President Nixon's New Federalism
Richard Nixon's first term as president was the one that featured the "new Nixon" – with Daniel Patrick Moynihan as a senior urban policy advisor, passage of several major environmental laws, and creation of the New Federalism. This last item included consolidating all major grant programs administered by the Department of Housing and Urban Development into a Community Development Block Grant (CDBG).
The reasoning behind CDBG was that local governments should be able to decide how to allocate programmatic monies among competing needs, rather than trying to fit their needs to the dictates of federal red tape. To this end, urban renewal, Model Cities, and other traditional HUD programs were lumped together. But there was an added component aimed at penalizing those American cities that had been most successful in obtaining funds through President Lyndon Johnson's Great Society.
CDBG monies would be distributed based on a rigid formula, resulting in a cut in funds for those cities such as San Francisco which had been particularly successful in dealing with HUD in the past, and windfalls for those cities which had been relatively indifferent to these programs. This meant that urban renewal as a major federal program in San Francisco was dead, because it simply consumed too much of what was now a diminished, albeit flexible, grant program that was expected to satisfy many demands.
This demise was timely, actually, since by the mid 1970s, urban renewal was running out of steam. Major clearance and displacement in dilapidated areas of the city proved to be too disruptive, time consuming, and expensive. Existing projects would be completed, such as the ultimately spectacular Yerba Buena Gardens, but new efforts at urban revitalization would go in other directions, emphasizing rehabilitation and in-fill, rather than wholesale clearance and the construction of mega projects.
But, if traditional, large-scale urban renewal was dead, what did this mean for SPUR, which at that time stood for San Francisco Planning and Urban Renewal Association?
Jackson Rannells' Lonely Crusade
There were, of course, many other problems facing San Francisco besides urban decay. One of these was a rapidly escalating budget. Since public employee compensation typically comprises 85% of a city's total expenditures, the City's generous pay setting procedures played a major role in pushing up spending.
In this pre-Proposition 13 era, however, increased spending was masked by the galloping growth in property tax revenues. In his last budget, for instance, Mayor Joe Alioto proudly proclaimed that he was cutting the property tax rate. While this sounded good, in fact property owners in the city were paying more taxes, because their property assessments had been increased to reflect continuing inflation in property values. The mayor was cutting the rate and collecting more taxes at the same time. (This was a statewide problem, eventually contributing to the passage of Proposition 13 in 1978.)
Despite the lack of an aroused public, San Francisco Chronicle reporter Jackson Rannells was engaging in a lonely, Quixotic crusade against a variety of practices in the city's pay setting procedures. These practices allowed increases in pay far beyond comparable rates in either the public or private sector for some classes of employees, and no raises at all for others. The result was a city budget that was growing too fast, and a disgruntled workforce with some winners and some losers in the race for higher pay.
Rannells would come up with revelation after revelation, and no one did anything. A faction of the Board of Supervisors tried once, introducing Proposition L on the November, 1974 ballot, but it went down in flames. The common view then was that there were three voting blocks in San Francisco – downtown, the neighborhoods, and organized labor. The latter two combined against the former to defeat Prop. L. And it looked like they would continue to do so indefinitely. Conventional wisdom about pay setting reform received a rude jolt in 1975, when the San Francisco police and fire fighters went out on strike. This action so enraged the electorate that, at last, the climate seemed ripe for some sort of reform. But what?
Scraping up against the deadline for submitting November ballot propositions, the Board of Supervisors suddenly was faced with a variety of proposed reforms, with no apparent consensus on the best approach. At SPUR's urging, the board united behind a single package, so that the voters would have a clear choice, instead of having to choose among competing proposals.
But Mayor Alioto then submitted two proposals of his own, so the message to the public was no longer clear. The board's package emphasized precise pay-setting formulas with no discretion, while the mayor proposed binding arbitration. Both packages outlawed strikes, and proponents of both argued that their package should be approved to achieve labor peace. Organized labor opposed the board's package and supported the mayor's.
