Supervisors Explore Funding Alternatives to Build Courts, Jails

With Proposition A and its $1.6 billion for new jails in legal limbo, the San Diego County Board of Supervisors on Tuesday began exploring other ways to build courts and detention facilities--and immediately encountered strong opposition to one of the most economically promising alternatives.

Exploring the gloomy prospect of what one top county administrator termed “life without Proposition A,” a half-cent sales tax narrowly approved by voters countywide last June, the supervisors reviewed a variety of funding options for new jails and courts. Among the possibilities were a utility tax, business license fees in the unincorporated areas, new sales taxes and a “bed tax,” under which cities would pay a pro-rated share of jail costs depending on how many of their residents are housed in them. Most of the alternatives would require special state legislation and voters’ approval.

Though intrigued by some of the suggestions, the board voted unanimously to postpone action on most of them pending further study. However, the supervisors also directed Chief Administrative Officer Norman Hickey to preliminarily move ahead on three options: the jails’ “bed tax,” business license fee increases and the possible formation of a so-called Joint Powers Authority with the city of San Diego to share downtown jail and court costs.

Deferred Action

The board also deferred action on a recommendation by Hickey’s office that $100,000 be allocated for preliminary design work on a new central pretrial jail.

Because of jail crowding, most people arrested on misdemeanor charges now are immediately released, and many of them fail to appear in court. Although correcting that situation is the county’s top criminal-justice priority, the supervisors said Tuesday that it makes little sense to spend money to design a facility before a site is determined and until they review the county’s overall budget later this spring.

Last month, a Riverside County Superior Court judge threw the county’s short- and long-term jail-building plans into disarray by declaring Proposition A unconstitutional on the grounds that its 50.6% voter approval fell short of the two-thirds margin for new taxes mandated by Proposition 13, the landmark 1978 statewide property tax-cutting initiative.

Optimistic About Tax

Although county leaders profess optimism that the legality of the half-cent sales tax will be upheld on appeal--a process that could last up to two years--they also acknowledge that it would be imprudent to count on that happening. Accordingly, they described Tuesday’s meeting as the first step toward being prepared if their worst fiscal nightmares become reality, forcing them to replace the estimated $1.6 billion that Proposition A would generate for new jails and courts over its 10-year life.

“Whatever happens, the county will have to continue building jails,” Supervisor Susan Golding said. “It behooves us to move as rapidly as possible . . . so we can take additional steps when we find out the result of Proposition A.”

One of the major alternatives suggested by county administrators is a utility users tax that could be added to consumers’ monthly gas and electric bills, as well as water, telephone and cable television charges. The surcharge would be collected by the utilities and forwarded to the county.

Utilities Tax Appealing

Needing hundreds of millions of dollars over the next decade to meet the county’s exploding criminal-justice demands, county administrators characterized a utilities tax as being one of the most viable options to raise such large amounts.

“Because of the broad tax base, the tax can generate a significant amount of revenue,” Rich Robinson, director of the county’s Special Projects Office, said in a report to the supervisors.

Under county estimates, a 1% utilities tax would raise $24.5 million annually, and a 5% surcharge would generate $122.5 million a year. Statewide, utility user tax rates average about 5%, Robinson said.

A San Diego Gas & Electric Co. official, however, told supervisors Tuesday that his company is “not enamored with the idea of being a collection agency for the county.”

SDG&E; Fears Being Tarred

“The public’s perception would be a higher utility bill,” said Art Bishop, a senior government affairs representative for SDG&E.; “Over time, people would not differentiate between what was being collected as a tax and their normal utility bill. They’d just think they were paying a higher utility bill . . . and blame us.”

Describing a utility tax as regressive, Bishop also argued that such a tax would be especially painful for low-income consumers--a point echoed by Supervisor Leon Williams.

To authorize the county to place a utility users tax on the ballot, the state Legislature would have to pass special legislation. Then, if the tax were to be used solely for the construction and operation of jails and courts, it would require a two-thirds public vote. If the county planned to use the revenue for general governmental purposes, only a simple majority vote would be required.

5% Surcharge Inadequate

Even a 5% utility surcharge would be inadequate to build and operate the facilities needed to alleviate the county’s longstanding jail crowding problem and a badly overextended court system, county officials and others acknowledged. As of April 3, the inmate population in county jails totaled 4,706--nearly twice the facilities’ official capacity of 2,396. By 1998, Hickey’s office estimates, the county will have to have more than 8,500 new jail beds to keep pace with the growing number of inmates.

“If the half-cent sales tax is ultimately declared invalid, the county will be put in the position of having to look at probably using a variety of these options at the same time,” said Mark Nelson, executive director of the San Diego Taxpayers Assn.

Concurring, Robinson explained that, should Proposition A’s funds not be available, the county will have to resort to a “shotgun-type approach” aimed at relying upon multiple taxes and other methods to raise about the same amount of money. Other than the utilities tax, most of the alternatives being considered would generate only a fraction of what Proposition A would have generated.

Cities Would Share

Under the “bed tax” option, the 18 cities within the county would be asked to share the operational costs of jails, based either on population or, more precisely, on the number of people arrested within their boundaries who are jailed. However, state law now precludes counties from charging cities for housing felony arrestees--a barrier that could dramatically curtail that option’s economic expectations.

Similarly, establishment of business license fees for companies operating in the unincorporated areas of the county, which also would require special legislation, would raise less than $2 million a year, county officials estimate.

Legislation authorizing a joint-powers agreement between the county and the city of San Diego to finance construction and operation of downtown jails and courts is already in place. However, that option would raise only about $3.8 million annually in lease revenue, fines, so-called tax increment funds and state or federal grants.

Other Options

The other options being reviewed include:

* A new half-cent countywide sales tax available for general governmental purposes, including jails and courts. In contrast to Proposition A, such a tax could be in place for longer than 10 years. Another major advantage, county officials said, is that, even if the courts scuttle Proposition A, local residents already would be accustomed to paying the 7% sales tax.

* A $50 surcharge on the filing fee for civil lawsuits, which could raise about $1 million a year.

* Legislation specifying that a majority vote is sufficient for special taxes “to meet an urgent or emergency situation,” such as jail crowding. Critics, however, contend that such legislation would seriously undermine Proposition 13 by eliminating the two-thirds requirement for new special taxes.

* Passage of a statewide sales tax or bond issue for jails and courts.