Monday, January 30, 2006 | During last year’s mayoral primary, then-candidate Jerry Sanders was swayed from supporting a tax increase to combat the city’s $1 billion-plus pension deficit because of rampant criticism from his opponent, businessman Steve Francis.
During the general election, City Councilwoman Donna Frye came out with a plan to ask voters to approve a temporary half-cent sales tax increase to reduce the city’s debt, a move that was the political equivalent of running directly into the path of a freshly painted San Diego city bus.
Sanders won, Frye lost, as did any chance of a Mayor Sanders asking penny-pinching San Diegans to raise their taxes. However, Sanders could learn a lesson on the political viability of raising taxes from an even more fiscally conservative locale than San Diego – the conservative bastion of Colorado.
Why Colorado? Because voters there recently decided that taxes might actually be necessary.
In 1992, the voters of Colorado approved an initiative called TABOR, a Taxpayer’s Bill of Rights, which mandated that government spending increase only at the rate of inflation and population growth with any additional revenues returned to taxpayers. Since the passage of TABOR, tuition prices at the once-storied University of Colorado have increased 60 percent while state spending on higher education has decreased 31 percent. Like all states, Medicare costs have soared but, unlike other states, Colorado’s government has been hamstrung from raising revenues to pay for these costs.
Colorado’s fiscal problems grew so bad that the state’s Republican governor, Bill Owens, supported an initiative on the November 2005 ballot that would scale back TABOR.
Ironically, without TABOR, Owens would likely never have been elected governor, as he made a name for himself as the leading advocate for TABOR in 1992 while he was a state legislator.
That is powerful – a Republican governor who himself was a true-believer in the mantra of limited government spending, turning against his supporters because he realized, as governor, that his beloved TABOR wouldn’t allow him to pay the bills and wasn’t such a great idea.
Despite a well-funded campaign by anti-tax groups to save TABOR, in the November 2005 election, Colorado’s voters smartly passed Referendum C, which temporarily frees the state from TABOR. Along with their concern over the decreasing quality of the state’s universities, Coloradoans had grown weary of traffic congestion caused by the underfunded transportation system.
Voters realized, “Hey, I guess taxes pay for something.”
And now you ask, what does this have to do with San Diego? Plenty, so long as you support the idea of eliminating that looming $1.4 billion pension deficit.
Recent history suggests that San Diegans don’t like to vote for tax increases, not even if the tax is to be paid by people from outside San Diego.
In March and November 2004, San Diegans voted down two initiatives to increase the city’s Transient Occupancy Tax, aka the T.O.T., a tax paid by guests at the city’s hotels. The existing T.O.T. in San Diego, currently around 10 percent, is one of the lowest among large American cities and generates more than $100 million annually, part of which goes into the city’s general fund with some of the revenue used to promote San Diego as a convention and tourist destination. The less than 3-percent increase proposed in 2004 would have increased revenues from the T.O.T. by about $25 million every year.
The political and financial failures of San Diego’s government elicit a visceral response from many San Diegans. As in Colorado, could this aggravation and unease translate into voters supporting a tax increase – possibly an increase in the T.O.T., a tax on San Diego’s visitors – to help reduce the pension deficit?
While it isn’t easy to raise taxes anywhere in California, thanks to a state law that requires a two-thirds majority of voters to approve any tax increase, San Diego is led by a new mayor with growing political strength at the helm of a newly restructured “strong mayor” form of government. San Diegans might be compelled to believe that this new government might have a better idea how to manage its finances.
If any time is ripe to ask San Diegans to increase a tax on other people to pay for our problems, now would be it.
Ramsey Green, a native San Diegan, is a graduate student at the Fels Institute of Government at the University of Pennsylvania in Philadelphia. He is working on a project to increase accountability within the Philadelphia School District. Reach him at