In San Diego, Taxpayers Want More than What They Pay For

by on November 12, 2013 · 14 comments

in Culture, Economy, Editor's Picks, Government, Voter Guide Special Election

Image Source:  OBRag.org

Image Source: OBRag.org

At KNSJ Mayoral Forum, candidates unwilling to discuss raising city revenues.

By Andy Cohen

Last night I had the opportunity to represent the San Diego Free Press as a panelist in the KNSJ mayoral debate, hosted by the California Western School of Law.  We were privileged to have three of the four major candidates for mayor participate, with Nathan Fletcher the only missing candidate.

This event had been in the works for months, with the upstart progressive radio station looking to put itself on San Diego’s political map, once again giving those on the more liberal side of the political spectrum a reason to listen to talk radio in San Diego, something we haven’t had since Clear Channel switched KLSD to an all sports format.  Apparently they didn’t like the competition to their right wing property, KOGO.

In the debates leading up to this one, in my opinion not nearly enough has been discussed regarding the philosophy behind economic growth and development by the candidates thus far.  And the candidates have not been asked to address how they would fund all of the different services that city government is supposed to provide, and all of the so called “goodies” that San Diegans have come to expect from their local government.

Last week an acquaintance of mine tweeted out something I’m sure we’ve all heard before, but in light of this special mayoral election, has become somewhat more prescient:

Along with it he posted a link to a UT-San Diego story published in 2010 in the wake of the defeat of Prop D, the proposed .5% sales tax increase for San Diego.  Their research found that San Diego lags far behind the other major cities in California in terms of revenue generated.  For example, in annual business taxes, San Francisco collects an average of $5,253 per year per business.  Los Angeles collects $1,283.  Oakland $774.  San Jose $225.

Here in San Diego, our city government was found to collect a mere $79 per year per business.  Other cities collect a whole host of fees that San Diego does not.  San Francisco, Anaheim, and Los Angeles all charge higher Transient Occupancy Taxes than San Diego does (two separate ballot initiatives to raise the TOT in 2004 failed, despite winning an overwhelming majority of the vote.  A two-thirds majority was required for it to pass), although the TMD thinks it has found a way to somewhat circumvent that little inconvenience, for better or worse.

In annual per capita revenue, San Diego lags well behind other major California cities.

In sales taxes—a city’s primary source of revenue other than property taxes—San Diego falls well short of other cities, something Prop D was seeking to rectify.  The state sales tax in California is 7.5%.   Cities have the option of adding additional sales taxes that it can keep on top of that.  According to the State Board of Equalization, San Jose adds an additional .75%; Los Angeles 1.5%; Long Beach 1.5%; Sacramento 1%; San Francisco 1.25%.  Even in Fresno—not exactly a liberal bastion in Central California—they add an additional .7225% to the state sales tax rate.

Close to home in more conservative San Diego County, National City adds 1.5%, La Mesa 1.25%, and Vista, home of arch conservative Congressman Darrell Issa, they collect an additional 1% in sales taxes.  In the City of San Diego, we collect .5%.  Prop D would have raised it to 1%.

Think of it in these terms:  Actual sales tax revenues for the City of San Diego in Fiscal Year 2012 was $220.3 million.  Had Prop D passed, that number would have been doubled.  That would pay for a lot of things that San Diego needs and wants.  So the question posed to the candidates was whether they would consider raising some of these taxes and fees as mayor?

According to Mike Aguirre, the city government cannot be trusted to direct its resources to where they’re needed.  He says no, he would not support raising taxes and fees because we cannot control where the money goes.  “If you raise taxes, it’s not going to go to (police, fire, other city services).  The taxes are going to go to where the people who are in control of the government want them to go.  They are controlling the election…do you think those people who are paying the million dollars to send you all those mailers because they want to make sure there’s more libraries and rec centers open?”  He then went on to rant about pensions—something Mr. Aguirre has on a feedback loop, yet he has never once told us what he would do about San Diego’s pension problem.  Presumably he would prefer to revert to underfunding the system again, but we don’t really know.

So that’s a “no” from Mike Aguirre, because we cannot trust the people “in control of the government,” despite the fact that as a “strong mayor,” he would presumably have some significant measure of control over our government.  Angry Mike made his triumphant return to the stage.

David Alvarez agrees that there are some fees that are appropriate, and that it’s the government’s responsibility to ensure that the money is going toward its appropriate purpose.  But no specific answer to the question of modestly raising the business or sales tax.

