Council Seeks Tax Increases to Fund Budget : City Finance: In a preliminary move, members voted to raise San Diego property taxes by $20 million and increase spending $155.4 million.

In a chaotic first attempt to fashion next year’s budget, the San Diego City Council on Thursday gave preliminary approval to $155.4 million in new spending for fiscal 1991 and voted to increase city property taxes by $20 million.

The council also took the first step toward asking voters to authorize an additional $81.7 million in fees and taxes for fiscal 1991, directing city attorneys to prepare four revenue-producing measures to be placed on the June 5 ballot. One of the measures would produce even higher property taxes in subsequent years.

The proposed new taxes and fees--if approved by voters--and the tax increase adopted by the council Thursday could add $246 to the annual property tax payment of the owner of a $150,000 home as early as next winter.

But the council left itself the option of undoing much of its work within the next few weeks, ordering City Manager John Lockwood to prepare a $135.4-million list of budget cuts and a separate, similar list of additional revenue sources that could finance the wish list of projects approved Thursday. Even more work on the spending blueprint will come during the council’s traditional budget review in May and June.

The council also agreed to ask voters to waive the Gann spending limit to allow as much as $700 million more in expenditures by fiscal 1994.

Included in the proposed spending approved Thursday is a $54-million housing trust fund for the poor, $8 million for 400 pre-arraignment jail beds, a $25-million police and fire communications system, $12.8 million for 160 more police officers and $1.6 million to fight the proposed merger of San Diego Gas & Electric and Southern California Edison--all additions to Lockwood’s projected revenue base of $432.6 million.

The council will review the entire package at a yet-unscheduled budget session to be held this month. But the panel must act soon because its self-imposed deadline for finalizing ballot proposals is Feb. 26. The new budget year begins July 1.

In a four-hour session of line-by-line voting on Lockwood’s budget recommendations, council members added expensive, high-priority projects to the spending plan like so many ornaments to a Christmas tree. Then they reviewed Lockwood’s revenue recommendations in an attempt to fund them.

“This is Kafka-esque!” exclaimed Councilman Bruce Henderson, who wanted to finance his top priority, jail construction, by cutting Lockwood’s proposed budget. “We’re not dealing with the real world here.”

Lockwood said he will propose a balanced budget in May, one that assumes that voters will approve none of the new revenue measures debated Thursday. If voters adopt any or all of the new tax measures, the revenue will be added to the budget after June 5, he said.

The council’s one definitive action Thursday will affect residents’ property tax bills beginning next winter unless it is overturned by the council. By a bare 5-4 majority, the council voted to raise $20 million for the city employees’ pension fund by increasing property taxes $44 per $100,000 of assessed valuation--or $66 for an average $150,000 San Diego home.

Lockwood said the council halted the property tax assessment for the pension fund as a precaution when Proposition 13 was approved in 1978. Legal action during the intervening years has persuaded city attorneys that the city has the authority to reimpose the tax without voter approval.

The measure, which will free $20 million in the city’s general fund now devoted to the retirement system, passed with the support of Council Members Abbe Wolfsheimer, Ron Roberts, John Hartley, Wes Pratt and Linda Bernhardt. Mayor Maureen O’Connor and members Henderson, Judy McCarty and Bob Filner dissented.

The council ordered a total of five measures prepared for placement on the June ballot, though several members said they might have second thoughts when those issues come back to them for a final vote. The measures are:

- A property tax increase to beef up the police force to 2 officers per 1,000 residents by 1994. The measure, which requires approval of two-thirds of the voters, would raise property taxes by $54 per $100,000 assessed valuation in fiscal 1991, generating $23.7 million.

By fiscal 1994, taxes would increase $155 per $100,000 assessed valuation. The proposal was adopted with only Henderson dissenting and Filner absent.

- Repeal of the People’s Ordinance of 1919, which mandates free curbside trash pickup. The action would be linked to adoption of a trash pickup fee averaging $90 annually. McCarty, who proposed repeal of the ordinance, said the new fee should be reduced for residents who participate in the city’s expanding curbside trash recycling program.

The measure, which needs approval by a majority of voters, was approved with Roberts dissenting and Filner absent. It would generate $12 million during the final six months of fiscal 1991, and $24 million annually thereafter.

- A property tax increase of $6 per $100,000 valuation that would generate $25 million to finance expansion of the Police and Fire departments’ communication system, which Assistant City Manager Jack McGrory said is badly overtaxed and plagued by delays.

The borrowing that would be financed by the tax hike requires approval of two-thirds of voters.

- A 5% tax on commercial and industrial users of utilities, including electricity, gas, telephones, cable television, water and sewers. Residential utility users would not be affected. Henderson, Filner, Pratt and Bernhardt opposed the measure, which would raise $21 million in fiscal 1991, and $28 million thereafter.

The council has the authority to enact the new tax without voter approval, but heeded O’Connor’s call to place the measure before voters.

- The Gann waiver, which would allow as much as $700 million in additional spending, depending on future revenue.

In fashioning the preliminary plan, the council rejected proposals to cut Lockwood’s $440-million basic budget by 5% and 10%, to impose a gross-receipts tax on business and to raise the city’s hotel room tax.