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SD Voters Will Decide On Sales Tax Increase

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Aired 8/5/10

The campaigns are now under way both for and against a potential sales tax increase in the city of San Diego. The City Council voted Wednesday to put the issue on the November ballot. The half-cent increase would also come with a list of financial reforms the city must make.

— The campaigns are now under way both for and against a potential sales tax increase in the city of San Diego. The City Council voted Wednesday to put the issue on the November ballot. The half-cent increase would also come with a list of financial reforms the city must make.

If approved by voters, the sales tax could not be implemented until San Diego completes a series of financial reforms. Those reforms include reducing the city’s retiree health care liability and reducing pension payments. The city auditor was chosen as the person to decide when San Diego can start to collect the tax.

Councilman Tony Young says the tax increase is not the answer to all of the city’s problems, but he says it will solve one of San Diego’s ongoing issues: the structural deficit.

"And that structural deficit that will be ongoing for the next five years is $70 million or more, ongoing, for the next five years. This will address the structural deficit if it does pass," Young said.

If approved, the sales tax increase would last for five years. It would generate more than $100 million annually for the city.

Councilman Carl DeMaio says the measure is misleading and continues a city pattern of asking the public for more money and providing fewer services.

"This ballot measure in essence continues the failed policies of the past, of saying one thing and doing another, of watering down reforms," he said.

The city’s labor unions have come out in support of the tax increase while many in the business community are opposed to it.

But there may be some potential business support. Both the local Chamber of Commerce and the Economic Development Corporation support putting the issue on the ballot, but both say they need to study the final ordinance before deciding whether to support the actual increase.

If the tax is implemented it would expire at the end of 2017 at the latest.

Comments

Avatar for user 'MGLAND'

MGLAND | August 5, 2010 at 8:51 a.m. ― 4 years ago

So far this appears to be a heads you win tails I lose proposition for the taxpayer.
Here is why.

The general fund is being decimated by the annual pension payments. According to the pension system's most recent estimates, the city's pension payment went from $154 million last year to $229 million this year, and it's projected to reach $340 million by 2016 and $508 million by 2025.
"Because pension costs continue to rise faster than revenue, the city ends up cutting its budget each year in order to pay its pension bill.".......aka....Its a Death Spiral
That is what the tax for. It won't be temporary.
If this city council, and the mayor were serious about this they would immediately rescind the prevailing wage ordinance on city contracts. That would cut the cost by up to a third.
Whats not in the "reform" proposal is the elimination of the "defined benefit" model of pensions which puts the taxpayer in the position of having to make up any pensions losses.
Of this years pension payment that is $80 million.
These "reforms" appear to make progress but they do not address the root problem of the defined benefit pension model. The city needs to change (like yesterday!) to a 401K style pension system and public employees take responsibility for their own investments

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