Daily Business Report — Proposition D Debate

Sales Tax Hike Ballot Measure

Voters in the city of San Diego will vote on Proposition D on the Nov. 2 general election ballot, a measure the proponents are calling the “Financial Reform Ballot Measure.” The sales tax paid on purchases of goods and services in the city will increase by half-a-cent if voters approve the ballot measure. The new, increased tax would be 9.25 cents. The half-cent hike would be in effect for five years and would generate about $103 million/year in increased tax revenue for the city. The sales tax hike is conditional on a package of financial reforms. San Diego’s city auditor will be required to certify that 10 fiscal reform measures have been implemented before the tax could go into effect. A simple majority vote is required for approval. San Diego Metropolitan Magazine asked a Proposition D supporter, Councilwoman Donna Frye, and an opponent, Councilman Carl DeMaio, to argue their positions on the measure.

Temporary Tax, Permanent Solution: By Councilwoman Donna Frye, District 6

After close to a decade on the City Council, I have spent great deal of time listening to the members of the San Diego community — their hopes, their worries, their anger and their ideas. So it was incredibly gratifying to me to have, in my final months in this office, an opportunity to respond to years of public input with a ballot measure I believe comprehensively addresses the needs and concerns of San Diego citizens.

While citizens often make positive comments about a city employee who works in their community, I certainly have never heard you complain that their services were too extensive. You never say your libraries are open too long. You don’t complain that that you roads are too smooth, or that police patrolling your neighborhoods aren’t spending their time well.

Instead, you tell me that you value your neighborhood parks and recreation centers, and you’re disappointed in the cutbacks in programs that represent constructive, healthy activities for kids in your community.

You tell me that you do not want to see your libraries closed any more than they already are.

You say you want more community policing and code enforcement, and that you worry about how long it will take an EMT to reach your home when you call 911.

You’re tired of driving on roads riddled with potholes and walking on cracked and broken sidewalks.

If I just heard you asking for more from us on the service side, I might have voted to put a sales tax measure on the ballot without first requiring reforms. But I didn’t, because you had a few other messages for me and my fellow city leaders.

You told us you want the pension problems fixed, costly perks eliminated, and our benefits to be more like those in the private sector.

You want managed competition fully implemented and for our workforce to become more efficient.

You want us to think differently about how we do business, to live within our means, and to solve our ever-present budget problem without causing you more problems.

You want us to set aside partisan politics, stop the blame game and put an end to costly court battles.

You want public safety services restored and more neighborhood code enforcement and policing.

And while you appreciate the $150 million in reforms and the $180 million in budget reductions that have already been made, you want permanent reforms that solve the problem.

We have the opportunity, with Prop D’s requirement of reforms before revenue, to solve our structural deficit once and for all – a feat that has eluded this city for decades, but that should by no means be considered impossible.

Prop D is a reasonable and workable solution that will allow the city’s problems to be solved by everyone working together on a defined set of reforms, rather than continuing on the same path of endless deficits and ongoing cuts to critical city services.

You’ve told us you wanted your leaders to show you a way out of the  city’s chronic fiscal woes and endless service cuts.  Prop D is that solution. Vote yes.

No on Prop. D: A Blank Check Tax Increase: By Councilman Carl DeMaio, District 5

This November voters will be asked to vote on Prop. D, which would authorize a five year half-a-billion-dollar tax increase for the city of San Diego.

City politicians and labor unions — the same individuals who have created the city’s financial problems and fought fiscal reforms for years — are backing Prop. D.  They claim you should trust them with more money or they will cut your services.

In contrast, leading taxpayer advocates and government watchdogs all oppose Prop. D for many reasons — and we urge you to vote No on Prop. D on election day.

First and foremost, Prop. D gives city politicians a “blank check” tax increase with no guarantees on how the money would be spent.

In this regard Prop. D is one of the most misleading propositions to make the ballot. While Prop. D is being sold by city politicians and city labor unions as “restoring” vital city services, not a penny of the increased tax is earmarked for important programs such as police and fire services.

To the contrary, with the city’s annual pension payment increasing dramatically each year, you can expect increased tax revenues to be diverted to the city’s financially-troubled pension system rather than to restore city services.

The pension and retiree health care funds are more than $3.4 billion in debt — and the true annual cost of retirement benefits last year was more than $370 million — or roughly two-thirds of city payroll.

These costs are driven by unaffordable pension benefit packages awarded to city government employees over the years — a problem that Prop. D fails to solve. Each week taxpayers hear examples of city employees receiving outrageous pension payments – in many cases earning more in retirement than they did while working for taxpayers.

City employees can retire as early as age 50, can “double-dip” by receiving their full salary and a full pension allowance during the last five years of their city service, and receive free taxpayer funded health care for life — among other perks that you will be hard-pressed to find anywhere but our city government.

San Diegans do not receive these lavish benefit packages, but under Prop. D they are now being asked to pay more during an historic economic downturn to pay the bill for them.

In this regard, Prop. D is essentially a “pension tax” that will be used to service unaffordable pensions and benefits granted to city employees over the years. In short, without concrete and proven reforms in place, raising taxes under Prop. D would be throwing good money after bad.

Understanding that voters are disgusted by this waste and the lack of progress on fiscal reform in city government, Prop. D’s proponents shamefully tout “reforms” as part of their ballot arguments to convince voters to approve the tax increase.

However, Prop. D does not require that any financial reforms actually be implemented. Moreover, several of the “conditions” included in Prop. D are weak and outright misleading.

In one case, voters are presented with a classic “bait and switch” reform that claims to require city politicians to pay for the full cost of their pensions, when in fact Prop. D grandfathers in the largest taxpayer subsidy for the cost of pensions for city politicians.

In another case — managed competition — Prop D gives only the illusion of reform. In fact, under Prop D no managed competitions actually have to occur let alone any outsourcing of city functions. All that Prop D requires for competitive bidding is that a “guide book” be published — just another bureaucratic document that produces no change and no savings for taxpayers.

City politicians know that the “conditions” in Prop. D are simply provided to help sell a tax increase to voters. That’s why Prop. D contains no concrete targets for actually saving money for city taxpayers.

Without concrete guarantees that fiscal reforms will be implemented, the city of San Diego will continue to waste millions of taxpayer dollars each year. And without reform, it won’t be long before city leaders are back again asking for more money with another tax increase.

Finally, Prop. D’s tax increase comes at the worst time for our struggling working families and small businesses. I hear every day from working families that are struggling just to make ends meet. These families are looking for ways to cut expenses, prioritizing their budget and working harder than ever before to survive.

With Prop. D, city politicians are behaving much like an alcoholic who asks friends and family for some money to pay “rent” with the promise of going sober.  Taxpayers deserve better.

The only way for voters to force city leaders into a true recovery program is to reject Prop. D at the ballot box.