SAN DIEGO -- Performance Institute, a financial watchdog, says San Diego taxpayers maybe able to get out of paying for the lofty pension benefits given to city workers, 10News reported.

According to PI, a state law that protects taxpayers from public officials who could use their powers for financial gain could make the 2002 pension agreement null and void. It might also make the 2002 San Diego city pension giveaway illegal.

At one time, Judie Italiano was a clerical assistant for the city of San Diego making less than $12,000 a year. Now, as the president of the Municipal Employees Association, sources told 10News her union members pay her $116,000 anually.

"I'm not prepared to dicuss that today. That's not what we're here to talk about," said Italiano during a recent interview.

10News does not want to talk to her about her pay. We want to know why she reportedly stands to make $110,000 a year as a city retiree -- a retirement San Diego taxpayers will pay.

"I don't want to talk about my pension any more. If you want to talk about MEA, that's important, but not my pension," Italiano said.

Sources told 10News that Italiano's pension package increased up to 2000 percent when the San Diego City Employees Retirement System Board voted in 2002 to boost benefits and the San Diego City Council approved the deal. It also gave Italiano and others a special retirement package they did not have before the 2002.

"This package entitles her to a lump sum payment of almost $500,000 in the city's DROP program if Italiano stays in the program 5 years. Insiders say Italiano pulled strings to get the deal done. Her lawyer denies this happened," 10News reporter Thom Jensen said.

The city's firefighter's union president, Ron Saatoff, is also in the spotlight. He was on the retirement board and voted for the benefits increase, which gave him a $32,000-a-year retirement boost, 10News reported.

University of San Diego law professor, Bob Fellmeth, said, "If you are being disproportionately benefited, you ought to be recusing yourself and not voting on that matter. And if you did vote, that's a vote that might be potentially rescinded."

So are taxpayers stuck with a deal that Italiano and Saatoff got with the 2002 pension deal? Maybe not.

Performance Institute President Carl DeMaio said, "Because they personally financially benefit from that agreement, we could essentially nullify it. We could consider it void, because that individual was not negotiating in good faith."

DeMaio was referring to a little-known state law, Government Code Section 1090 (read below).

"There's not greater a case for a 1090 violation than what's happened here in San Diego," DeMaio said.

DeMaio said Saatoff had a direct conflict of interest, because he pushed the pension deal through and voted on it. Sources told 10News that Italiano persuaded union members on the pension board to vote for the package.

Government Code Section 1090

Members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members. Nor shall state, county, district, judicial district, and city officers or employees be purchasers at any sale or vendors at any purchase made by them in their official capacity.

As used in this article, "district" means any agency of the state formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited boundaries.