Hopes for recovery amid San Diego's mess

A corruption trial could send two City Council members to prison. Banks are scared to pump money into city coffers, and possible bankruptcy looms. Virtually everyone at City Hall seems to be under investigation. And now the mayor is taking a powder, more than three years before his term is up.

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At first glance, the July 15 departure of Mayor Dick Murphy, announced Monday, seems unlikely to heal San Diego's tattered reputation. The city is still hundreds of millions of dollars in debt, thanks to a pension-fund fiasco, and its name is still mud among lenders.

But optimists hope new leadership will bring San Diego's warring factions together and make the city of 1.2 million a well-respected player on the national stage. "The role of the mayor is critical. Whether people feel confident in his or her leadership is paramount," says City Councilwoman Toni Atkins, a Murphy critic.

A transplant to San Diego, like many of the city's residents, Ms. Atkins has missed a few of the city's scandals, which have ranged from municipal corruption to savings-and-loan misdoings to a funding debacle that forced Republicans to move their 1972 national convention to Miami. In fact, some observers say San Diego is the most corrupt city on the West Coast.

But that image has largely been limited to local left-leaning critics. Elsewhere, people have mostly linked San Diego to the beach and the sun - and perhaps the Navy - and not much else. "I hate to use the word 'innocuous,' but ... San Diego has never been at the tip of anyone's tongue," says University of San Diego history professor Iris Engstrand.

Until now. The current mess, sparked by bills for huge pension-fund promises, has spawned loads of bad publicity as critics accuse Murphy, a former judge, of being in denial about the city's financial straits at best, and responsible for them at worst. He has defended San Diego and its leaders, but couldn't stave off a final insult: Time Magazine named him one of the country's three worst big-city mayors.

"The city has never been in greater turmoil than it is at the moment, or under greater stress. This has to be the worst period in our history," says Ms. Engstrand.

Further cutbacks in city services - or bankruptcy - could hurt the tourism and high-tech industries, which have helped the city flourish economically and retain a low unemployment rate. But the industries could also keep the city strong enough to survive the new taxes necessary for municipal survival, says Alan Gin, professor of economics at the University of San Diego. "The problems could be dealt with if the right decisions are made," Mr. Gin says.

"Conceivably, the resignation of Mayor Murphy might be a catalyst that could... cause everybody to give up something to try to right this thing."

If San Diego can be saved, who is to lead the charge after Murphy and his motto - "A City Worthy of Our Affection" - leave the scene next summer? The deputy mayor will automatically take over the top job, but he and another council member face a federal trial over accusations that they took bribes from strip clubs hoping to relax city restrictions.

The council could appoint a replacement mayor, or there could be a special ballot, perhaps a replay of last year's November election, which pitted a last-minute write-in campaign by renegade councilmember Donna Frye against two moderate-to-conservative Republicans.

Initially a long shot, Frye garnered the most votes with a campaign calling for a citywide reality check, but Murphy won after thousands of ballots were declared invalid because voters didn't fill in a bubble. On Monday, Ms. Frye - an environmental activist married to a famous surfer - confirmed that she'll run again, though she doesn't expect a smooth ride.

"It's going to be chaotic for a while, the way politics naturally goes, with a lot of people jockeying for position and trying to play games with one another," she says.

The odds may seem good for Frye: Democrats outnumber Republicans in the city. However, some consider her to be too liberal, too anti-business and too iconoclastic. And history isn't on her side: Moderate-leaning Republicans have managed to control the mayor's office for most of the past 30 years by courting traditional liberal constituencies like gays and labor.

If Frye does become mayor, however, local Republicans will have more than one reason to kick themselves. Before she entered the 2004 mayor race, they pushed for a ballot measure granting new, permanent mayoral powers. It won.