“I was a strong opponent of Prop D,” said Kevin Faulconer.  “It’s not about sending more money to City Hall, it’s about City Hall doing a better job with the money that it already has.”

That’s all well and good, and Mr. Faulconer is correct that the city should ensure that it is managing its resources properly and efficiently.  However, one of his major campaign points is to solve the San Diego Police Department’s massive officer retention problem.  Due to scarce resources, the SDPD is struggling to retain the officers it has, and it cannot afford to train and hire replacements for the officers it has lost.  Faulconer wants to reverse that problem, but never quite tells us where he will get the funding from.

San Diegans love for their government to provide all kinds of things for them, such as free parking at the beach, free residential trash pick-up, and adequate police and fire department protection and response times.  But San Diegans have also been very reluctant to provide adequate funding for those services we demand.  Even something as innocuous as fire pits at San Diego’s beaches have been threatened—something near and dear to Faulconer’s District 2 contituents—until private donors stepped forward to prevent them from being removed, and thus saving a local cultural icon.  The fire pits have since been put back into the city’s budget, but for how long?

A couple of points here:  Keeping taxes low sounds great and reasonable in the abstract.  But governments still need to find funding for the basic services they are mandated to provide.  Without taxes, governments often turn to fees as a funding source:  Trash collection fees; sewage treatment fees; building and construction permit fees; parking fees.  Individuals and businesses end up getting nickel and dimed to death with fees, all in the name of keeping taxes low.  That’s not necessarily fair, or right.  By spreading out the “pain” more evenly through modest sales and business tax increases, we would be able to reduce or even eliminate some of those fees (but certainly not all) without doing any real harm to the average person’s pocket book.

With the potential additional hundreds of millions of dollars in revenue, San Diego could continue to provide free residential trash pick-up, leave the beach fire pits in place, continue providing free parking at city beaches and parks, and be able to find the money to rebuild the police department, build much needed new fire stations, and reduce fire department response times in areas where they are woefully inadequate.  The city could hire additional lifeguards and provide them with the equipment they need to keep our beaches safe—our beaches are, after all, a crucial source of tourism revenue.  We might even be able to fund some of the infrastructure improvements this city so desperately needs.

Are consumers really going to stop shopping at Target if the city sales tax were increased, by, say, a quarter of a percent, costing them an extra 2.5 cents for every $10 spent?  Are businesses going to go bankrupt if their local business taxes were raised to, say, $279 per year instead of the current pittance?  What is received in return would seem to be well worth the small increase.

Our city government should be able to manage its money effectively.  But that doesn’t mean that we shouldn’t provide the city the resources it needs to offer the services we demand.

Finally, Memo to Mike Aguirre:  Please stop talking about pensions.  Particularly if you continue to fail to offer a solution to the problem.  Any solution.  San Diego has an obligation to pay down the mess created by City Councils and mayors past.  There’s simply no way around that inconvenient fact

Correction:  Mathematics is apparently not my strongest suit.  A quarter cent tax increase would amount to $.025 per every $10 spent, not $.25 as previously noted.  An even stronger argument in favor of raising the sales tax.

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Andy Cohen

Andy spent 15 years working in the highest levels of the San Diego professional sports world, including both the Padres and the Chargers. He began his foray into writing while a volunteer for Francine Busby's 2010 Congressional campaign, eventually becoming a contributor to the now defunct SDNN. He has reported on local and national politics for both the OB Rag and the San Diego Free Press. When not reporting news and events, he offers political and policy commentary from a liberal perspective, occasionally turning back to his sports roots. While he does not hide his more liberal political bent, Andy always strives for fairness in the telling of a story.
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{ 14 comments… read them below or add one }

avatar patty jones November 12, 2013 at 12:18 pm

Thanks Andy for representing the freepers.

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avatar Lowell November 12, 2013 at 1:03 pm

This is the fundamental structural budget problem the City of San Diego continues to deny exists and claims to have fixed.

Our civic phobia to fees and taxes to pay for our needs finds San Diego far behind in having the resources to meet demands and our ignorance of the facts leaves us blissfully oblivious of alternatives to solve this civic problem.

In 2010 the Center on Policy Initiatives (CPI) updated its original 2005 report “The Bottom Line” to establish a pre-recession baseline for San Diego general government revenue relative to other large cities in California. The 2005 report was a ground breaking eye opener pinpointing the source of our service and infrastructure deficits.

