Friday, July 2, 2010

San Diego Tax and Spend Alert

Not coincidentally, the same day that Carl DeMaio's outsourcing initiative failed to make the November ballot, comes news that Mayor Jerry Sanders is considering putting a half-cent sales tax increase on the same November ballot (H/T Temple of Mut.) The city council and the mayor have failed to outsource a single service to save money, even though the voters approved managed competition two years ago. The lack of coincidence is that the only reasonable way to cut the cost of government is to reduce labor costs by outsourcing. That way, the big overhang of future obligations from city pensions can start to be reduced. Carl DeMaio had this to say about the situation:

Voters overwhelmingly passed proposition C in 2006 to require the city to use regular competitive bidding on city services with the exception of police and fire. And so four years have passed, not one city service, not one function not even one taxpayer dollar in the city budget has been subjected to managed competition under proposition C.
Richard Rider discusses the idea of a ballot measure in the article about the tax increase:

Taxpayer advocate Richard Rider said any proposed tax increase from Sanders would be shot down by voters because they believe they’re already paying enough.

“If he likes to get his teeth kicked in, I guess he can go ahead,” Rider said.

Rider also said the proposed ballot measure would stop financial reforms already under way.

“Nobody is going to do anything else in terms of reform,” he said. “They’re going to hope that they can get bailed out with taxes.”

Exaclty. If there is an issue that conservatives, libertarians, Tea Partyers and taxpayers can get together on, this is it. If Sanders proposes this initiative, I will never vote for him again.

Not convinced of the efficacy of outsourcing? See Adam Summers article for the Reason Foundation. Just one example:

The City of Phoenix implemented a managed competition program in the late 1970s to address a looming fiscal crisis. One of its successful competitions was for trash and recycling collection. The city was divided into six geographic regions and collection services in each sector were put up for bid on a rotating basis. Some bids were won by the city, and others were won by private providers. As a result of the competition, the city has saved about $25 million over the past 30 years. Add in savings for competitions for solid waste transfer hauling and landfill operations and the city has saved a total of almost $40 million.
I would like to hear Howard Wayne and Lori Zapf provide their views on the proposed tax increase. I have my suspicions, but maybe we can find out.


  1. Is a half cent going to make any difference at all?

  2. KT,
    I'm not sure of the formulas, but a half cent is an about a 6% increase in the total tax. Further, the local government only gets a small piece (1.5%) of the local sales tax. An increase of .5%, with no change in behavior, results in an increase of 33% to local revenue from sales tax. See Ballotpedia for a good discussion.