TOT Tax Increase Proposal is Flawed and Misguided

Dual Measures Opens City to Possible Proposition 218 Violation
Council Feeds City Spending Addiction

Under the state constitution and pursuant to a court ruling two weeks ago, the City would need two-thirds of the vote to raise a “special purpose” tax. Under the current legal interpretation, the City would only need the approval of 50 percent of voters if proceeds went directly into the General Fund without special instructions. In a move to skirt this requirement and garner public support for the tax increase, the Council will consider a proposal to place a TOT tax increase measure on the November ballot, along side a so-called “Advisory Measure” that would allow voters to state a preference for where the monies would be spent. In the mid-1990s, the City Attorney issued a legal opinion warning the City Council against using such an approach, citing the legal uncertainty it would bring to a ballot initiative.

“By placing a so-called ‘Advisory Measure’ on the ballot, the Council is violating the intent of Proposition 218 and misleading voters into thinking their vote on the use of the increased tax revenues will be binding,” noted Carl DeMaio, President of the Performance Institute. “Under this proposal, the Council crams the real truth into fine print—allowing the City to spend the increased tax revenue on whatever it wishes rather than on the priorities set by the public. It is yet another violation of the people’s trust in how the City raises and manages its finances.”

The Institute opposes the increase in the TOT tax for another important reason: it forestalls any serious reform of the way the City spends existing tax revenues. As such, the Institute reiterated its pledge to the Council to vehemently oppose any tax increase measure should it reach the November ballot.

“The city does not have a revenue problem, it has a spending problem. What’s worse, raising the TOT is throwing good money after bad. By defeating this tax increase, the voters can send a clear message to City Hall that it must address the significant waste and mismanagement in City departments before coming to the people and asking for more money,” DeMaio promised.

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 Citizens’ Budget Project can be found at www.sandiegobudget.org.

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