The data showed that the City of San Diego continued to lag behind other large cities in California in most general fund revenue sources, including property tax, sales tax, transient occupancy tax, trash fee/tax and business license fee/tax. The City took in more revenue in 2006-07 than in 2002-03, but much less than other cities, though the regional economy was doing well.

Check out the report for yourself at: http://onlinecpi.org/reports/the-bottom-line-2010-update/

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avatar La Playa Heritage November 13, 2013 at 1:16 pm

The CPI also revised their Bottom Line Report in 2010.

http://www.tinyurl.com/20100216a

Above is our analysis of the CPI Bottom Line Report. We found that San Diego has an Average total tax rate compared to other California cities with exceptions for Business taxes. The analysis was misleading in that the CPI report compared General Fund taxes instead of the overall tax rate.

http://www.tinyurl.com/20120619

Although San Diego only has a 10.5% TOT, we actually have an effective Hotel Tax Rate of 15.5% (2% TMD + up to 3% CCFD) which is average for California. See Page 3 for Tables 2 and 3.

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avatar Dana Levy November 13, 2013 at 3:55 pm

Have you ever been to another big city? They charge TOT plus car rental structure fees on rentals plus stadium fees for new stadiums plus any other fee they want as the customers can bear it and don’t expect the locals to pick up the entire burden. Our TOT should be 13% (at least) plus any other percentages tacked on by other various entities like the county and sandag. San Diego City proper carries the largest burden for the region and needs to be recompensed by the “users” for the costs associated with their visits thus helping to maintain America’s Finest City as they would and do expect it.

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avatar La Playa Heritage November 13, 2013 at 5:24 pm

The Hoteliers and the City Council have already pre-approved an effective 5% TOT Increase to a maximum of 15.5%. However, since 2004, the elected City Council has refused to put a TOT increase onto the ballot for fear of being labeled tax and spend liberals. We brought the issue of a 5% TOT increase for public Infrastructure before the Rules Committee and City Council several times, to no avail.

http://www.tinyurl.com/20130415a

We should increase the TOT by 6% to a maximum of 16.5%. With 5% for Infrastructure and 1% Penny for the Arts. The Special Tax would need 2/3 voter approval. Who would vote against it besides the private Hoteliers?

A General Fund (50% voter approval) tax would likely failed because any General Fund tax increase would pay for increased Pension payments and not tangible civic improvements, infrastructure, or more Police officers.

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avatar Anna Daniels November 12, 2013 at 1:06 pm

I’m glad you raised the revenue issues Andy. I didn’t expect to hear Aguirre say that you can’t trust the government to spend the money for the right things/ the gov’t can’t control where the revenue goes. The last time I checked, revenues go into the General Fund. The General Fund keeps the city departments which we all care about alive.
None of the candidates are willing to discuss revenues, but are they adverse to figuring out everywhere fees can be levied? Sanders and the city council have been exploring “revenue lite” for a number of years. Paid parking at the beaches anyone?
Or perhaps we can turn to the touted private-public partnerships and cover every trash can and lifeguard station at the beaches with ads.
So many questions. And such largely lackluster answers from the candidates. I didn’t expect any of them to support the revenue increases you described–that would be political suicide. But I did expect a more nuanced response.
Thanks for being there Andy.

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avatar Dana Levy November 12, 2013 at 1:44 pm

What a well reasoned article and I do agree that the premiss of “if we all pay a little the entire population will benefit” is the right one and one that is needed to be placed in the forefront of the entire conversation. And, who directs where the current and any future revenues will be directed if not the city council and the mayor? Who better? And Aguirre thinks that “they” can’t be trusted? Conspiracy Theory to the nth degree and he offers no solution? Blow hard to the end is what Mike is! Why this was dodged by the two current city council persons in attendance baffles me. Too bad Fletcher wasn’t there to actually go on record with some tactic. Chicken might be the primary reason for such innocuous answers. Faulconer is the worst of the bunch and how and why the TOT wasn’t raised to the state average years ago when we had the chance eludes me also. If the tourists that come here can’t afford to pay the TOT then they could stay home. Who pays for the services they use like roads and police, etc. in OUR city if not the tax payers? They (tourists) should expect pick up this “use tax” that everyone pays in all the rest of the vacation/convention destinations in California, Florida, Hawaii, etc. I don’t remember anyone ever saying I don’t like to pay the TOT. The beauty and desirability of our city and it’s surroundings, including the hotels, are wonderful and the “users” should and do expect to pay for their usage while in town. That is what the TOT is designed to do, offset the expenses generated by the mass of humanity that come here temporarily, so the permanent citizens don’t have to bear this weight all alone. Finally, increased income will do wonders for the entire system at city hall and it needs to be addressed now. Hope someone takes charge in the upcoming elections that can and will take the lead. Do any of them posses the fortitude to make the hard decisions like Filner? I again hope so!

