The Morning Report
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If San Diego voters approve a ballot initiative next June, organized labor argues the city would lose up to $250 million in state funds annually under a new state law.
But state Senate President Pro Tem Darrell Steinberg, who authored the new law, disagrees with that assessment. Through a spokeswoman, he said more than half of the funding included in the labor’s estimate shouldn’t be counted.
The dispute hinges on whether certain taxes are legally considered state or local funds, and the answer could have huge consequences for some of San Diego’s biggest proposals like a downtown Chargers stadium or a Convention Center expansion.
The ballot initiative proposes banning city officials from ever requiring union-friendly construction agreements for public works projects. If city officials can’t consider the agreements for a project, the new state law says no state funds or financial assistance will be provided for that project. The law doesn’t further clarify which state funds or financial assistance would be shut off.
So far, the astonishing trend continues to be a lack of certainty about the law’s impact. No one appears to have completed a financial analysis of the bill before legislators approved it or the governor signed it. State officials, lobbyists and nonpartisan legislative analysts are still trying to wrap their heads around it.
Meanwhile, the debate’s picked up steam in San Diego. Organized labor says the restricted state funds include redevelopment and special tax districts known as Mello-Roos. Though the state established each funding mechanism, the actual money is generated and controlled locally. About $160 million of labor’s $250 million cost estimate accounts for these two sources.
The loss of redevelopment would be a huge blow to San Diego. The Chargers and city officials have questioned whether financing a downtown stadium would be feasible without redevelopment. It’s also a major source of funding for affordable housing, planning and many community projects.
Nothing in the new state law specifically excludes redevelopment or special tax districts, but Steinberg said he doesn’t consider them state funds since the money is generated locally.
State finance officials told me they also agree with Steinberg’s interpretation. With the exception of redevelopment and special tax districts, they said the other kinds of funding outlined by organized labor could be at risk under the new law. Here is organized labor’s list of other annual funds:
• $30 million in state grants, which support various building projects, such as the new downtown library.
• $22 million in state gas taxes, which pay for transportation projects.
• $15.2 million in Prop. 42 funds, which also pay for transportation projects.
• $8.8 million from the state’s Clean Water Revolving Fund Program, which pays for sewer and wastewater projects.
Organized labor made its estimates based on the city’s current budget, but notes that state funds — especially grant funding — can change dramatically year to year. City public works officials said San Diego received about $37 million in state grants for building projects in each of the previous two years, for example, and expects to receive about $5 million this year.
As I’ve previously explained, the ballot initiative’s proponents call concerns over state funding losses meritless. They say their initiative includes a loophole so the city wouldn’t lose any state funding. The city of Oceanside, which already has a ban in the books, similarly argues that a loophole isn’t needed to avoid state penalties.
But what do you think? We still have months to go before the June election, but how do you interpret the new law’s possible impact on San Diego? Please share your thoughts by emailing me or posting a comment below.
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