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Debate Begins Over Where Sales Tax Money Would Go

Audio

Aired 8/6/10

The debate over whether San Diego should raise its sales tax is heating up. There's disagreement over what the new revenue would be spent on.

— The debate over whether San Diego should raise its sales tax is heating up. There's disagreement over what the new revenue would be spent on.

San Diego Mayor Jerry Sanders said revenue from the proposed half-cent sales tax would fix San Diego's structural deficit and restore cuts to public safety.

It's estimated the tax would generate more than $100 million a year, but the money would go into the city's general fund and couldn't be earmarked. Critics say a lot of it will go toward the city's multi-million dollar pension debt. Sanders said the pension situation is easing.

"We've seen good returns to the pension system this year, which you average out over a four year period," he said. "With every year that we don't have a pay raise that knocks more money off the unfunded liability."

Sander said changes to city retirement plans will also help.

But the organization that manages the city's pension doesn't anticipate payments going down. The amount for Fiscal Year 2012 is about $255 million. Councilman Carl DeMaio said the sales tax increase would get sucked into covering that.

"There are no guarantees of reform and there's no guarantee that our neighborhood services will receive any of these monies," he said. "What is guaranteed is that you'll have a tax increase and what is guaranteed is that the pension system payment will continue to go up."

The tax increase could not be implemented until the city completes a series of fiscal reforms. Supporters of the tax say it provides incentive to fix the city's finances and provides quick cash that the city needs.

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