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avatar Andy Cohen November 12, 2013 at 2:20 pm

Dana-

In in the 2004 primary election, Prop C appeared on the ballot and would have increased the TOT from 10.5% to 13%. It got nearly 62% of the vote, but a 2/3 majority was required to pass the initiative.

Then again, in the November General Election, Prop J was placed on the ballot to do the same: Raise the TOT from 10.5% to 13%. It won 58.4% of the vote and failed (again, 2/3 majority required).

Of note: On that very same November 2, 2004 ballot, residents of El Cajon voted in favor of a 0.5% (“Half-Cent”) sales tax increase with 69% of the vote, while San Diego residents were voting down Prop D with 62% voting “no.”

This is the problem with California state law, and Prop 13 in particular. Most tax increases require a 2/3 majority to pass, a near impossibility in this day and age.

Source: SDVote.com

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avatar Dana Levy November 12, 2013 at 3:06 pm

Thanks, and I couldn’t agree more that it was/is a no-brainer and should have passed each time it came up. Just like GMO labeling, I am still bewildered as to why and how it didn’t pass. Same with TOT on hotel bills. Not even a tax that the residents have to pay and should not fall under the restrictive 2/3rds requirement. Maybe Gov. Brown can help us there. Or a STRONG MAYOR could do it justice and be a hero! Another case of the Manchesterites (this includes Faulconer and his like on the city council) being in charge of the destiny of us all for city infrastructure preservation/improvement/maintenance and tax base relief/funding enrichment/prosperity denial.

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avatar Sara November 12, 2013 at 2:35 pm

Nicely done.

Also: We want safe, swimmable/surfable visitor- and resident-serving beaches, but everyone is freaking out about increased stormwater fees. Our Regional Water Board is so strapped for resources they can do little in the way of monitoring and enforcing the pollution discharges by some of our local industries.

Contrary to urban legend, the ocean isn’t so self-cleaning.

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avatar judi November 12, 2013 at 3:30 pm

And Fletcher wasn’t there. What a surprise.

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avatar micaela porte November 13, 2013 at 7:03 am

sometimes, in the event of world disaster and suffering, like typhoons in the Philippines,etc… I feel ashamed to be living in such a beautiful and safe land/town as San Diego California USA and complaining about it… we’ve got it all, if we manage our resources attentively and don’t sellout to hedonistic tourism and developers….
I also admire all political candidates and dedicated civic volunteers, including SDFP and the OBRag journalistists and activists, who work to help us understand and manage our complex social contract…
thank you

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avatar La Playa Heritage November 13, 2013 at 1:53 pm

Back in 2010, San Diego Sales Tax rate was 8.75%. Currently, in San Diego County the average effective Sales Tax rate is 8.0%, which includes the 7.5% statewide rate plus the 0.5% County-wide TransNet Sales Tax. SANDAG was suppose to put another 0.5% County-wide Sales Tax Increase by 2008. There has been talk of Todd Gloria and/or SANDAG putting a 0.5% Sales Tax Increase on the November 2014 ballot which would be great.

http://www.kpbs.org/audioclips/16172/

Only Four local cities have higher sales tax rates including Vista 8.5%, La Mesa 8.75%, El Cajon 9.0%, and National City 9.0%.

Statewide Sales Tax
8.0% Anaheim
8.225% Fresno
9.0% Long Beach
9.0% Los Angeles
9.0% Oakland
8.5% Sacramento
8.75% San Jose
8.0% Santa Ana
8.75% San Francisco City and County.

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avatar John Lawrence November 15, 2013 at 8:15 pm

I am glad to be living in progressive El Cajon with the highest sales tax in the state. That translates into excellent city services including great parks. Recently, a call to 911 put my beloved in the emergency room in 5 minutes. Excellent service.

On a different note why should San Diegans have free trash pickup? That is the most ridiculous thing of all. Why don’t they outsource that, and then San Diegans would pay, pay, pay.

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