Statement: “Very clear that we’re not going to use our general fund monies to subsidize an expansion at this point,” Carl DeMaio, a San Diego mayoral candidate, on the Convention Center expansion in an interview Feb. 10.
Determination: Huckster Propaganda
Statement: “There is a cap right now. Yes there is. There is a cap,” DeMaio on the city’s financial contribution to the expansion in the same interview.
Analysis: Mayoral candidate Carl DeMaio’s political career has been built in no small part on opposing tax, fee and other revenue increases to the San Diego treasury.
Yet, he backs a Convention Center expansion. The expansion’s financing plan relies on a tax increase on hotel-room stays to raise more than $1 billion over the next three decades.
I talked with DeMaio last week about his tax record and the discussion transitioned to his support for the Convention Center expansion. Here’s the exchange:
LD: Why the Convention Center tax increase?
CD: I support the Convention Center because it creates jobs and brings revenues into the city for our municipal services. What I told the industry is that you have to pay for it. Very clear that we’re not going to use our general fund monies to subsidize the expansion at this point. We don’t have it.
The Convention Center financing plan, however, does tap the day-to-day operating budget, or general fund. And in his many votes in favor of moving Convention Center financing forward, DeMaio never has expressed outright opposition to using any general fund dollars. (A similar statement on the general fund earned one of the half-dozen Huckster Propagandas we gave out last year.)
I pointed out to DeMaio that the general fund is on the hook for $3.5 million a year under the financing plan. He took the conversation in another direction.
LD: You are. $3.5 million a year.
CD: I have a cap right now on that. My goal is to eliminate the need for that funding. I’ve been very clear about that.
But there isn’t a cap. I told DeMaio that.
LD: You don’t have a cap. There’s no cap now.
CD: There is a cap right now. Yes there is. There is a cap.
LD: How is there a cap right now? They haven’t voted on it.
CD: Well, the commitment is that we’re going to have a cap on that deal.
The “cap” that we’re talking about would be a hard ceiling on the amount of money that could come from the general fund. It would limit taxpayer risk.
The other two groups involved in the financial plan — the Unified Port of San Diego and the city’s hoteliers — have a hard cap on the contributions they’ve arranged.
The city, however, doesn’t have that cap. That leaves taxpayers — not the port or tourists — at risk right now if there are any shortfalls.
A DeMaio staffer, Diana Palacios, defended both of the councilman’s statements.
The city isn’t using general fund dollars to finance the expansion, she said, because the bill will be covered by new revenue created by the project.
“These are new funds generated from the expansion itself,” Palacios wrote in an email to us.
We debunked this same “no general fund” argument in a December Fact Check of expansion point man Steve Cushman:
A city consultant says the expansion will generate roughly $13 million in additional tax revenue each year. Though the project would cost the general fund $3.5 million annually, Cushman argues the budget would still see a net increase of $9.5 million.
But that doesn’t mean the financing package doesn’t include general fund money. At the very least, the proposal would siphon $105 million in revenue that would otherwise flow into the same pot of money that pays for police, firefighters, parks and libraries.
If the projected revenues don’t materialize, city financial officials warn, San Diego would also be left on the hook to still pay for the project. The Convention Center expansion would cut into the general fund.
The city also has capped the spending of these dollars, Palacios argued, because a financial official said so at a January hearing. Similarly, a staff report from the same meeting references spending no more than $3.5 million a year.
Those are merely pledges. They aren’t the kind of hard cap that DeMaio has sought and that the other financial contributors to the expansion have attained.
Both the port and hoteliers have had their contributions capped through formal votes. The city hasn’t.
That’s important because there’s also precedent for the city’s share increasing without warning. Back in October, backers said they needed $3 million a year. That figure increased to $3.5 million a month later.
DeMaio also has failed in two separate attempts to limit taxpayer risk.
In January, DeMaio tried a different approach. He wanted any excess dollars from the visitor tax increase to pay back the city’s contribution to the expansion. That effort also was unsuccessful. But DeMaio once again voted in favor of the expansion.
And even DeMaio backs off calling the current situation a “cap” during the interview. Instead, he refers to it as a “commitment … we’re going to have a cap on that deal.”
To review, DeMaio has been highly involved in Convention Center financing decisions, including several votes in favor of the project moving forward.
It’s reasonable to assume that he knew his first statement about the general fund was false and he used it to try to square his political identity with his support for expansion. That one’s Huckster Propaganda. The second statement is just False. There have been assurances that a cap will be there, but to date DeMaio’s attempts to get any sort of firm taxpayer limit have failed.
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Liam Dillon is a news reporter for voiceofsandiego.org. He covers San Diego City Hall, the 2012 mayor’s race and big building projects. What should he write about next?
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This article relates to: Election, Fact Check, Government, Mayor 2012, News
Tags: business finance, Carl Demaio, Convention Center, Convention Center Expansion, Diana Palacios, Fact Check: False, Fact Check: Huckster Propaganda, Liam Dillon, Mayor's Race, San Diego, San Diego City Hall, San Diego Mayor's Race, Steve Cushman, Unified Port Of San Diego