The Morning Report
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Friday, June 03, 2005 | The City Council will consider on Tuesday levying beach- and bay-area parking fees for non-residents, charging youth sports teams to practice on city fields and hiking police inspection fees on certain businesses as ways to raise revenue for cash-strapped San Diego.
Those options are a sampling of the fee proposals City Manager Lamont Ewell made in his budget plan for the next fiscal year, although council members and community leaders have been pitching other ideas to offset a myriad of cuts to city services and personnel.
Ewell suggested that imposing new fees and raising existing ones will generate $3.68 million in new revenue. It is one of many tools employed by Ewell this year to close a $50 million budget gap brought about largely by increased contributions to the city’s troubled pension fund.
The city manager proposes charging a number of fees for services that are currently free. He estimated that about $210,000 would be generated by charging a $1 or $2 admission fee to the Botanical Building in Balboa Park; nearly $400,000 for charging sports teams for using public fields, a fee that averages $3 per child, per season; and $11,000 for issuing alcohol licenses for $220 per application.
Ewell also proposes to charge non-residents a daily maximum of $10 at 44 parking lots near the beaches and Mission Bay.
The fee, which would require approval by the California Coastal Commission, would be charged from 8 a.m. to 7 p.m. everyday from Memorial Day to Labor Day, as well as every weekend in March, April, May and September.
Residents would not be charged as long as they produced a valid driver’s license with a San Diego address, according a detailed proposal released Thursday.
Increasing existing fees will raise $1.77 million in new revenue, according to the city manager’s plan.
One proposal would raise residential parking permit fees in areas that require it – from $14 to $45 for a one-year placard, from $7 to $22.50 for six months, and $3.50 to $11.25 for a two-week temporary pass. The parking permit hike is estimated to draw in an additional $240,000, the plan said.
The impacts of increases
Bob Johnson, owner of Loan Ranger pawnshop in Ocean Beach, will see his annual inspection fee increase from $34 to $4,289 if the proposed fee hike is passed Tuesday. He said that the increase could put him out of business.
“I might have to potentially close down, absolutely. That’s a huge hit,” he said. “Most pawnshops are like a mom-and-pop store trying to make ends meet.”
Johnson wants to know where his “take” from the city is because he occasionally helps the police by reporting patrons’ attempts to sell stolen goods. He said that if a stolen item had been re-sold to an antique store, flea market or swap meet – secondhand dealers that pawnbrokers used to pay the same rate as – the item would have never turn up to the police.
The increases were arbitrary, he said.
“When was the last time a yogurt shop got a $4,200 bill from the city?” Johnson said.
Maheu contends that regulations governing pawnbrokers are more costly than other secondhand dealers.
“Every item that goes into a pawn slip has to be checked out,” Maheu said. “To make their business successful is costly for the police department.”
Jabie Gray, president of Discount Gun Mart in Bay Park, said he is so irate that the city is proposing to raise his firearms dealer fee from $126 to $660 per year that he plans on making his point at the public comment during Tuesday’s council meeting.
“I think it’s ludicrous,” he said. “The solution to the city’s budget disaster isn’t to slap small business owners with new taxes and fees.”
Gray said that the California Department of Justice performs inspections for $90 in parts of the state that don’t require a local permit. He said he’ll be able to survive the increase, but that he’ll have to pass that cost, along with new background check fees the council has already approved, onto his customers.
“The fee is miniscule in their bigger picture,” Gray said, referring to deficits in the city’s operating budget and the employee pension plan.
The pension deficit is estimated to be between $1.37 billion and $2 billion, and the city’s increased annual contributions to the plan have hogged any natural increase in revenue experienced since the last fiscal year.
But what else?
“We clearly have a revenue problem,” said Councilman Jim Madaffer in an interview. “The reality is apparent, and it’s that this city has been trying to get by for far too long with money it doesn’t have.”
At a budget hearing on May 24, Councilman Tony Young asked to find new streams of revenue to restore cuts that have tentatively been made to next year’s park and recreation budget.
“If we don’t look at additional revenue, we’re never going to fund our parks system, so that is direly needed,” he said.
The proposed cuts to parks include the closure of almost all city pools for about three months, fewer hours at recreation centers and the elimination of some groundskeeper and maintenance jobs that could result in unkempt parkland and less frequent restroom cleaning.
One suggestion Young made was to examine city property, such as buildings and public golf courses, to weigh the option of selling them to raise revenue.
Will Griffith, the city’s real estate assets director, said that about six or seven properties will be presented to the council next week in closed session for prospective sale. If the council were to give the go-ahead in closed session to make a transaction with prospective buyers, final approval would be held in an open meeting for public input.
Ann Smith, an attorney representing the Municipal Employees Association, also asked the council Tuesday to consider selling the city’s “jewels of real estate” as an alternative to declaring bankruptcy to solve its fiscal woes. Additionally, Smith suggested raising property taxes to include a pension subsidy, a procedure that doesn’t require a citywide vote, she contends.
“Your charter says you have to do it if it’s necessary,” she said, referring to a section dealing with the limit of tax levies. In the charter, it states that “the council, if necessary, shall levy annually a sum sufficient to meet the requirements of the pension funds …”
Smith said in an interview Thursday that, in her reading of the charter, the council can raise property taxes in the city to cover only a key factor in the pension formula known as the multiplier to the level used before Proposition 13’s passage in 1978.
The multiplier, which is currently 2.5 percent for general city workers, was 1.48 percent before Proposition 13, she said.
Smith said that the retirement system’s actuary would have to calculate how much could be raised by imposing the pension tax, and said that such a move is prudent but likely to be unpopular.
“The plain fact is that the (pension) underfunding occurred so the residents would not be imposed upon,” she said. “The city would hardly be able to say it’s not necessary when at the same time it’s asking for concessions from workers.”
Several other groups have asked the council to look at new ways to generate revenue.
The San Diego Regional Chamber of Commerce has proposed a $2 surcharge on rental car transactions to be solely used for road repairs as well as a five-year-long increase on real estate transfer tax to be earmarked for infrastructure. Mitch Mitchell, vice president of public policy at the chamber, said he believes the council can impose the rental car fee but that an increase in real estate transfer hike would have to be passed by the voters.
Under city law, two-thirds of the voters must vote in favor of a tax measure for it to be approved.
The Center on Policy Initiatives, a local think tank, released a report last month estimating that $279 million could be raised annually for the city’s day-to-day budget by increasing tax and fee levels to the average amount levied by California’s 10 largest cities.
Among the state’s 10 largest cities studied by CPI, San Diego was found to have:
– The lowest hotel tax, 15 percent lower than the major city average.
– The lowest real estate transfer tax, one-sixth the average.
– The second-lowest business license fees, less than one-fifth the average.
– No trash collection fee, when $9.80 per household was the average monthly fee.
– No utility users’ taxes, when $92 per person was the average annual fee.
The creation or increase of any of the above taxes would have to be approved by voters.
Donald Cohen, executive director at CPI, said that his study, along with discussions about the city’s “fiscal crunch,” have made many San Diegans realize that they live in a low-tax region. However, he pointed to a lack of leadership and declining public trust as reasons why he doesn’t think the current climate is right to propose any new revenue streams.
The City Council will discuss revenue through cost recovery on Tuesday at 10 a.m. in the council chambers at 202 C St.
Please contact Evan McLaughlin directly at