A low-profile state Assembly bill just signed into law is raising concerns that sales tax rates in San Diego County could soon rise from the 8% range toward the 10% and 11% rates seen in Los Angeles County and much of the Bay Area.<\/p>\n
The new law \u2014 AB 2484 \u2014 marks the first time the state Legislature has given a government agency in San Diego County the kind of exemption that other parts of California have used to exceed the statewide 9.25% sales tax cap.<\/p>\n
Local and statewide taxpayer advocacy groups say the law, which would exempt a proposed Metropolitan Transit System sales tax hike from the cap, could open the floodgates to more exemptions in San Diego County.<\/p>\n
Since the cap was first exceeded in 2009 in the Los Angeles suburb of Southgate, it has become routine for the Legislature \u2014 lobbied by local officials \u2014 to approve steadily more exemptions in greater L.A. and the Bay Area.<\/p>\n
\u201cIf the cap is breached in San Diego, the future could look like Los Angeles where no city is below 10%,\u201d said Scott Kaufman, legislative director for the anti-tax Howard Jarvis Taxpayers Association.<\/p>\n
A series of exemptions has allowed the rate in the Los Angeles County desert cities\u00a0of Palmdale and Lancaster to rise to 11.75%, the highest in the nation and 3 percentage points above San Diego County\u2019s highest rate of 8.75%.<\/p>\n
Every city in Alameda County, which includes Oakland and much of the East Bay, has a sales tax rate of at least 10.25%. Other counties where the 9.25% cap has been exceeded include San Mateo, Sonoma, Santa Clara and Contra Costa.<\/p>\n
Two co-authors of AB 2484, San Diego Assemblymembers David Alvarez and Chris Ward, stressed in interviews last week that the law doesn\u2019t put San Diego over the cap; it only allows voters the chance to\u00a0make that choice.<\/p>\n
\u201cIf you can\u2019t make your case, you won\u2019t get the votes,\u201d Alvarez said.<\/p>\n
The two men, both Democrats, said the Legislature hasn\u2019t granted any other local exemptions, so sales tax rates in San Diego County won\u2019t be rising anywhere near 11% anytime soon.<\/p>\n
But Ward also said he believes low sales tax rates come with a compromise. \u201cWe can be glad our rates are lower, but we\u2019re also getting weaker services,\u201d he said.<\/p>\n
He said the survival of quality local transit service will probably depend on the $300 million per year that a\u00a0proposed half-cent sales tax hike would generate for MTS, which is facing annual budget deficits of about $125 million starting in 2030.<\/p>\n
Mark Kersey, chief executive of the San Diego County Taxpayers Association, said he\u2019s worried some local politicians look at raising taxes as the solution to every problem.<\/p>\n
\u201cThere\u2019s definitely a concern when you look at the Bay Area that we could see those kinds of high rates down here,\u201d Kersey said. \u201cI don\u2019t think voters in San Diego are going to be as willing as voters in the Bay Area to do that.\u201d<\/p>\n
Ward said seeking\u00a0the exemption to the cap in AB 2484 wasn\u2019t a case of laying the groundwork for a flood of other exemptions. He said it was essential to allow the proposed MTS half-cent sales tax measure, which is now tentatively slated for the November 2028 ballot, to even be possible.<\/p>\n
Because four of the 10 cities served by MTS \u2014 Chula Vista, National City, Imperial Beach and Lemon Grove \u2014 already have rates of 8.75%, those cities are now only a half-cent below the cap.<\/p>\n
With voters now considering a countywide half-cent sales tax hike to pay primarily for health care and public safety programs, those four cities could already hit\u00a0the 9.25% cap before voters can even consider an MTS hike in two years.<\/p>\n
In addition to next month\u2019s county measure and the MTS measure, the San Diego Association of Governments has discussed asking voters for sales tax increases to pay for transportation projects. A proposed half-cent countywide sales tax hike to fund transportation narrowly failed in 2024.<\/p>\n
And individual cities across the county, including cash-strapped San Diego, frequently discuss possible sales tax measures. Voters in San Diego narrowly rejected a one-cent hike two years ago.<\/p>\n
Ward said local sales tax hikes can be true game changers because all the money stays local. Of the state\u2019s base sales tax rate of 7.25%, most of the money goes to Sacramento, and only one cent on the dollar stays local.<\/p>\n
When a city approves a local one-cent hike, all the additional money stays local \u2014 essentially doubling sales tax revenue in that city.<\/p>\n
Ward said having lower sales tax rates also forces government agencies in San Diego to miss out on some statewide programs that require matching funds.<\/p>\n
But Ward and Alvarez agreed that the timing for proposed sales tax increases is not great amid ongoing cost-of-living concerns caused by inflation and rising fees for nearly everything.<\/p>\n
To Kersey, such concerns make a slew of sales tax increase proposals over the next few years a very bad idea.<\/p>\n
The sales tax rate everywhere in San Diego County is at least 7.75% \u2014 the state rate of 7.25% plus the half-cent countywide Transnet surcharge to pay for transportation projects.<\/p>\n
Voters in six of the county\u2019s 18 cities have never approved an increase beyond 7.75% \u2014 San Diego, Carlsbad, Encinitas, Poway, Santee and Coronado. Santee voters are considering<\/a> a one-cent sales tax hike this fall.<\/p>\n