On August 4, 2010, the San Diego City Council supported by a vote of 6?2, a proposed ballot initiative from Councilmember Donna Frye and me to be considered by the voters on November 2, 2010.
The measure would ask voters to require the completion of several financial reforms by the City and then allow for a temporary 1/2 cent sales tax increase to be used for general governmental purposes. Among the mandated reforms are reduction of retiree health costs, completion of a guide for managed competition of some City services, and reduction of the City's pension pickup costs for City employees.
Read the Ballot Measure Ordinance.
Read the August 2, 2010 Updated Memo from Councilmember Frye and myself.
Read the July 29, 2010 Memo .
The City of San Diego's budget, like the budgets of most families, businesses and jurisdictions at all levels of government, is tighter due to the global economic recession. Though the City has never boasted of having surplus - or even enough - money to accomplish the services desired by the public, the shrinking tax revenues coming to the City have clearly illustrated our structural budget deficit.
In addition to the reforms implemented since my election, two critical public processes are helping shape the City's financial future:
- A citizens' survey to gauge the levels of services wanted by the community and to determine how much they are willing to pay for them was completed in April 2010, and the results are [here] (include link to report on IBAs website).
- The Citizens' Revenue Review and Economic Competitiveness Commission is also looking into existing and potential revenue streams. CRRECC is expected to conclude its work in Fall 2010, and I am confident we will have more direction on additional means of financial strengthening for our City.
Efforts to fortify City finances remain necessary. This summer, it became evident that we will once again face a deficit, this time amounting to approximately $70-$80 million. This news comes even after cutting $179 million from the budget in December 2009 and $84 million in Spring 2009.
On June 8, 2009, the City Council passed the Fiscal Year 2010 Budget, which was signed by Mayor Jerry Sanders on June 17, 2009. Decreased revenues led to a budget gap of $83 million which was remedied through action from several angles. The inclusion of approximately $7 million in new revenues was among adjustments, and City employees' return of 6% of their compensation yielded about $32 million. Long term savings in retirement costs will also be generated, in part due to a new pension plan for new employees, suspension of the escalator in retiree health benefits, and a doubling of our retirement vesting period. I am grateful to our dedicated City employees, who showed commitment to this City and citizens by offering substantial savings that helped us meet our short term budget needs and improve our long term fiscal health. To be clear, the contracts both agreed to and imposed on employees contained great personal sacrifices. We must continue to move strategically away from promises of unclear benefits and toward fair and competitive salaries.
Nine out of 10 cities in America are grappling with similar budget troubles because of the global economic recession. However, San Diego's financial challenges are exacerbated by a structural budget deficit; expenses are designed to be greater than revenues, causing the City to make annual cuts to personnel and services, even during healthy economic times.
To this day, I have never heard a constituent tell me that they get too many City services. I am encouraged that a majority of my Council colleagues seem to understand that our solution cannot solely consist of cutting already low service levels. Pursuing additional revenues must also be included in the equation to balance our ledger. As City leaders, we must be honest about our financial circumstances with the public and allow the public the opportunity to decide whether closing libraries and slashing Fire-Rescue Department staffing is preferable to paying for a little bit more upon the City's achievement of additional reforms.
If you are interested in a thorough explanation of our budget situation, please review my presentation from Fall 2009, " Understanding the City's Budget" .
Work to complete the required reforms is underway. The initiative will appear on the November 2, 2010 ballot. If the measure is approved, all reforms must be completed before the sales tax could be implemented. The earliest the increase could go into effect would be April 2011.