City Council Finalizing Sales Tax/Reform Proposal
Tuesday, August 3, 2010
What issues need to be worked out before the City Council's scheduled Wednesday vote on a sales tax increase/financial reform package for San Diego? We speak to Metro Reporter Katie Orr about the latest news on the council's efforts to craft a ballot measure before Friday's deadline.
MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. The work continues at San Diego City Hall to hammer out a financial reform package that includes a sales tax increase to go on the November ballot. The deadline to place measures on the ballot is this Friday, and members of the council are working with the city attorney to create the correct ballot language. Time is short, the stakes are high and the city council has to hold onto every ‘yes’ vote for the reform package to have a shot at approval later this week. Joining us with an update on where the city council is now in the process of creating this ballot measure is my guest KPBS metro reporter Katie Orr. Good morning, Katie.
KATIE ORR (KPBS Metro Reporter): Good morning, Maureen.
CAVANAUGH: Now the last time we heard, when we left this off last week, we heard that the city council was going to have a meeting scheduled for Monday…
CAVANAUGH: …where they would be voting on a proposal to put the sales tax increase and a financial reform package on the November ballot. But that didn’t happen yesterday.
ORR: No, and at Friday’s meeting they said that it might not. What they’re doing is crafting a pretty complicated ballot measure. It, you know, has all these reforms. They have to be implemented before the tax can go into effect. And so the city attorney was saying, you know, this is – we’re on new ground. This is very complicated. It’s going to take us some time. And so what they really did on Monday was just sort of check in with him and see where he is, and now they’re going to meet again on Wednesday to, hopefully, approve the final measure. And they did have some talks, well, we’ll come back on Wednesday, we’ll show you what you have, if you want us to tweak it, we can. Maybe we can meet on Thursday. You know, so they’re really pushing this to the last minute. But whereas normally the city attorney might have, you know, weeks or months to craft something, he’s really doing it over the weekend so they’re working on a pretty accelerated timetable.
CAVANAUGH: Do we know the key elements of how this financial reform package is being developed?
ORR: Well, it’s sort of bringing together all of the things that San Diego has been dealing with over the past couple of years, implementing managed competition, reducing the pension costs, reducing the retiree healthcare liability, things like even privatizing the Miramar Landfill, reforms that people have talked about before but have never really gotten off the ground. They’re tying that to this sales tax increase. And what would happen is that all 10 of these reforms, I believe it is now, would have to be implemented before the sales tax could take effect.
CAVANAUGH: And who or what entity is going to decide if those financial milestones have been met in order for the sales tax increase to kick in?
ORR: Well, that was a bit of contention. Before when Council members Donna Frye and Todd Gloria proposed this new measure, they had said that a panel of three retired judges would decide and the city attorney said, no, you can’t do that, you can’t delegate your authority to someone outside of the government. Now it’s looking like the city auditor might do that and, you know, maybe the council would have to approve the auditor’s findings, but it would stay within the city.
CAVANAUGH: Now do we have any idea how much money the city’s actually going to be able to generate if, indeed, this half-cent sales tax is approved by voters and if it kicks in after the reforms have been satisfied?
ORR: It’s estimated that it’ll generate about $103 million a year for the city, you know, which could be a substantial amount of money given the deficits. You know, the projected deficit next year is $72 million, around there, keeping in mind that’s sort of a moving target. But, you know, critics of this tax would say, listen, this doesn’t even cover the city’s pension costs. The pension costs are skyrocketing every year and, you know, that whole $100 million could go into paying in the pension. Now, supporters of the tax say, no, it won’t. It will go to cover service cuts, it’ll go to fire and police. But, really, it goes into the general fund because they cannot specify it to go towards a specific use unless they get a two-thirds majority which is, they say, too hard. So if you go for a simple majority vote, it goes into the general fund and, you know, it makes the pot bigger but that pot goes toward a lot of things.
CAVANAUGH: I don’t – I want to ask you this question. I don’t know if you know, but it’s just occurred to me now. As they fashion this ballot language for this ballot measure, are all of the reforms going to be part of the actual measure that we see on the ballot? I mean, is it going to say a half-cent sales tax increase if these things are satisfied, and list the things?
ORR: I believe it will. And that’s what made it so complicated before. The city attorney said putting the reforms before the measure makes it less complicated. Previously, there was a couple of reforms that came before and then once the tax is implemented some reforms had to be made after, essentially giving it two triggers. And he was saying you can’t do that. But, yes, I believe it would be listed on the ballot and you would see all of the reforms that need to happen before the sales tax can be implemented.
CAVANAUGH: Mayor Sanders has voiced his support for this idea and said he will campaign for this measure of reforms and sales tax if the council approves it. Why is the mayor’s backing so important?
ORR: Well, the mayor is a Republican and with his support it gives the measure that compromise appeal. You know, the Democrats are primarily supporting it now, the mayor comes in with his backing, and, I mean, he will hope to bring some of the business community aboard. So it does, it gives it that air of compromise. You know, the council’s two Republican members, Kevin Faulconer and Carl DeMaio, did not support this. So it just – it lends it this air of credibility that the mayor’s here and saying, listen, you know, I don’t support a tax increase but it comes along with these reforms that I think are important and the city needs to step up and the people of the city need to play a role in fixing the financial problems of San Diego.
CAVANAUGH: There’s another issue that’s sort of complicating life at city hall these days and that is the mayor says he will – he’s vetoed the council’s approval of a ballot measure asking voters if the city should build a new city hall. Now does that mean the mayor has changed his mind about the city hall proposal?