SPUR responded by issuing an analysis of these competing ballot measures, one of the first times the organization evaluated more than a single ballot issue for a given election. This analysis provided SPUR members and the media with a clear understanding that there were two competing packages on the ballot, both of which would change the status quo, but offering diametrically different approaches (See SPUR Report #114).
The election results were overwhelming, with the Board of Supervisors' package passing by amargin of 4:1, and Mayor Alioto's alternatives losing by the same margin. This meant that reform of the system was politically feasible, but a more carefully developed, systematic approach was still needed.
New York, New York
Having suddenly entered the fray, SPUR then issued a lengthy analysis of public sector labor relations and evaluated various options for achieving longer-term reform. Many of these options were adopted over the next few years (SPUR Report #116).
To really nail the problems San Francisco faced because of its profligacy, SPUR's report on pay setting reform cited a Congressional Budget Office (CBO) study of municipal expenditure patterns. CBO looked at county spending patterns provided by the Census Bureau. These statistics measured all local government spending that occurred within a given county, so that comparing the City and County of San Francisco with other municipalities that had separate city and county governments
was done on a statistically comparable basis.
Lo and behold, San Francisco was second only to New York City in public spending and public employees per capita. And this was at the time when New York City was facing bankruptcy! Remember the headlines in New York when Gerald Ford denied Mayor Abraham Beame's request for more federal aid? "President to New York: Drop Dead."
SPUR's board determined to go beyond a fixation on salary setting and look at the bigger picture. This task was handed to the newly-renamed City Planning and Management Committee, chaired by James Fussell, co-chaired by Frank Petro.
Over the next several years, SPUR initiated a number of analyses that addressed the entire infrastructure of municipal finance, and adopted new procedures to make sure that the public remained vigilant in support of fiscal reform.
Beginning with the June, 1976 election, SPUR analyzed all propositions on the San Francisco ballot. This was particularly important because the local ballot often offered a score of charter amendments, ordinances, and policy statements, placed there by the mayor, the board, a faction of the board, or initiative petitions. These propositions directly influenced city expenditures and government efficiency. Even worse, on occasion, two measures addressed the same problem from different perspectives. If both passed, the city attorney had to combine them to create a hybrid charter amendment or ordinance that imposed a whole new approach, different from the intent of each original measure, that was awkward and contradictory. SPUR tried valiantly to cut through this morass.
Through the efforts of Frank Petro and his firm, Arthur Young & Co., SPUR initiated a study of the city's annual audit. To say the audit was a joke is to heap praise upon it. Issued 18 months to two years after the end of the fiscal year, in a series of volumes that were not consolidated, with so many exceptions that the city's bond rating was abysmal, major surgery was required. SPUR had to persuade then-Mayor George Moscone that it was not out to embarrass him or the city, and to argue with then-Deputy Mayor Rudy Nothenberg that a consolidated fiscal report was even conceivable for a major municipality. After years of effort and additional help from Bank of America, the task was accomplished. San Francisco now routinely wins awards from professional accounting societies for the accuracy and clarity of its annual financial report, and its bond ratings are excellent (SPUR Report #118).
SPUR also took on the task of reforming the city's budget process. In the 1970s, the budget was a multi-volume list of line items. There was, for instance, one meeting of a Board of Supervisors committee where then-City Planning Director Alan Jacobs was asked why he needed as many rolls of film as he was requesting. Or, Muni's General Manager Curtis Green would be asked to defend why he needed two new inspectors' cars. In other words, the budget was debated in terms of inputs, rather than outputs.
SPUR recommended the adoption of a performance budget, where each department would group its inputs (pencils, oil, wrenches, paper) in terms of a specified level of outputs (services delivered). With this system, the mayor and board would debate budget items in terms of their impact on actual services provided to the public. Rolls of film would be related to preparation of a new urban design plan; inspectors' cars would be discussed in terms of on-time Muni service. Eventually, as was the goal of this effort, the debate skipped the inputs entirely, to consider what level of service was most desirable within the financial limits the city faced. Then-Mayor Dianne Feinstein implemented this approach, which facilitated her efforts to sustain a high level of services despite passage of Proposition 13, by getting her managers to focus on results (SPUR Report #123).
