Can San Diego Finally Pass a Sales Tax Increase?

On Tuesday, San Diegans will decide whether to pass Measure E, which would raise the city’s sales tax by one percent.

The city of San Diego currently has one of the lowest sales tax rates in all of California. Its sales tax is the lowest among cities in San Diego County.

San Diego’s sales tax is currently 7.75 percent. If Measure E passes, it would go up to 8.75 percent. Some cities in California have a sales tax as high as 10.75 percent, the maximum allowable rate in the state.

Supporters say it’s vital to bring the sales tax in line with other cities so that officials can begin to chip away at San Diego’s massive backlog of infrastructure projects.

“If you want to live with the same roads, sidewalks and infrastructure we have now, vote no. If you want to improve all of those infrastructure things vote yes,” said Councilmember Raul Campillo.

Each of the city’s nine city councilmembers and the mayor support the sales tax increase.

Opponents say city government is already an inefficient bureaucracy and that the additional revenue would not be well spent.

“I’ve seen where the waste is and the lack of enthusiasm to try and fix it,” said former councilmember Scott Sherman at a debate during Voice of San Diego’s Politifest in September.

The tax would generate an additional $360 million to $400 million per year for the city, according to city’s Independent Budget Analyst. Councilmembers would be able to vote to spend it however they choose.

“There’s no guarantee on where this money will be spent. It goes right into the general fund,” said Sherman. “I’ve heard councilmembers say ‘We’re gonna spend it on infrastructure…’ And then once the election is over that kind of goes by the wayside.”

Campillo said the City Council is committed to prioritizing infrastructure needs. Council President Sean Elo-Rivera and Mayor Todd Gloria have also made similar pledges.

The city has a backlog of more than $5 billion in infrastructure needs.

Past councils, Campillo said, have been kicking the can down the road on infrastructure for decades. The tax will allow officials to do longterm infrastructure planning, he said.

Opponents of the tax have pointed out that it is regressive — meaning that poor people will spend a larger portion of their income on the tax than wealthy people. (Progressive tax rates charge wealthy people a higher percentage of their income than poor people.)

In some ways, the tax is not just a simple revenue increase for the city.

The city is currently staring down an anticipated budget deficit of $200 million. That means, at least to some extent, the new tax revenue would cover that deficit.

Michael Zucchet is the general manager of the Municipal Employees Association which represents city employees. At Politifest, he downplayed the expected shortfall, arguing that if the tax increase doesn’t pass, the city would not be required to enact serious cuts.

“I think we’ll keep trudging along and you’ll keep experiencing your city and its shortcomings and particularly infrastructure shortcomings,” Zucchet said.

Elo-Rivera, the council president, has argued the tax is especially necessary to fund stormwater improvements in the wake of devastating floods in January. Gloria has also pledged to spent tax revenue for stormwater needs.

It will also allow them to make badly needed stormwater improvements, Elo-Rivera said at Politest.

The majority of the city’s current budget goes to police, fire, libraries, parks and transportation.

Zucchet argued that citizens shouldn’t vote against the tax just because bureaucracies are big and sometimes inefficient. For the most part, he said, people believe in the services government provides.

“If we focus on the things we don’t like or we want government to be perfect, before we give another penny, that’s one approach, but it seems crazy to me,” Zucchet said. “Are we waiting for the perfect bureaucracy? Here’s a news flash: That is not gonna happen.”

If Measure E passes, the sales tax would go up starting April 1, 2025.

Update: We included San Diego’s current tax rate.