ORR: No. The mayor says he did not want to veto that – the council’s actions but the developer, Gerding Edlen, of the city hall project and some of the important city hall project backers came to him and said, listen, we do not have enough time to mount a campaign in favor of this project. They said normally it can take up to six months for them to get a campaign like that going, and they just said if – they think if it went on the ballot now, it would fail. And, you know, it’s also complicating that we have the sales tax increase on the ballot. I believe the school parcel tax is on the ballot. So it’s a lot to ask voters for in one election and they just were not confident that it would pass. So the mayor said he reluctantly vetoed the project. He still is a big believer in the project and he says he thinks in the long run a new city hall will save San Diego money.
CAVANAUGH: I remember reading at the time that the city hall measure was voted onto the ballot that the city council, some members of the city council, said we should just approve this ourselves, we don’t have to bring it to the voters. So is that something that they may revisit as a council?
ORR: Yeah, and that is true. They chose to put it before the public, a public vote, and for some city council members that was really important. They wanted the public to have a chance. You know, it’s the public’s money. It’s about $300 million. They wanted the public to have a chance to say yes or no. Now that it’s not on the ballot, it doesn’t look like the council is going to move to put it on the ballot. They’re not going to override the mayor’s veto. It’s not docketed for tomorrow’s meeting, so they won’t take it up. And, you know, after this is all done, after the sales tax is put to rest or, you know, put on the ballot, they could go back and, if they have the votes, approve it themselves.
CAVANAUGH: Now what is scheduled to happen at tomorrow’s big meeting?
ORR: So tomorrow the city attorney’s going to come back. He’s going to present his refined ballot language and they’ll vote on it. They need six votes. They have been – the Democrats have been pretty deferential to council members Sherri Lightner and Tony Young. They seem to be the swing votes in this. And they seem to be willing to make any compromises, you know, to a point that these members want. So they’ll vote on it tomorrow and if they are happy with what the city attorney has presented them, they could vote to put it on the ballot. If they think it could need some more tweaking, well, I guess they have up until Friday to keep doing those.
CAVANAUGH: To get – Yeah, because that is the deadline.
ORR: That’s the deadline.
CAVANAUGH: Now, you were talking about how quickly all of this has gotten together and people are trying to get on the ballot and make the ballot language legal and all of that. And that, the pressure, comes from this really sort of remarkable city council meeting that happened last week where a lot of the economic problems that the city is facing were outlined by a number of speakers and council members. What kind of risks does the city face if the council doesn’t come to an agreement on this package of cutting costs and increasing revenue?
ORR: Well, they were really painting a pretty dire picture. They were saying, listen, if we don’t get more revenue – and, you know, keep in mind that even if this sales tax increase doesn’t go forward, they can still make these reforms. You know, they don’t have to have a sales tax increase to do these. So, you know, but they were saying if nothing changes, if we don’t get any new reforms, the city is going to be in really drastic straits and, you know, they always go to the public safety and they said, you know, 20 more – they would have to shut down 20 fire stations in the city, roughly half the city’s fire stations, and they would have to lay off 700 police officers to try and make up the budget deficit for next year because 50% of the general fund goes toward public safety. So because it makes up such a large percentage, that’s really where you have to cut to get the most savings. So they were saying if we don’t get any more revenue in one way or another, we could really be facing some drastic public safety issues in the future.
CAVANAUGH: Do we know why the two Republican members, Carl DeMaio and Kevin Faulconer, are opposed to what seems to be trying – they’re trying to reach a compromise, nonpartisan agreement here. What is the opposition?
ORR: Well, these two council members say that there really aren’t a lot of reforms in this proposal. They say there are no guarantees that these reforms have to be made. You know, it’s really up to someone to just look and say, okay, the city’s made substantial progress on this, we feel like we can implement the tax now. You know, they wanted guarantees of certain things in the proposal. They say there’s no guarantee that the tax would sunset after five years; it’s supposed to be five years. They say, though, it’s not written in there that it has to. And they feel like the city has not made enough effort at reforming without the tax increase. They think there’s more that we can do before we go and ask people for money.
CAVANAUGH: Okay, so if the council does approve the sales tax increase financial reform package, what are the next steps in this process?
ORR: Well, if they approve it, it’ll go on the ballot and then the campaign begins. Mayor Sanders says he will work to make sure that people understand the absolute need for this tax. And then Councilman Carl DeMaio says he will campaign with his own money against the sales tax. You know, it’s funny. It got pretty heated. People were getting very emotional at this meeting. It really comes down to people’s beliefs, you know, reform versus revenue, taxes, all of these things. And so it looks like we’re in for a pretty spirited campaign, I’d say, if it does, indeed, get placed on the ballot.
CAVANAUGH: Are we looking at perhaps this same kind of fireworks tomorrow during the vote?
ORR: Well, you know, I don’t know. I think that the opposition will continue to make their voices heard but I think it seems at this point they’ve worked with people that they – like Sherri Lightner and Tony Young to get their support so unless there’s like a drastic change in the measure or they’re really unhappy, I don’t think it’ll be as dramatic as meetings we’ve seen in the past because it seems like they’ve been working on this and people know what to expect but I definitely think we’ll continue to hear from the opposition at these meetings.
CAVANAUGH: Now when does the meeting take place just in case our audience wants to attend?
ORR: I believe it takes place at nine o’clock tomorrow morning at the city hall downtown.
CAVANAUGH: Okay. All right. Thank you, Katie.
ORR: Thank you.
CAVANAUGH: Thanks very much.
ORR: Thank you.
CAVANAUGH: That’s KPBS metro reporter Katie Orr. If you’d like to comment, please go online, KPBS.org/thesedays. Coming up, a diagnosis of what’s gone wrong with state government from the author of the book “Calfornia Crackup.” That’s as These Days continues here on KPBS.