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Smart Voter
San Diego County, CA November 2, 2010 Election
Proposition D
If Financial Reform Conditions Are Met, Authorizes Temporary One-Half Cent Sales Tax
City of San Diego

Majority Approval Required

Fail: 137,010 / 38.1% Yes votes ...... 222,166 / 61.9% No votes

See Also: Index of all Propositions

Information shown below: Summary | Fiscal Impact | Impartial Analysis | Arguments |

To help offset severe state cuts and help restore essential services, including police, fire and street resurfacing, shall the City of San Diego enact a temporary one-half cent sales tax for up to five years, only if the independent City Auditor certifies conditions have been met, including pension reforms and managed competition?

Authorizes the City of San Diego to impose a temporary one-half cent sales and use tax for up to five years, only after the City Auditor certifies that specific conditions have been met relating to City pensions, retiree health care, managed competition, and terminal leave for employees.

Fiscal Impact:
If the conditions contained in Proposition D are fully implemented, the total projected savings to the City could range from $3.5 million to $428 million over the next five years, and $8.7 million to $855 million over the next ten years. The implementation of these conditions and the realization of any associated fiscal impact are contingent upon the outcome of the meet and confer process, managed competition and outsourcing requirements of the measure. Some of the conditions are estimated to reduce the City's pension and health care liabilities by approximately $200 million to $500 million and reduce taxpayer financial exposure for pension and retiree health care costs by approximately $20 million to $50 million annually. The other conditions such as managed competition, outsourcing and benefit reductions could save taxpayers an additional $626,000 to $43 million annually. These projected fiscal impacts do not include the additional potential savings from the new Defined Contribution Pension Plan or the results of the Deferred Retirement Option Plan (DROP) Cost Neutrality Study. The estimated savings are based upon current budget information, previous City experience, the application of industry standards and actuarial calculations and are preliminary. Only if the independent City Auditor certifies that the conditions contained in Proposition D are satisfied, will the City's General Fund receive a net estimated $102 million annually for five years in new sales tax revenue from the temporary one-half cent sales tax.

Impartial Analysis from City Attorney
State law authorizes the City to impose a sales tax increase for general purposes if it is approved by a two-thirds vote of the governing body and a majority of the City's voters. On August 4, 2010, six members of the eight-member City Council approved a temporary, one-half cent increase to the sales tax in the City of San Diego that may be imposed only if certain conditions are first met. This measure seeks voter approval of the proposed increase.

The tax increase would not be operative until the City Auditor certifies that the following conditions have been met:

    1. The City adopting an ordinance eliminating retirement offsets for elected officials and those City employees not represented by a labor organization. "Retirement offsets" are the amount of an individual's retirement system contribution which the City agrees to pay on behalf of the individual.

    2. The City adopting, by ordinance, a managed competition guide for various City services.

    3. The Mayor completing a study of costs to the City of the Deferred Retirement Option Plan (DROP) program and presenting findings to the City Council. If the study finds DROP is not "cost neutral," the City will initiate "meet and confer" proceedings with labor unions to make DROP cost neutral.

    4. The Mayor soliciting requests for qualifications from bidders to assume operations of the Miramar Landfill.

    5. The City adopting an ordinance eliminating terminal leave for City employees. Terminal leave allows employees to remain on the payroll when they end employment, using accrued leave, instead of taking a lump sum payment. Under the ordinance, upon separation from the City, an employee may only cash out accrued leave.

    6. The City reducing the total cost of "retirement offsets" existing as of June 30, 2010 for employees represented by labor organizations.

    7. The City reducing its retiree health care liability existing as of June 30, 2010.

    8. The Mayor soliciting proposals from bidders to provide the City's information technology services.

    9. The City establishing a second tier pension plan for new employees represented by the firefighters union, comparable to one in effect for new police officers.

    10. The City adopting an ordinance that would allow all City employees to voluntarily select or switch from a current retirement plan to a new alternative Defined Contribution Plan. The new plan may be subject to IRS and other governmental approvals, but obtaining such approval is not part of this condition.

