conclusive, deficit estimate for the coming 1995-96 fiscal year is $100 million.)

Upon hearing the number, the mayor and members of the Board of Supervisors react as if the shortfall has been visited upon them by some totally alien force. "It's a disaster." "It's a bombshell." "It's a fiscal hurricane." (Actual quotes from previous productions.)

The mayor has the supervisors in a jam: It's his budget. Under the City Charter, they can raise taxes and cut programs, but they can only suggest to the mayor where to spend any new money.

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