Out of Control Policy Blog

San Diego Prop D Promises Reforms, But Only if Taxpayers Cough Up Hundreds of Millions in Taxes

The City of San Diego continues to face significant budget shortfalls, mostly due to years of granting unaffordable public pensions and then compounding things by intentionally underfunding the pension system. The city has placed a measure, Proposition D, on Tuesday's ballot that would authorize a half-sent sales tax increase for five years, provided that the city first satisfies a number of conditions such as agreeing with its labor unions on a management competition guide, which spells out the process by which private firms may compete with city agencies for contracts to provide various government services (note that the city is not required to actually conduct managed competition, just to complete the guide), and implementing several pension reforms.

But, as I noted in a press conference with Councilman Carl DeMaio last month about the Managed Competition Guide that the city and labor unions finally agreed upon recently, the Guide describes a process that is so bureaucratic and slanted toward the unions winning any "competitions" that it would be so costly and time-consuming for private companies to bid for contracts that they probably have no realistic chance of winning anyway, given provisions like a 10% cost advantage to the unions, that few are likely to participate, that it defeats the whole purpose of managed compeition. It has been four years since voters approved the implementation of a managed cometition program, and still the city has failed to deliver a fair and transparent means of achieving the cost savings and other benefits of competition for government services. (See my comments on the Managed Competition Guide here.)

And the pension reforms, while welcome and an improvement over the status quo (although still probably short of what is really needed), should have been made years ago. They should not be a bargaining chip for squeezing taxpayers for more money.

In a recent San Diego Union-Tribune letter to the editor, former councilman Larry Stirling outlines why he and three other former councilman oppose the tax increase measure.

Former San Diego city councilmen Fred Schnaubelt, Bruce Henderson, Bill Mitchell and I are voting “no” on Proposition D. Threats by city staff to cut services if we don’t give them more money is the lingo of street muggers, not responsible public officials. We’ve heard it all before, and we know it’s not necessary.

The city does not need higher taxes. It just needs to do a better job with the millions it is already receiving.

Instead of “cutting” police, fire, libraries, etc., the city has literally scores of efficiency options available. It just takes political backbone – something currently lacking in the City Council majority.

When the voters reject Proposition D, we will be providing the adult supervision so desperately needed at City Hall.

Larry Stirling

In the comments section of the Web page that contains Stirling's letter, libertarian activist and San Diego Tax Fighters chairman Richard Rider likewise describes how the city's political leadership has acted like petulant children and extortionists.

Here's the question I don't believe anyone has posed: After Prop D fails, will our politicians go ahead and aggressively implement the ten "reforms" anyway?

After all, NONE of these conditions need the sales tax revenue to be completed. Indeed, since the sales tax boost would kick in only AFTER the conditions were met, the sales tax money CAN'T be used to complete the conditions. Of course, these conditions SHOULD have been done years ago, but the proponents don't like to talk about that.

So back to my question: After Prop D fails, will our politicians go ahead and aggressively implement the ten "reforms" anyway?

Two possible answers:

1. Yes, the reforms will be aggressively completed anyway, because the city council and mayor care enough to do the right thing. IF they do it right, they would largely eliminate the "need" for their sales tax increase.

2. No, the city council will stop the reforms in a petulant fit -- or more likely, they enact tepid reforms that in total save only a few million a year at most. IF that is the case, then this measure was simple extortion.

Sadly we know how much we can rely on the word of extortionists. And we certainly don't want to pay off extortionists. To do so would only invite more of the same.

By largely burrying their heads in the sand and neglecting their duties to deliver fiscally responsible budgets, the mayor and the majority of the City Council can now hold these reforms over the heads of taxpayers, demanding that they hand over several hundreds of millions of dollars more and trying to scare voters by threatening significant cuts to the most improtant priorities, such as public safety, if they do not get their way.

I suspect that political leaders in state and local governments across the nation are engaging in similar tactics and trying to present this choice to voters in this election (and will do so in future elections as fiscal conditions continue to deteriorate): suck it up and give us more tax money or we'll cut the things most important to you. It is the old Washington Monument syndrome all over again. Hopefully, taxpayers will stand up to these bullies and offer a dose of needed tough love by saying "No!" to tax increases and forcing their elected leaders to deliver responsible budgets appropriate for existing economic conditions.

Adam Summers is Senior Policy Analyst


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