The tax would be operative the first day of the first calendar quarter commencing more than 110 days after the State Board of Equalization receives the City Auditor's certification. The City must deposit all revenues received from the tax increase into the City's general fund. Proceeds could be spent for any lawful governmental purpose. The authority to levy the tax would expire five years after the operative date described above, or December 31, 2017, whichever is earlier. The City could suspend or terminate the tax earlier.

  News and Analysis

San Diego U-T

Voice of San Diego
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Arguments For Proposition D Arguments Against Proposition D
Restore fire, paramedic, police and other essential City services.

Revenue from Proposition D will help maintain and restore essential City services such as fire, paramedic, police, library hours and pothole repair, end fire station brownouts, and help improve 911 emergency response times.

By law, funds from this temporary five-year measure can only be collected after the independent City Auditor verifies the City has initiated 10 financial and pension reforms that can produce hundreds of millions of dollars in savings.

City budget cuts totaling over $180 million have led to rolling brownouts at fire stations, delays in 911 emergency response times, and loss of nearly 200 police, fire and paramedic positions.

But San Diego still faces an ongoing budget deficit of over $70 million next year - caused in part by Sacramento seizing tens of millions of local tax dollars. By law, Proposition D's funds cannot be taken by Sacramento.

Mandatory financial reform first!

Proposition D establishes 10 fundamental financial reforms - among the most comprehensive ever undertaken by a California city, including reforming City pension and retirement benefits.

Because of the risk of further drastic service cuts, public employee unions are offering historic concessions. Implementing Proposition D reforms could reduce pension and healthcare liabilities by up to $500 million and reduce taxpayer costs for pension and retiree healthcare by up to $50 million annually.

Longtime adversaries - Mayor Jerry Sanders and Councilmember Donna Frye - along with firefighters, police, business and labor leaders concerned about protecting public safety, jobs and our economy, support Proposition D because it is the most fiscally responsible and realistic alternative to avoid further devastating cuts in public safety and other essential services.

San Diego City Firefighters
San Diego Police Officers Association
Former Chair, San Diego Regional Chamber of Commerce
Chair, San Diego Public Library Foundation

NO on PROP D - The "Blank Check" Sales Tax

Prop D is misleading and harms San Diego taxpayers. Prop D gives city politicians a "blank check" tax increase with no guarantees on how the money will be spent.

Prop D: More WASTEFUL Spending

  • No Protections for Taxpayers: Prop D does NOT include the fiscal reforms taxpayers deserve to end millions in wasteful spending each year in the city's budget.

  • Fails to Fix the Pension Crisis: Prop D allows the city to continue to offer unaffordable pension benefits for city employees + and allows city politicians to continue receiving the biggest taxpayer subsidy for their personal pensions.

Prop D: Does NOT Protect Vital Services

  • No Guarantees for Police and Fire: Not one penny of this tax is dedicated to pay for police, fire and other vital city services. Politicians can spend this money any way they want!

  • Money Will Go To Pension Fund: As pension costs keep increasing in the city budget, more and more tax money will be diverted to the pension system to bailout politicians.

Prop D: LACKS Accountability for Reform

  • Weak and Deceptive Triggers: Prop D lists several weak, meaningless and deceptive conditions that will be quickly used to trigger this sales tax.

  • Prop D Contains No Requirements for Managed Competition: Prop D does not require implementation of competitive bidding - something voters overwhelmingly approved four years ago but politicians and unions have resisted. Prop D continues the practice of ignoring the will of the people.

Prop D: HURTS Working Families by Raising Taxes

  • More Burdens In a Tough Economy: Prop D makes everything more expensive for city residents.

No Blank Check, No Bailouts, No More Wasteful Spending, Vote No on Prop D.

San Diegans Against Government Waste
Former Chair
Pension Reform Committee
City Audit Committee
Vice Chair
City Audit Committee
President and CEO
San Diego County Taxpayers Association

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Created: January 6, 2011 15:00 PST
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