Council President Scott Peters said in an interview today that he doesn’t believe the city needs to levy the pension tax being advocated by labor union attorney Ann Smith because the city can simply manage its pension debt over the long term without raising taxes.

“We have time to do it,” he said. “We don’t need to do anything drastic.”

In a story today, we wrote about a letter Smith sent to Mayor Jerry Sanders and the City Council on Friday saying that they were legally obligated to levy a pension tax on top of the property tax collected each year. The tax, Smith said, could be imposed upon property owners without a vote of the people under certain circumstances.

She also indicated the proposal could be taken to the courtroom if city leaders choose not to institute it by Aug. 31.

“I don’t think we should be sued into passing a tax in any circumstances,” Peters said.

However, he said he was not offended by Smith’s letter. The pension tax is a legitimate issue to raise, he said, considering that some city leaders had asked the City Attorney’s Office for a legal opinion on details of the pension tax.

“A lot of us have asked for information about this, just to be able to discuss it,” Peters said. “We never found out if you were able to do it.”

Indeed, the city’s Fiscal Year 2004 Financial Forecast and a March 2003 report from the City Manager’s Office state that the “City Attorney’s Office is presently conducting a thorough analysis to determine the current status of the retirement tax provision” given the passing of two anti-tax ballot proposals in California.

Casey Gwinn served as city attorney until Dec. 2004, and it’s unclear if the legal analysis were ever completed or memorialized in writing.

Current City Attorney Mike Aguirre held a press conference today to respond to Smith’s letter, saying that a pension tax would not be imposed on San Diego residents without a vote of the people as long as he is in office. He said he would challenge any union lawsuit trying to do so all the way to the U.S. Supreme Court.

Aguirre said that disputes over the legality of a decade’s worth of pension benefit increase would prevent any new tax from being raised to pump into the pension system without a vote of the people.

Smith, an attorney for the Municipal Employees Association, City Hall’s white-collar workers union, maintains that the city has not lived up to its obligation to fund the pension system and therefore is mandated to raise its revenues through the pension tax.

Aguirre said he expects a lawsuit to be filed by the union and said he was concerned the council could settle such a suit and raise the tax in the future.


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