Fees Are More Popular than Taxes

"The City needs to stop using the general fund to subsidize services that are funded by user fees in most other cities," said Bob Nelson, chair of the Citizens Revenue Review and Economic Competitiveness Commission.

On Wednesday, December 1, Nelson presented the Citizens Revenue Review Report to councilmembers sitting on the Budget and Finance Committee.

The Citizens Review Commission, made up of business professors from the University of San Diego and San Diego State University, developers, and CEOs of local businesses, spent the past 50 weeks strategizing on how the City can close it's $73 million structural deficit and raise general fund revenues while providing adequate levels of public service.

"San Diego collects far less general revenue per capita compared to peer cities in the state," said Nelson as he presented the commission's findings. "We believe a top priority should be to seek voter approval for trash and stormwater fees. Fees are more popular than taxes."

Currently, the city spends $49 million a year on trash collection and an additional $31 million for stormwater programs, $7 million more than the projected deficit for 2011.

In addition to new user fees for trash collection and increasing fees for stormwater treatment, commissioners also recommended the implementation of the managed competition program. According to the report, the City could save $20 million a year by contracting out city services to private companies.

But, as Nelson explained, the savings produced from trash and stormwater fees and managed competition could take years to obtain, and in order to prevent more cuts to public service — 1414 city positions have been cut since 2007 — the commission searched for quicker solutions.

That solution: raise other fees such as the cost for business licenses. Nelson said that the average cost that California cities charge business owners to set up shop in their cities is $601. In San Diego, the cost to obtain a business license is $79.

"Merely raising it to what San Jose charges ($240) would add $26 million a year to the general fund," said Nelson. "It is so radically different from other cities.... We don't believe it is providing any edge, instead we are just robbing the city revenues that other cities get."

After Nelson finished presenting the commission's findings, councilmembers had an opportunity to comment. And while some elected officials praised the report, others, such as Carl DeMaio, rejected the conclusions.

"Was this report written before nearly two-thirds of San Diegans rejected the sales tax increase?" Asked DeMaio. "There is so much inconsistency within this document. I think it's woefully out of step with political realities."

Added DeMaio: "As it relates to comparisons with Los Angeles and San Francisco, I don't want San Diego to go down the toilet with those cities."

The committee later passed a motion to send the report to city council.