MEMORANDUM

TO: HONORABLE SAN DIEGO CITY COUNCIL MEMBERS

HONORABLE MAYOR JERRY SANDERS
FROM: LANI LUTAR, PRESIDENT & CEO, SDCTA
SUBJECT: DOLLAR FOR DOLLAR BALLOT PROPOSAL
DATE: AUGUST 3, 2010

The San Diego County Taxpayers Association appreciates Councilmember Frye and Gloria’s
recognition that reforms should occur before citizens pay more in increased taxes. Last
week, the San Diego City Council directed the City Attorney to draft a ballot measure with
the stated intent of achieving this goal. At the same hearing, several Councilmembers clearly
communicated that the City cannot achieve financial stability without substantial reform.

The Association’s concerns with the “reform” components are as follows:

Several of the measures, as drafted, would create an adverse incentive to achieve
minimal savings. For example, on retiree health costs, the measure simply states that
“The City shall reduce its future unfunded retiree health liability.” Eager to check
off this item from the list of measures, the City Council could simply settle for a $1
reduction to the unfunded liability.
The measure pertaining to managed competition has already been mandated by the
voters through Proposition C in 2006.
Measure #4 regarding the solicitation of RFQs for the Miramar Landfill
Operations/Lease has already taken place. Likewise, the Mayor has already stated his
intent to pursue Measure #8 regarding solicitation of proposals from qualified
bidders to take over the operations of the City’s IT services.

The items noted above demonstrate the weakness of several measures. This is not an all
inclusive list; we have concerns with several other measures on the list because as drafted
they do not guarantee savings or incentivize achieving the best outcome for taxpayers when
linked to the sales tax.

110 West C Street, Suite 714, San Diego, CA 92101 • P: (619) 234-6423 • F: (619) 234-7403
www.sdcta.org
As a result, we’d like to offer an alternative proposal that would clearly demonstrate the
Mayor and City Council’s genuine commitment to achieving substantial reform outcomes
which voters can be assured will result in measureable, annual savings. Our recommended
modifications would also address City Attorney Jan Goldsmith’s recommendation for a clear
trigger target. We understand that the City Attorney has stated that there are risks to not
establishing a clearly measurable standard.

DOLLAR FOR DOLLAR PROPOSAL

The 5-year ½ cent temporary sales tax should only be triggered after the completion of all 10
measures and General Fund annual savings of $103 million per year (using the FY 2011
Council-approved budget as the baseline) achieved from a combination of pension and
retiree healthcare reform and outsourcing/managed competition.

The Mayor, Independent City Auditor and Independent Budget Analyst shall each provide
verification that $103 million in aggregate savings over the baseline FY 2011 General Fund
Council-approved budget has been achieved prior to the tax being levied. The savings
calculation associated with retiree healthcare shall use the FY 2011 General Fund budgeted
payment of $40 million as the baseline. The City Council shall not delegate its authority to
any public officials to determine when the tax is triggered. The City Council shall make the
required findings that the $103 million in cost savings has been met, upon receiving written
verification from the Mayor, Independent City Auditor and Independent Budget Analyst and
shall trigger the tax via ordinance and provide said ordinance to the Board of Equalization.

This is an equitable proposal that results in a $1 tax increase for every $1 in general fund
savings achieved through reforms.

Please don’t hesitate to contact me at (619) 234-6423 if you have any questions.

Lani Lutar
President & CEO
San Diego County Taxpayers Association

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