San Diego Sales Tax and Financial Reform Package, Proposition D (November 2010)
Supporters of the sales tax increase called it the Financial Reform Ballot Measure.
The sales tax paid on purchases of goods and services in the city would have increased by half-a-cent if voters had approved Proposition D. The new, increased, tax would have been 9.25 cents. The half-cent hike would have been in effect for five years and would have generated about $103 million/year in increased tax revenue for the city.
The sales tax hike was conditional on a package of financial reforms. San Diego's city auditor would have been required to certify that 10 fiscal reform measures have been implemented before the tax would have been allowed to go into effect.
The competing campaigns for and against Proposition D cumulatively spent close to $1 million.
According to the San Diego Union-Tribune, the defeat of Proposition D "continue[s] a pattern of labor unions losing city ballot initiatives over the past decade, a period in which public anger over guaranteed pensions for public workers has reached a crescendo." City councilman Carl DeMaio, an opponent of Prop D, said, "The public is a lot smarter than the labor unions think. You can’t throw up a bunch of ads saying that if you don’t raise your taxes the world will swallow your house whole and have any credibility, particularly when people know in San Diego about the full extent of the pension crisis."
Election results are from the San Diego County elections division as of November 26, 2010.
A simple majority vote was required for approval.
Text of measure
The question on the ballot:
|Proposition D: IF FINANCIAL REFORM CONDITIONS ARE MET, AUTHORIZES TEMPORARY ONE-HALF CENT SALES TAX. To help offset severe state cuts and help restore essential services, including police, fire and street resurfacing, shall the City of San Diego enact a temporary one-half cent sales tax for up to five years, only if the independent City Auditor certifies conditions have been met, including pension reforms and managed competition?|
- City Councilwoman Donna Frye was a leading sponsor of and spokesperson for the sales tax increase.
- Mayor Jerry Sanders endorsed the sales tax hike. He said it "clears the final obstacles to our reform agenda."
- Brian R. Marvel, President, San Diego Police Officers Association
- Frank De Clercq, President, San Diego City Firefighters
- Mel Katz, Former Chair, San Diego Regional Chamber of Commerce, Chair, San Diego Public Library Foundation
Arguments in favor
Supporters of Proposition D made these arguments:
- "Revenue from Proposition D will help maintain and restore essential City services such as fire, paramedic, police, library hours and pothole repair, end fire station brownouts, and help improve 911 emergency response times."
- "By law, funds from this temporary five-year measure can only be collected after the independent City Auditor verifies the City has initiated 10 financial and pension reforms that can produce hundreds of millions of dollars in savings."
- "City budget cuts totaling over $180 million have led to rolling brownouts at fire stations, delays in 911 emergency response times, and loss of nearly 200 police, fire and paramedic positions."
- "San Diego still faces an ongoing budget deficit of over $70 million next year – caused in part by Sacramento seizing tens of millions of local tax dollars. By law, Proposition D’s funds cannot be taken by Sacramento."
- "Because of the risk of further drastic service cuts, public employee unions are offering historic concessions. Implementing Proposition D reforms could reduce pension and healthcare liabilities by up to $500 million and reduce taxpayer costs for pension and retiree healthcare by up to $50 million annually."
- "Longtime adversaries – Mayor Jerry Sanders and Councilmember Donna Frye – along with firefighters, police, business and labor leaders concerned about protecting public safety, jobs and our economy, support Proposition D because it is the most fiscally responsible and realistic alternative to avoid further devastating cuts in public safety and other essential services."
Opponents of Proposition D include:
- City council member Carl DeMaio: "This ballot measure, in essence, is the failed politics of the past. Of saying one thing and doing another. Of watering down reforms."
- San Diego County Taxpayers Association
- T.J. Zane, Chair, San Diegans Against Government Waste
- April Boling, CPA, Former Chair, Pension Reform Committee
- Kevin Faulconer, Chair, City Audit Committee
- Lani Lutar, President and CEO, San Diego County Taxpayers Association
- Steve Francis, co-founder of AMN Healthcare and a former candidate for mayor of San Diego.
- List of opponents from "No on D" campaign website
Opponents of Proposition D made these arguments:
- "Prop D does NOT include the fiscal reforms taxpayers deserve to end millions in wasteful spending each year in the city’s budget."
- "Prop D allows the city to continue to offer unaffordable pension benefits for city employees – and allows city politicians to continue receiving the biggest taxpayer subsidy for their personal pensions."
- "Not one penny of this tax is dedicated to pay for police, fire and other vital city services. Politicians can spend this money any way they want!"
- "As pension costs keep increasing in the city budget, more and more tax money will be diverted to the pension system to bailout politicians."
- "Prop D lists several weak, meaningless and deceptive conditions that will be quickly used to trigger this sales tax."
- "Prop D does not require implementation of competitive bidding – something voters overwhelmingly approved four years ago but politicians and unions have resisted. Prop D continues the practice of ignoring the will of the people."
- "Prop D makes everything more expensive for city residents."
- See also: Polls, 2010 ballot measures
|Date of Poll||Pollster||Support||Oppose||Undecided||Number polled|
|October 5-7, 2010||SurveyUSA for ABC 10||29%||48%||23%||577|
The financial reforms that would have had to be implemented before the tax could have gone into effect are:
- End city pension pick-up costs for employees, and a benefit that picks up part of the pension contributions for elected officials and unrepresented employees. An analysis by the "Voice of San Diego" published in August 2010 says that the savings to the city from this reform are "Approximately $4.8 million in the day-to-day operating budget if all pickups were eliminated."
