Panel Sees San Diego’s Future Sinking in a Sea of Red Ink

The city of San Diego is $1.5 billion short of the money it needs to pay for streets, parks, libraries and police stations over the next 20 years, a gap that can be filled only by levying as much as $451 million in impact fees on development, borrowing up to $420 million and assessing a host of other new taxes and fees, a citizens’ panel concluded Thursday.

The Citizens Finance Committee also determined that the city will fall short of its yearly budget needs if it tries to expand its police force and devote $54 million to housing for the poor, even if it assesses the wide variety of new taxes and fees it suggests.

The calculation of the city’s staggering long-term budget shortfall does not include the $2.6-billion to $2.8-billion cost of a new city sewer system (which will be borne by ratepayers), city contributions to a new airport, the estimated $3-million cost of a new city jail, payouts to victorious litigants or a possible decline in city revenues if growth limitations are imposed.

“They’ve got some very serious problems to deal with, and they have a very limited sum of local revenue they can reach for without going to the voters,” said former Assistant City Manager John Fowler, chairman of the panel appointed by the City Council in April.

“It’s a wish list, and all of these cannot be funded. We know that,” said Frank Panarisi, a consultant and panel member. “But the issues have to be addressed.”

If the panel’s proposals are adopted, city residents could see new fees for parking at the beach; new taxes on gas, electricity, telephone and cable television use; a fee for turning in false fire alarms; higher hotel room taxes and a substantially increased business license tax.

The council assigned the panel the unenviable task of totaling the city’s capital needs and suggesting ways of raising the revenue to fill a budget gap that has long been apparent. Council members are scheduled to begin considering the committee’s grim conclusions next month.

The 75% of the city considered “urbanized”--or largely built-out--needs $645 million to fund infrastructure that was not constructed as the area developed because growth there occurred before the adoption of standards for roads, parks and libraries--and before the city adopted a policy of exacting fees from developers to pay for them.

In “urbanizing,” or developing areas located primarily in the city’s northern tier, developers will be expected to finance the needs of new growth.

With all current sources of revenue identified, the report concludes that the city will be $297 million short of the $1.1 billion needed for streets citywide over the next 20 years; $341 million short of the $494 million needed for local parks; $105 million short of the $185 million needed for major parks such as Balboa, Mission Bay, Mission Trails and Los Penasquitos parks; and $120 million short of the $127 million needed for new libraries.

An additional $137 million will be needed for police and fire stations, $87 million will be required for new “operations stations” where city trucks and equipment are stored and maintained; and $80 million to $100 million must be found for new landfill sites and trash transfer stations.

The panel’s suggestions are unlikely to win the rousing support of voters, developers or City Council members. The committee suggested levying $311 million to $451 million in “citywide impact fees” on development, based on the theory that the cost of certain facilities such as the new central library should be shared throughout the city.

The committee proposes floating general obligation bonds to raise $320 million to $420 million. But committee members freely acknowledged that the chances of winning the necessary approval of two-thirds of the city’s voters are slim.

Other revenue includes $100 million from a proposed statewide gasoline tax increase that will go before voters in June, $80 million for Mission Bay and Balboa parks from a previously approved increased in the hotel room tax, and $241 million for a new City Hall that will be generated by leasing current city-owned office space.

The city also will have to stretch to meet its annual budget needs if it hopes to devote as much as $54 million each year to a “housing trust fund” for the poor and as much as $49.8 million annually to expand its police force to two officers per 1,000 residents.

Keeping services current with San Diego’s expanding population will cost $40 million to $60 million each year, City Manager John Lockwood has estimated.

To cope, the panel recommended having voters repeal free trash pickup for about half the city, saving $25 million annually; enacting a utility user tax that would generate $9 million to $16 million each year; establishing parking fees in city-owned lots to produce $10 million, raising the business license tax to provide another $4.5 million to $32.8 million and establishing a citywide assessment district to pay for $10 million to $40 million in lighting and landscape maintenance.