Fee Increases are the Wrong Remedy for City

While City Council is Fixated on Tax and Fee Increases, Citizens Continue the Push for Accountability, Transparency and Efficiency Reform

SAN DIEGO – As the Mayor and City Council meet today to take up a host of fee increases, the Performance Institute returned to the city’s budget deliberations with its call for fundamental reform of city’s budget process and a call to consider the cost savings ideas generated by the San Diego Citizens’ Budget Project.

Analysis released by the Institute today shows that revenue collected to by city is up by $65.5 million (a healthy 8.8%) this year—without the fee hikes. Yet the city wants to increase its spending by $71.4 million (a whopping 9.6% increase.) “The city’s problem is not a revenue problem, it is a spending problem. Why raise fees on taxpayers if you are not willing to address the skyrocketing costs of city operations?” asks Carl DeMaio, President of the Performance Institute.

Last week the Institute released 219 separate options for achieving cost savings of between $39-115 million in city operations through various efficiency reforms. The Mayor and Council have yet to take action—let alone call for a study—on any of the 219 options generated by the project’s outreach to city employees, stakeholder groups, civic organizations and citizens.

There is also no guarantee that fee increases will yield increased revenues. In fact, last year the Council voted to raise the room rental fee at libraries and projected increased revenues into the General Fund as a result. Unfortunately, the fee increase caused many non-profit patrons to look elsewhere for meeting space, resulting in a net decrease of approximately $20,000 in revenue this year.

“The Mayor and Council should not be preoccupied with a search for new revenues through increased taxes and fees. Instead, they should be addressing the real problem of an inefficient city with transparency and accountability problems in its current spending practices. Only after they account for the fees they currently collect and deliver a completely efficient city should we even be talking about fee increases,” noted Carl DeMaio, President of the Performance Institute.

In addition to the fees being voted on today, the Mayor and Council have asked the City Manager for a report on additional ways to raise revenues through other tax and fee increases. In response to a similar request last budget cycle, the City Manager offered a myriad of tax and fee increases tallying over $250 million in potential tax and fee increases annually. Several members of the city council have already proposed a ballot initiative to increase the Transient Occupancy Tax (TOT) this November.

“Without fundamental reform in the way the city spends the taxpayer’s money, we will oppose increased taxes and fees on the citizens of San Diego—at Council and at the ballot box,” stated DeMaio. A measure on the March ballot to increase the TOT tax failed due to last minute campaign expenditures in opposition.

Based here in San Diego, the Institute is a national government reform think tank that promotes the principles of performance, transparency, competition and accountability in government. Additional information on the San Diego Citizen’s Budget Project can be found at www.sandiegobudget.org.

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