SAN DIEGO (FOX 5/KUSI) — With the November election comes a number of local measures all focused on sales tax changes. This includes a proposal to raise the city of San Diego’s sales tax rate by one cent.
Measure E, which was pitched by city leaders earlier this year, is one of nearly a dozen local ballot measures to be decided alongside races for elected offices.
Find a breakdown of all of these races and what San Diego voters need to know to participate in this year’s general election in FOX 5/KUSI’s Local Election Headquarters 2024.
What would Measure E do?
Measure E would raise the city of San Diego’s sales tax rate by 1%, or one cent, starting on April 1, 2025.
On certain purchases, this would bump the current sales tax rate from 7.75% to 8.75%. Under state law, essential products like groceries, diapers, menstrual products and prescription drugs are exempt from these fees.
At the current sales tax rate, only one cent per dollar actually goes to the city in revenue. The remainder typically goes to the state or other local entities.
According to the city’s Independent Budget Analyst, adding an extra percent to the sales tax rate would allow San Diego to collect two cents on the dollar in revenue, which would generate an additional $360 million to $400 million for local services.
Why is Measure E on the ballot?
Measure E was placed on the ballot by city leaders to address a roughly $200 million structural budget deficit, meaning the city’s ongoing costs currently exceed regular revenue, heading into the next budgeting cycle.
The city had to contend with a similar gap of about $170 million while working to pass the most recent budget, although the Independent Budget Analyst’s office says they were able to close it without making steep cuts through one-time funds and temporary reductions to expenses.
When those steps expire heading into the next fiscal year, the analyst’s office added “more severe and permanent operational cuts” would need to be made to balance future budgets, affecting funding for things like public safety, emergency response and neighborhood services.
However, one of the biggest impacts these cuts would have is on San Diego’s significant — and ever-growing — backlog of local infrastructure projects. To close the backlog, the city estimates it would need to spend $9.25 billion over the next five years.
Should it be passed, city leaders say the funds Measure E would generate could be used for these projects to maintain and fix roads, streetlights and storm water systems. Although the cash would go into the city’s general fund, meaning it’s not legally restricted to any one use.
As it does not levy a special tax, the measure requires a simple majority of “yes” votes to pass.
Arguments for Measure E
The San Diego City Council unanimously passed a resolution to put Measure E on the ballot on the heels of a budget process where proposed cuts to equity programs, police and fire training, and libraries were met with impassioned pushback from the public.
Supporters of Measure E describe the tax hike as necessary to improve public infrastructure, emergency response times and the city’s storm water system. Billed as a “Penny for Progress,” backers say the measure would have “an immediate impact on every San Diego neighborhood.”
“Oher cities in the county of san diego where people go shop, go have fun, they have a higher sales tax than us right now,” Councilmember Raul Campillo, who has championed the measure alongside Mayor Todd Gloria, said in a March press conference. “We’re asking voters to step up for us right now so we can invest for their families going forward in the future.”
The ballot measure is endorsed by all of the city’s municipal unions, like the San Diego Police Officers Association, San Diego City Firefighters Local 145, San Diego Municipal Employees Association, and San Diego City Lifeguards. It also has the support of the Middle Class Taxpayers Association, San Diego Coastkeeper, and the city’s public library and parks foundations.
Arguments against Measure E
Opponents of Measure E, including the San Diego County Taxpayers Association, do not contest that the city faces significant funding shortfalls on things like infrastructure, rather they argue raising the sales tax is not the way to close this gap.
Detractors contend city leaders need to demonstrate better fiscal discipline and be willing to make hard cuts in order to make sure things like infrastructure projects get funding. They point to recent issues with water billing, real estate deals and improper raises on city contracts.
Those against Measure E also take issue with its lack of a sunset clause, meaning it would remain in place in perpetuity. The Taxpayers Association is backing similar sales tax raises in other cities like Chula Vista that have expiration dates.
Besides the Taxpayers Association, the Lincoln Club of San Diego, a conservative business association, and Carl DeMaio’s political action committee Reform California are also opposing Measure E.
