The Morning Report
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First, I would like to thank Pat Shea for another thought-provoking article. When reading it, I thought perhaps the discussion on costs of government in San Diego should be expanded to shed light on the question; Are San Diego taxpayers “cheapskates” or are they just unusually thrifty?
First, it has been said that San Diego pays some of the highest water and sewer fees in the nation. The first part makes sense even without looking at the numbers but recognizing that San Diego is located in a semi-arid desert with a Mediterranean climate. With 9.5 inch average rainfall, most of our water must come from northern California or the Colorado River. Obviously transporting water hundreds of miles and pumping it up over mountains makes it more expensive. Based on geography alone, one would surmise that Seattle would likely have access to cheaper water.
Our sewer does flow into the ocean but it is first filtered and chemically treated before being pumped into a two mile ocean outfall. That process has been thoroughly studied and defended. Storm drains do empty into the ocean and have come under increasing scrutiny and regulation. Sewer stoppages and overflows in urban canyons were a major problem that former Mayor Dick Murphy expended a lot of time, energy and money trying to correct. Repairing and replacing broken pipes in rugged areas is an expensive proposition as is the program of education and enforcement to clean up storm water runoff. The combination of deferred maintenance and rising state and federal regulatory standards has in the past and will likely continue to result in higher costs in these areas.
Turning to taxes, it has been said that San Diegans are right up there in payments for per capita tax revenue. Sadly, that is true. According to “The Bottom Line, A Comparative Analysis of California’s Largest Cities,” by Murtaza H. Baxamusa, AICP of the Center on Policy Initiatives, 2005; 33 percent of San Diego’s General Revenue Sources come from sales and use tax, compared with an average of 18 percent for the ten largest California cities. Sadly I say, because we know that the sales tax is most regressive, i.e., falling more heavily on the lower income groups.
In terms of population, San Diego ranks second only to Los Angeles, but our $425 per capita general revenue ranks eighth in the top ten cities in the state. Mean household income for San Diego, $64,072, ranks fourth but our general fund revenues of 1.97 percent of household income ranks dead last in the big ten.
Other cities make use of a Utility Tax, deriving and average of 13 percent of their general revenue while San Diego does not use this tax at all. In fact, San Diego even has a tax aversion when it comes to tourists, ranking 8th among the top ten with a 10.5 percent transient occupancy tax. An increase in this tax was defeated not too long ago by San Diego voters. In his report, Baxamusa states that if San Diego had a “. TOT of 12.4 percent, the average of the ten largest California cities – it would generate $9.9 million more in General Revenue annually.”
But San Diego is definitely business friendly when it comes to taxes. A retail shop of $1 million sales with two employees pays license fees of: $1,480 in Los Angeles, $943 in San Francisco, $150 in San Jose, and $34 in San Diego. If memory serves, that $34 was intended to cover the cost of processing; it is doubtful it still does. At the high end of the scale, a multimedia/high-tech company with $6 billion in revenues and 4,500 employees pays $7,080,000 business license fees in Los Angeles, and $22,565 in San Diego.
Trash pickup is another tender topic for San Diegans. Once upon a time long, long ago (1919) and far, far away (Otay Mesa), there lived a hog farmer, who bought garbage collected by the city of San Diego from its approximately 70,000 pop. But the sale of garbage incensed a segment of the population who convinced the Town Board, that if the city was selling their garbage to the farmer, that income should cover the costs of collection, and therefore, the citizens of San Diego should nevermore have to pay for trash collection.And they all lived happily ever after. Today, the farmer is long gone but the good people of San Diego, now numbering 1.2 million and growing, still cling fervently to that 1919 tale as the reason why they should nevermore have to pay for trash pickup.
So while the residents of the top-10 California cities pay an average of $9.80 per household, per month, the citizens of San Diego pay $0. If, however, San Diego charged that average of $9.80 per household per month it would generate $54.29 million in annual revenue.
So no one here is calling the citizens of San Diego “cheapskates,” but I think you do have to agree that in California, they are by far, the thriftiest of the lot.
Joe Flynn represents retired San Diego city employees on the San Diego City Employees’ Retirement System’s board of administration.