San Diego’s city and county governments continue to face budget shortfalls that have been years in the making. Significant federal spending cuts could make them much worse.
Oddly, both local governments instead could experience revenue windfalls if a bunch of local tax increases being discussed are passed. The odds of that happening might be sketchy, certainly if every tax currently on the table moves forward.
In particular, city voters could be overwhelmed by being asked to dig deeper into their pockets after an array of fee increases — from trash collection to parking to use of recreational facilities — recently kicked in. (Some of the fees, notably for parking in Balboa Park, are now estimated to bring in less than original estimates.)
Then there’s the history of local voters rejecting city and countywide taxes for general government services and transportation.
The city of San Diego already is faced with a growing budget gap of at least a couple of hundred million dollars. But a further threat to its revenue comes by way of a possible ballot measure to repeal the trash pickup fee assessed last year on single-family homes that is being considered by the conservative-leaning Lincoln Club and others.
Support for the trash fee was always tenuous. A 2022 ballot measure allowing the city to charge it was narrowly approved. But the actual fees enacted later turned out to be about twice as much as originally advertised.
The fees were added to property tax bills, and the sticker shock in the fall may have triggered a revolt — and an initiative.
Budget shortfalls typically result in more expensive government services, and fewer of them.
The county last year closed what was a relatively modest shortfall in its multibillion-dollar budget. But this year, the county Board of Supervisors is looking at a potential $300 million gap, largely from federal health and social service cuts and new requirements, among other things.
The county had long been credited by some for its fiscal acumen, while at the same time criticized by others for shortchanging residents on important services. Only in recently years has the county experienced a budget where revenues didn’t cover spending, a change that coincided with Democrats taking over the board majority after decades of Republican control.
The city’s structural budget imbalance goes back a lot longer, under both Republican and Democratic mayors.
Regardless of how they got here, what are they going to do about it? There doesn’t seem to be an appetite to try to cut their way out of the budget situations. The reductions could have significant impacts on services people count on and even the local economy.
There’s a growing realization that the region can no longer rely as much on federal spending, at least in the way it occurred in the past. This means finding more local revenue in addition to belt-tightening.
Unions and other organizations aligned with local elected officials are proposing separate city and county sales tax increases. That raises the obvious question of whether that’s too much for voters to swallow in one election. If they passed, city residents would pay the two tax increases — 1 cent on the dollar for the city and a half-cent for the county. Those living and voting outside the city would face just the half-cent county tax.
The city tax would raise an estimated $400 million annually, while the county measure would bring in $350 million.
In addition to raising money for different governments, the proposals promise to spend it in different ways.
The city tax, pushed by Local 89 of the Laborers’ International Union of North America (LIUNA), limits spending mostly to infrastructure projects like road construction, dams, fire stations and libraries — an approach the union says will be more popular with voters than giving City Hall a blank check, according to David Garrick of The San Diego Union-Tribune.
In theory, that money could free up other funds now spent on infrastructure.
The county tax would go to the struggling social safety net, the Tijuana River Valley sewage crisis and wildfire safety, according to Lucas Robinson of the Union-Tribune. SEIU Local 221, the largest labor union representing county employees, is proposing the tax along with nonprofit organizations.
The developing tax race doesn’t end there.
San Diego City Councilmember Sean Elo-Rivera is proposing a tax on short-term vacation rentals that could amount to thousands of dollars per room, and a levy on second homes that owners aren’t renting out long-term. The potential ballot measure was advanced by a council committee in October.
While the main focus has been on the sales and rental taxes, Robinson noted the county is also seeking authority to raise other taxes that could have big consequences. The county plans to ask the state to let it raise taxes on real estate sales from 55 cents for every $500 in value to $30.55 for every $500.
That would bring in more money, but add to the already high cost of homes in the region.
The county also wants the state to start letting counties levy payroll taxes.
Together, the city and county could face vastly different realities if one of the all-or-none scenarios comes to pass — serious retrenchment, maintaining close to the status quo or even expanding services.
Another prospect is that not all of the cuts materialize — say, the trash fee repeal doesn’t happen — or the field of tax increases thins out, making those that remain more palatable to voters.
Forecasts for local government can be uncertain. This year maybe even more so.
What they said
MeidasTouch (@MeidasTouch).
“Trump posted a photo claiming it shows a bald eagle in the United States killed by a windmill.In reality, the image is of a dead falcon in Israel from 2017.”