Civil service reform was another task, albeit one that took a lot longer to change just a little bit. San Francisco had hundreds of job classifications instead of the dozens that other large cities have; an appeals process that paralyzed development of new lists of eligible candidates; a Rule of One, so that a manager had to hire the person at the top of a list of eligibles rather than being able to choose among several; and procedures regulating employee dismissal that resulted in few ever occurring. To make matters worse, 100 pages of the city charter were devoted to civil service rules and procedures.
SPUR argued that the Civil Service Commission should have more flexible rules adopted by the commission itself, rather than being contained in the charter. In addition, the city needed a separate labor-management relations unit under the mayor, which would conduct surveys for salary setting and negotiate changes in working conditions (SPUR Report #129).
Charter reform completed the package, conceptually, but it took a long, long time to accomplish. After all, it was not easy to modify a document adopted in the 1930s with the goal of diffusing power, that had been amended more than 600 times, and was probably the longest city or state constitution in the country. Political scientist Fred Wirt best described the problem in his superb book, Power in the City. Because of the diffusion of power imposed by the charter among four separate power centers (mayor, board, chief administrative officer, controller), independent commissions, and a 19th century civil service system, Wirt demonstrated how no one was in charge. He concluded that San Francisco had "government by clerk," and that such a government is best characterized as being one of "inaction."
SPUR's ideal charter would be one of perhaps a dozen pages, clearly separating policy-making from administration, providing a bare-bones outline of government structure, concentrating administrative authority in the mayor, and be very hard to amend. The result today is not that simple and clear cut,but it is light years beyond what existed at the time the organization decided enough was enough (SPUR Report #147).
Finally, SPUR co-founded and participated actively in the Mayor's Fiscal Advisory Committee (MFAC), which provides pro bono help to reform individual city departments and services; and SPUR established the Better Management Award, presented annually to a city administrator for good management practices. Subsequent to this, MFAC added three awards of its own, and provided training for city administrators through the Transamerica Corp. training program.
...and Urban Research
For all intents and purposes, this package of reports, awards, and advocacy was in place by the end of the 1970s. Late in the decade, a New York-based organization, the Council on Municipal Performance, issued a ranking of the most effective municipal reform groups in the country, and SPUR was #1.
There was only one slight hitch. SPUR was referred to as the San Francisco Planning and Urban Research Association. This caused a light bulb to go off in the collective mind of the SPUR Board, who decided to rename the organization.
The late Aaron Wildavsky, who taught for a number of years at the University of California, used a catchy phrase to define what public policy analysis is: Speaking truth to power. SPUR spoke the truth about what it was that made San Francisco the second most profligate municipality in the nation, second only to New York City going bankrupt. The citizens of San Francisco listened, their attention focused by a city employee strike. And the mayor of San Francisco, first a wary George Moscone, then a determined Dianne Feinstein, exercised the power.
The reforms that were implemented foreshadowed the current revival in other major American cities, including New York, Philadelphia, and Chicago. These reforms enabled San Francisco to survive the draconian revenue losses imposed by Proposition 13 so well that the City enjoyed a budget surplus through much of the 1980s, and even had funds available for maintaining its infrastructure.
This reform effort also illustrated something important about SPUR. In the early 1980s, the Danforth Foundation of St. Louis commissioned a national study of municipal research groups for the purpose of choosing the best model to be replicated in St. Louis. The study identified SPUR and the Minneapolis-St. Paul Citizens League as the best prototypes. Both of these organizations> had a predictable component of business donations to insure continuity in their organizational structure and staffing, and an active membership that provided the energy to keep the organization abreast of current issues.
SPUR continued throughout this period to pay attention to its traditional areas of concern – housing, transportation, urban design, regional governance – but it also remained on the cutting edge of new concerns facing San Francisco. Urban Renewal implied an exclusive focus of bricks-and-mortar HUD programs, whereas Urban Research better characterized the broader array of issues that SPUR tackled in the late 1970s and today.