Group: San Diego business tax burden less than comparable cities


City News Service

The tax and fee burden on businesses in San Diego is far below the average of other large California cities, creating opportunities to raise revenues for its general fund, according to a report issued today by a citizens commission.

However, two City Council members warned their colleagues that voters are in no mood to increase city taxes after the failure of a half-cent sales tax increase on last month’s ballot.

According to the key findings of the Citizens’ Revenue Review and Economic Competitiveness Commission, as presented to the City Council’s Budget and Finance Committee:

a large majority of residents favor contracting some services to private companies via managed competition;

a similar majority does not want further cuts to programs or service levels;

fee increases are more palatable than new taxes;

San Diego collects far less general fund revenue per capita than other cities; and

waste collection and storm water costs come from the general fund instead of separate fees like other cities.

The services identified for privatization include the Miramar Landfill, municipal golf courses and airports.

Business taxes average $79 in the city of San Diego, compared to a norm of $601 in similar cities statewide, according to the report. The next lowest city is San Jose, which charges three times as much.

Bringing the tax burden up to San Jose’s level would generate $26 million in new revenues, and $94 million would be raised if San Diego’s business taxes were boosted to the state average.

“I do not believe the citizens of San Diego are going to vote to raise taxes,” City Councilman Kevin Falconer said.

The wide margin of defeat for Proposition D was “a very clear message,” Falconer said.

City Councilman Carl DeMaio objected to the comparisons to other cities.

“As far as comparing San Diego with Los Angeles and San Francisco, I don’t want San Diego to go down the toilet with those cities,” DeMaio said.

City Councilman Todd Gloria said the report provided “a lot of food for thought,” and implementation of the findings would take “political fortitude.”

The commission’s mandate was to compare San Diego’s finances with other cities without political advice, City Councilman Tony Young said.

The commission also recommended the city protect water and beach quality, continue to promote tourism, help local schools produce a capable workforce, create and maintain sustainable infrastructure and encourage hospitals to offer more beds -- all to improve quality of life, which they said was critical in attracting high-value employers and workers.