A pair of proposed San Diego tax increases that supporters say could raise $130 million a year for flood prevention and $400 million annually for general city expenses took a key step toward the November ballot this week.
The City Council’s Rules Committee hammered out details of both measures June 5 and unanimously forwarded each to the full council for a vote this summer on whether to place them on the ballot.
The flood-prevention measure would be a parcel tax on properties based on the square footage that is developed or paved. The median monthly cost would be $18.67 for single-family properties and $145.44 for others.
City officials said they’ve written the measure to require approval from only 55 percent of city voters instead of two-thirds, provided California voters also approve a statewide measure in November to lower approval thresholds for some tax measures.
The general-revenue measure would be a 1-percentage-point city sales tax increase that would raise the tax from 7.75 percent to 8.75 percent and possibly double the sales tax revenue San Diego receives annually — from $400 million now to a projected $800 million under the measure.
Council members said both measures have the potential to dramatically improve the city’s finances and residents’ quality of life.
But critics of the flood-prevention measure say the proposed tax rate would be nearly triple what Los Angeles County charges under a similar measure.
And critics of the sales tax measure said San Diego officials lack the track record and credibility to be given another $400 million a year to spend with no restrictions.
City officials are proposing a parcel tax of 7 cents per square foot of impermeable or paved-over property — much more than the 2.5 cents per square foot that L.A. County charges.
San Diego Councilman Joe LaCava said the proposed parcel tax strikes the right balance between flood prevention and enabling property owners to reduce their costs with moves like replacing paved areas with natural terrain that better absorbs stormwater, reducing the flow into the city’s storm channels.
San Diego’s goal, according to Brendan Dentino, policy director for City Council President Sean Elo-Rivera, is solving the city’s estimated $1.6 billion backlog of flood prevention and stormwater projects within 10 years.
“We are proposing a real solution to a chronic problem,” Dentino told the Rules Committee. “This is not a half measure.”
Business leaders said the proposed rate is too high.
“We’re concerned about the cost burden that the 7 cents could put on businesses and employees,” said Evan Strawn, a policy adviser for the San Diego Regional Chamber of Commerce.
Jack Monger, chief executive for a consortium of industrial businesses called the Industrial Environmental Association, said the city should consider starting at 4 cents per square foot and slowly increasing to 7 cents.
He said the city’s proposal would cost owners of a typical 25-acre industrial property $75,000 per year. Monger also wanted more details on exemptions, credits and rebates that businesses could secure.
Dentino said city officials plan to create detailed plans for exemptions, credits and rebates after voters approve the measure.
Using the 2018 Los Angeles County flood-prevention measure as an example, Dentino said San Diego would flesh out policy details in an “implementation ordinance” the council would create once voters have approved the measure.
If those details were included in the ballot measure, it would force the city to go back to voters every time they wanted to make a small change.
Dentino said the relatively lengthy process city officials envision would delay collection of revenue under the new parcel tax until at least the 2026 fiscal year.
The tax wouldn’t apply to parcels already exempt from property tax, such as churches, schools, government sites and property owned by nonprofits. The city also plans to exempt low-income senior citizens, Dentino said.
The possibility of having to meet only a 55 percent approval threshold comes from Assembly Constitutional Amendment 1, a measure the state Legislature placed on the November ballot. That would reduce the requirement from two-thirds to 55 percent for tax measures that meet specific guidelines.
For the city’s parcel tax to qualify, it must devote revenue only to flood prevention and stormwater infrastructure projects — not city operations or maintenance of existing projects.
Elo-Rivera said he expects the city to have enough additional revenue from the sales tax measure to cover operations and maintenance of flood prevention and stormwater infrastructure, while the parcel tax would cover creation and renovation of such infrastructure.
He said the proposed parcel tax, which was prompted partly by flooding in January that left more than 1,000 San Diego residents homeless, would be huge for the city.
“This measure will be transformative in terms of how we experience the city,” Elo-Rivera said. “With cleaner water, our beaches will be closed fewer days.”
Residents also would be able to focus less on the potential for floods and enjoy local flood channels that are greener and more natural like parks, he added.
LaCava said city officials have neglected flood prevention for decades primarily because it’s not visible enough.
“It never rises to the level that a park or a new library or a fire station does,” he said. “Those are tangible impacts. Stormwater is always left behind.”
On the sales tax measure, city officials said a poll of 400 likely voters May 1-5 showed 58 percent support, above the simple majority required. The poll presented voters with this question:
“To repair neighborhood streets and sidewalks, update police, fire protection, paramedic and 911 equipment and facilities, improve parks and libraries, provide enhanced citywide infrastructure and deliver general city services, shall the measure enacting a 1-cent sales tax be adopted, generating approximately $400,000,000 per year until ended by voters, requiring citizen oversight and independent audits, with all funds staying in the city of San Diego?”
But the people polled weren’t presented with any potential opposition arguments.
The San Diego County Taxpayers Association has said it will oppose the sales tax measure because it doesn’t include a sunset clause requiring it to be presented to voters again to continue beyond a certain number of years.
Critics have said the proposal is ill-timed because residents already face inflation, high housing costs and rising energy bills. They also raised concerns about what they call the city’s record of mismanagement.
Councilwoman Vivian Moreno, who was part of the 5-0 vote June 5 to move the measure forward, said some of those concerns are valid.
“If we expect this tax to pass, we absolutely need to build trust,” she said. She specifically mentioned the multiyear scandal over the city’s purchase of an unusable skyscraper filled with asbestos on Ash Street.
Moreno also raised concerns about a countywide half-percentage-point sales tax increase that has already qualified for the November ballot.
“Asking voters to approve multiple sales tax increases in the same election is perhaps asking for too much,” she said.
Elo-Rivera said the city sales tax measure would give San Diego enough money to deal with problems such as crumbling roads and failing pipes proactively instead of during a crisis, when it generally would cost more.
“I think of it as us having some financial might,” he said.
Some critics have said the city could spend much of the new revenue on employee pay raises, not infrastructure projects and road paving.
Staff members for Mayor Todd Gloria and Councilman Raul Campillo, who are jointly spearheading the sales tax measure, said the city likely would sell revenue bonds to raise immediate capital for infrastructure projects and paving.
They said a bond based on half the projected new revenue — $200 million — would raise about $2.5 billion in immediate capital. A bond covering all the new revenue would raise about $5 billion.
