The San Diego mayor’s office has an emphatic response to a recent report advising the city to explore the bankruptcy process as an avenue to reduce its pension and employee retirement liabilities.

“This is a question that’s been asked and answered 100 times; the city of San Diego is absolutely and without equivocation not going to pursue Chapter 9 bankruptcy,” Rachel Laing, spokesman for Mayor Jerry Sanders, told The Bond Buyer Wednesday. “There is zero chance.”

The recommendation came earlier this month in a report by the county grand jury, which studied what it described as the city’s financial crisis.

In California, county grand juries, which are established in the state constitution, are convened every year. Would-be jurists apply for a spot on the 19-member panel.

“The grand jury reviews and evaluates procedures, methods and systems utilized by government to determine whether they can be made more efficient and effective,” is how the San Diego County grand jury describes itself on its website.

The county’s grand jury report concluded that, despite recent reforms and changes to the city’s employee benefits — including a new, lower pension tier for recently hired employees — the city lacked any reasonable plan to tackle its unfunded retirement liabilities of $2.2 billion for pension obligations and $1.3 billion for retiree health care.

“A proactive dialogue as to the efficacy of a Chapter 9 reorganization cannot be removed from any discourse as to the city’s financial health,” the report said. “A Chapter 9 filing would result in a federal determination of which fringe benefits and collective bargaining agreements could be restructured.”

Laing said bankruptcy has been looked at repeatedly since the city’s financial crisis erupted in 2003 with an admission that it had failed to adequately disclose its employee retirement liabilities to bondholders.

That admission kept the city out of the bond market for more than five years and led to Securities and Exchange Commission sanctions.

Sanders was first elected in 2005 on promises to clean up the mess, and since then has refused to contemplate a municipal bankruptcy.

Laing said no one has advanced a credible argument that the city is actually insolvent and unable to pay its ongoing bills, a key criterion in a municipal bankruptcy case.

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