Lesson No. 1: You Get What You Pay for : San Diego Needs to Face the Sobering Truth That It Must Increase Taxes

Well, here we are. Nearly five months after the San Diego City Council began its fiscal 1991 budget deliberations with a $60-million deficit, a week remains before it must balance next year’s ledger.

After numerous false starts and turnarounds, the deficit is down to about $40 million. Now comes the hour that a few prescient souls have been warning about. It’s time to talk taxes.

For years, the council has patched together a budget with the help of a one-time windfall here and the deferral of a project there. But services have eroded as population has soared, and one thing continues to become clearer: San Diegans--and their elected representatives-- cannot continue to demand more parks, police and the like without paying for them.

How can this be happening? Property tax revenue is up, but the city’s entire share wouldn’t even pay for next year’s Police Department budget. Yes, developers are paying higher fees, but those pay for capital improvements, such as school and sewer construction. Overall, San Diego is 47th of the 50 largest U.S. cities in operating revenue per capita.

Happily, the city can provide these services without too much pain. Let’s start with trash collection. Half the city pays for it--the half that lives in apartments or condominiums. Under a 1919 charter provision, those living in single-family homes receive free trash pickup.

The council should put this unfair ordinance on the November ballot, and voters should repeal it. It would cost homeowners $7.50 a month and save the city $24 million. But the money wouldn’t be available until next July.

This year, the council should substantially increase the business license tax. Consider that the city’s tax of $30 plus $4 per employee accounts for just 1% of the city’s revenue. Los Angeles’ business license tax provides 14.6% of city revenues. Comparably sized San Jose charges a $150 minimum tax.

San Diego’s blue-ribbon Citizens Finance Committee called for increasing the fee to $150 per business and $10 per employee, a reasonable sum that would net $13.5 million. Small businesses could be protected with an exemption, and large employers might be entitled to a ceiling that would cap their payments.

San Diego imposes no user fees on any utility. Los Angeles raises hundreds of millions with a 10% fee on electricity, gas and telephones; San Francisco charges 5%. San Diego need not do anything so drastic. Even a 1% fee on commercial and industrial use of electricity, gas, telephones and other utilities would raise $5.7 million over a full fiscal year. A residential fee would bring in another $5.5 million annually.

The council also should re-enact the $20-million tax it approved and then rescinded in February. The money would go into the city employees’ retirement fund. The council voluntarily eliminated the tax 12 years ago and does not need voter approval to reinstate it. The measure would cost homeowners and businesses alike $44 per $100,000 of assessed valuation, a fair share of the civic burden.

One-time financial fixes won’t work this year and don’t provide money for the future. This year, the council must embrace long-term revenue sources to pay for the services that their constituents continue to demand--and issue a sobering reminder that you get what you pay for.