Lockwood Paints a Grim Financial Future for City

Garbage collection fees, property tax increases and surcharges on electricity, telephone and cable television services might be necessary to pay for more San Diego police officers, a city manager’s report released Friday said.

Moreover, even if the city swallows the bitter fiscal medicine necessary to pay for more police--and other goals such as a new library and landfills--San Diego still faces nearly $900 million in other pressing needs such as streets and parks, most of which have no clearly identified funding source, the report added.

That grim picture of the city’s financial future emerges from a 23-page study by City Manager John Lockwood. It is certain to engender controversy inside and outside City Hall when it is unveiled before a council committee next week.

“The magnitude of the citywide financing needs . . . precludes the use of pay-as-you-go financing,” Lockwood concludes in his analysis of the city’s long-term needs and fiscal necessities.

Financing Options

As a result, Lockwood offers the council a variety of financing options--among them, increases in existing taxes, new special taxes, fees and bonds--without, in most cases, recommending which to pursue. Most of the potential taxes would require voter approval, many by a two-thirds margin.

“Getting public approval of a tax is never easy, but this lets the public make the choices,” Lockwood said in an interview. “The question you ask the public is: ‘Here’s a need and here’s the way to fund it. Now, do you want to do that?’ If the answer is no, it won’t happen.”

As politically distasteful as many of those funding options are, Lockwood stressed in the report, the city’s financial future could appear even bleaker in the early 1990s without them.

Lockwood also noted that San Diego voters in two years will be asked again to extend the current waiver of the city’s so-called Gann spending limit, a public-approved measure that limits government spending under a formula based on population and the inflation rate. San Diegans approved a four-year waiver of that limit in 1987, but, unless the waiver is renewed in 1991, the city’s fiscal hands will be tied, creating a potential budget gap of hundreds of millions of dollars, Lockwood warned.

In essence, the Gann limit’s cap on expenditures would forbid the city, now operating under an $807-million annual budget, from spending up to $450 million that would otherwise be available through existing taxes and other sources from 1992-1995, the report said.

Hands Would Be Tied?

When the current Gann waiver was approved, supporters emphasized that the waiver does not increase taxes but permits local governments to spend all existing tax revenues. Absent a new waiver in the 1990s, Lockwood said, the city would be prevented from using some of the financing options he outlined to meet the expanding demands.

Arguably the foremost of those future financial demands is police staffing. The City Council has indicated it wants to increase the number of sworn officers from the present 1.62 officers per 1,000 residents to two officers per 1,000. Lockwood detailed several methods by which the city could hire the 482 added officers needed to reach that goal by fiscal 1993.

The expense of hiring the extra officers would total $106.4 million over a three-year period, according to city figures. Beginning in fiscal 1994, the officers’ salaries and related expenses would increase the city’s annual costs by nearly $50 million.

Three major options--a garbage collection fee, an increase in property taxes or creation of a special citywide tax--could be used to pay for the added police, Lockwood said. A combination of those options--as well as several other alternatives--probably would be needed to fully underwrite the added police manpower costs, the report said.

Garbage Pickup Fee

Because a 1919 ordinance guarantees San Diegans free garbage collection, a monthly pickup fee would require majority approval of a charter amendment by city voters. The city of San Diego is the only city in the county that does not charge for the collection and disposal of residential refuse.

If voters agreed to pay the current monthly garbage collection cost of $7.50 per single-family household, the estimated $20 million generated could help pay for the two-officers-per-thousand program, the report said.

To fully finance the expected annual budget increases for added police, however, a garbage collection fee would have to be combined with one or more options, including a possible property tax increase or a new special-tax district. Both of those alternatives would require a two-thirds public vote.

Under Lockwood’s estimates, a property tax increase of $55 per $100,000 assessed valuation would be needed by 1994 to finance the police hiring program. Although the dollar figure for a special-tax district is not specified in the report, it presumably would cost taxpayers about the same.

Other Alternatives

Other financing alternatives--none of which could fund the entire police program by itself--include establishment of a utility users tax, issuance of general obligation bonds and use of the increased hotel room-tax revenue expected when San Diego’s new bayfront convention center opens.

Although the bonds would require a two-thirds vote, the precise use of a utility surcharge on electricity, gas, telephone and cable TV services would determine whether voter approval would be needed for that option, Lockwood said. More than 80 California cities impose utility user taxes, the report states, and a 1% surcharge on SDG&E;, Pacific Bell and cable TV services would raise about $9.6 million a year.

Other major citywide priorities--including a new city library, new landfill disposal sites and open-space acquisition--also will cost hundreds of millions of dollars more, Lockwood said.

The estimated price of a new downtown library, for example, is nearly $78 million, while branch library construction and improvement projects would cost another $24.4 million, according to the report. That cost could be defrayed, Lockwood said, by the sale or lease of the existing downtown library property, bonds, state funds or a special tax.

Similarly, with the region’s landfill capacity expected to be exhausted by 1999, the city faces an estimated $100-million bill to develop a new landfill, as well as $25 million per site to close the city’s four existing landfills, the report said. Higher refuse disposal fees will be needed to cover those expenses, Lockwood wrote.

Even if City Hall overcomes the long political odds to win more taxes to meet those diverse needs, the city’s financial woes would be far from over.

A Gloomy Picture

That dismal fiscal and political outlook is vividly illustrated by the report’s identification of $900 million in additional needs in urban communities throughout the city--needs that, in most cases, have no apparent funding sources. Those needs include $500 million for streets, $340 million for community parks, $30 million for libraries and $30 million for fire stations.

A “substantial portion” of the needed streets will be financed by a half-cent sales tax increase for transportation improvements that was approved by countywide voters in November, 1987, the report said.

“The funding of the remaining needs will, however, likely require the reallocation of existing resources or the identification of new revenue sources,” Lockwood wrote.

What that means, Lockwood explained in the interview, is that none of the major policy goals identified in the report will be met unless more taxes or other funding mechanisms are approved.

“To those who might say we can do these things by ‘trimming the fat,’ I’d say the fat’s already gone, and so is a lot of the meat,” Lockwood said. “All that’s left is bone. You could eliminate the entire Parks and Recreation Department and library budget, for example, and still not have enough money to hire the additional police. . . It’s fine to talk about trimming the fat when you’re looking for $10,000. But when you’re looking for $10 million or $100 million, forget it.”

Costly Sewage Update, Too

Those fiscal problems will be compounded by another of the city’s most costly future budget demands that receives only cursory attention in Lockwood’s report: a federally mandated, $2-billion-plus secondary sewage treatment program. Although Mayor Maureen O’Connor has begun soliciting state and federal aid to help pay for that program, a large part of the cost likely will eventually be recovered through dramatically higher water bills.

Recognizing the difficulty of selling the mixture of new taxes and fees to the public, Lockwood and council members concede that the timing of any proposals to be put before the voters could be as critical strategically as the specifics of the proposals.

“I think it would be a mistake to try to do it all at once,” City Councilman Bob Filner said. “Police staffing is the top priority, and I think that’s what we should try to take care of first.”

When the council begins reviewing Lockwood’s report next week, Filner said he will encourage his colleagues to focus on ways to accomplish the police manpower increases, even if that means deferring action on other major programs. Filner added that he hopes that a financing package to raise the funds needed to hire the extra police officers will be placed on the ballot later this year.

“It’s going to be tough, but I think the public wants the extra police and is willing to pay for it,” Filner said. “If we go after too much at once, I’m afraid we could lose everything.”