- Reach agreement with labor unions over how to conduct the voter-approved managed competition program. An analysis by the "Voice of San Diego" says that the savings to the city from this reform are "Savings depends on departments targeted and the bids the city receives after negotiations are complete. The reform alone doesn't guarantee any savings."
- Complete a cost neutrality study of the Deferred Retirement Option Program benefit. An analysis by the "Voice of San Diego" says that the savings to the city from this reform are "Unknown. If the study shows the program costs money, savings would come after negotiations to reduce those costs."
- Solicit bids for the outsourcing of the Miramar Landfill. An analysis by the "Voice of San Diego" says that the savings to the city from this reform are "Savings depends on whether the city asks for bids, what those bids are and if privatization occurs. The reform alone doesn't guarantee any savings."
- Eliminating terminal leave for city employees. An analysis by the "Voice of San Diego" says that the savings to the city from this reform are "Unknown. Depends on when it's implemented and how much leave employees have."
- Lower retiree health care costs. An analysis by the "Voice of San Diego" says that the savings to the city from this reform are "Unknown. Depends on bargaining."
- Bid out some information technology services. An analysis by the "Voice of San Diego" says that the savings to the city from this reform are "Savings depend on the bids the city receives and if the city decides to privatize. The reform alone doesn't guarantee any savings."
- Create a second-tier pension plan for firefighters. An analysis by the "Voice of San Diego" published in August 2010 says that the savings to the city from this reform are "City officials estimate the reduced pension plans already implemented will save $20 million annually in 20 years when new hires begin to retire. A new plan for firefighters would add incrementally to that savings."
- Start a voluntary 401(k)-style pension plan for employees. An analysis by the "Voice of San Diego" published in August 2010 says that the savings to the city from this reform are "Unknown. Depends on the plan's terms, the number of employees who enter it and IRS approval."
Path to the ballot
The vote on the San Diego City Council to place the sales tax increase on the ballot was 6-2.
The vote on the city council split on party lines.
All six Democratic city council members voted in favor of the sales tax increase, while the council's two Republicans, Carl DeMaio and Kevin Faulconer, voted against the sales tax increase.
Rider/Cicero lawsuit to remove
Richard Rider and Stephen Cicero, opponents of Proposition D, filed a lawsuit on August 19 seeking to have Proposition D removed from the ballot. The lawsuit alleges that Prop D should not be on the ballot because:
- It violates the single-subject rule.
- It gives voters administrative powers, contrary to limits that have been placed on ballot measures disallowing their use for administration.
- It delegates legislative power to the city auditor.
- It is too vague.
- The ballot title and summary are false.
Richard Rider, head of San Diego Tax Fighters, is a plaintiff in the lawsuit. He said, "[Proposition D] is a con job. It's outright extortion and it really irritates me to no end."
Rider/Cicero lawsuit fails
San Diego Superior Court Judge David Oberholtzer ruled on August 27 that Proposition D can stay on the ballot. Oberholtzer said that contrary to the claims of the lawsuit, Proposition D is not misleading to an informed voter.
Boling lawsuit to remove
On August 25, April Boling filed a lawsuit seeking to have Proposition D removed from the ballot.
Boling's lawsuit says that the fiscal impact analysis prepared for Proposition D is "not impartial, not accurate and misleads the public."
- Website of the "No on Proposition D" campaign
- Website of the "Yes on Proposition D" campaign. (As of August 22, this website is not live, but it is the website that is listed in the official ballot pamphlet materials as the website of the "Yes on Proposition D" campaign.)
- Official ballot arguments in favor of Proposition D
- Official ballot arguments opposing Proposition D
- Local November 2, 2010 ballot propositions in San Diego County
- Ballot Savings Not Wrong, But Not Right, Says Analyst
- Where's the love for Proposition D?
- Giving back the ballot measure's savings
- The Two Big Ones
- City Hall facing challenges of sales-tax reform
- Parsing Proposition D’s fine print
- Public Safety Cuts Likely If Proposition D Falls
- Proposition D Supporters Making Big Last Minute Changes
- New Recommendations are Not a Change to Ballot Measure
- Council, Mayor Endorse Last Minute Proposition D Makeover
- Mayor's office again warns of cuts if Proposition D fails
- Fact check on Prop D
- ↑ 1.0 1.1 1.2 NBC San Diego, "Council Approves Sales Tax Ballot Measure", August 4, 2010
- ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 Voice of San Diego, "Breaking Down the Financial Reform Ballot Measure", August 12, 2010
- ↑ 3.0 3.1 La Jolla Light, "Half-cent sales tax incease likely to be on ballot", July 30, 2010
- ↑ 4.0 4.1 4.2 San Diego Union Tribune, "Who funded the pro and con Proposition D campaigns?", December 4, 2010
- ↑ 5.0 5.1 Voice of San Diego, "Business Groups Still Wary of Ballot Measure", August 3, 2010
- ↑ San Diego Union-Tribune, "No on D: City must confront pension problem head-on", October 24, 2010
- ↑ Voice of San Diego, "Sales Tax Could Come Down to Lightner", July 22, 2010
- ↑ Mission Times Courier, "Judge Throws Out Proposition D Lawsuit", September 3, 2010
- ↑ 9.0 9.1 Voice of San Diego, "Opening Lawsuit Calls Proposition D 'Frankenstein Proposition'", August 20, 2010
- ↑ 10.0 10.1 760 KFMB, "Judge: Sales tax measure can remain on November ballot", August 27, 2010
- ↑ CBS 8, "Judge to rule on Proposition D on Friday", August 25, 2010