When San Diego’s population and economy grow, it significantly affects how well the city provides its residents with basic services like emergency responses and functional roads. The Rebuild San Diego ballot measure proposed by the city of San Diego pays no attention to this fact.

Commentary - in-story logoBoth inflation and growth rates impact municipal budgets, and observers frequently confuse the two.

Inflation, or price rate increases, makes it so the city gets less out of each dollar it spends, either in materials, like cement or fuel; or labor, like salaries or benefits.

On the other hand, population or economic growth rate increases, increase city expenditures because they create the demand for the city to purchase more materials or labor to keep service levels even. If there are more people calling 911, there will be a need for more dispatchers, police-officers, EMTs and vehicle maintenance crews. This service demand from growth happens regardless of inflation.

For a large city like San Diego, as population grows, not only does it generate a greater demand for services, but the cost of providing those services to each person also increases alongside increases in population density.

During San Diego’s financial crisis, I compared the revenues and expenditures of the largest cities in California. The Bottom Line, published in 2005 by the Center on Policy Initiatives, found that the city of San Diego had difficulty keeping up with service levels relative to growth from 1990 to 2000.

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The report showed there was an all-around deterioration in level of services in the city of San Diego, not just infrastructure, as the population and economy grew.

Now that we are in the midst of an economic recovery, some services are being restored, but in many instances we have yet to catch up equitably.

The natural increases in taxes collected by the city should ideally meet the demand from economic and population growth, and outpace the rate of inflation. For example, general fund revenues this year are expected to grow 5.5 percent annually – almost double the rate of statewide inflation, 2.79 percent annually, according to the ballot measure proposed by the city. Sales taxes are expected to rise 11.1 percent this year, almost quadruple the rate of CPI inflation.

Yet, the proposed ballot measure only accounts for inflation in its projection of spending increases on general services in the future. This limitation prevents the city from applying new revenue that comes from economic and population growth to the increased service needs the city will see as a result of that growth.

By earmarking all increases in sales tax funds for physical improvements to things like roads and sidewalks through ballot-box budgeting, the measure essentially blocks the city from spending a fair share of revenue increases on other services, such as public safety, which, including police, fire and lifeguards, accounts for over half of general fund expenditures.

The math is simple. If over half of incremental general fund revenues through 2022 are set aside for infrastructure, then public safety is going to see its share of general fund spending shrink over time. If all sales tax increases through 2043 is set aside for infrastructure, no sales tax increases will go to public safety – even as service calls increase. Consequently, as population and economic growth increases demand for police, fire and rescue services, spending on public safety services will not be able to catch up on a per-person basis.

By considering only the inflation rate, and ignoring the growth rate, Rebuild San Diego has a built-in assumption of zero growth for other services funded by the sales tax. This is obviously erroneous. The city of San Diego’s population is projected to grow by almost 40 percent, to 1.8 million by 2040, with an accompanying growth in jobs and housing, according to the San Diego Association of Governments. The region’s gross domestic product grew by 3 percent this year, when adjusted for inflation, according to the National University Institute System for Policy Research.

Rebuild San Diego effectively creates a limit on future spending increases for all non-infrastructure services, such as public safety.

The measure undermines the role of the City Council in prioritizing spending during the budgeting process, and balancing the needs of city residents with the resources available that year.

Rebuild San Diego is robbing Peter to pay Paul. Unless the city were to increase tax rates to supplement the declining share of public safety and other non-infrastructure spending, the measure is likely to create an artificial ceiling on increases in public-safety spending, and consequentially cause a long-term decline in the level and quality of services.

Murtaza H. Baxamusa is the director of planning and development at the San Diego Building Trades Family Housing Corporation, and teaches urban planning at the University of Southern California. Baxamusa’s commentary has been edited for style and clarity. See anything in there we should fact check? Tell us what to check out here.

    This article relates to: Infrastructure, Opinion

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    Mark Giffin
    Mark Giffin subscribermember

    "For a large city like San Diego, as population grows, not only does it generate a greater demand for services, but the cost of providing those services to each person also increases alongside increases in population density."

    So Max what you are saying is that in Government the principal of "economy of scale" does not apply? 

    If so then that is really a statement of the problem

    Bill Bradshaw
    Bill Bradshaw subscribermember

    I believe Mr. Kersey’s financing plan is based on the assumption that the public won’t vote to tax itself, even for repairing vital infrastructure like water mains, sewer lines and storm drains.  He’s probably right, so the promoters of the Convadium face a daunting task of fooling the public into believing it’s another free lunch, just like Petco Park.  They’re up to it, trust me on that.

    There simply isn’t enough revenue to cover all the commitments.E.g., despite the alleged pay fix to retain police officers, we’re continuing to lose them at a rate about equivalent to academy graduations, and many go to other local agencies.  If you’ve tried to call the police non-emergency number, or even occasionally 9-1-1, you no doubt have encountered long delays before the phone is answered.  At a town council meeting I attended last night, the cops admitted that they are now losing dispatchers at a high rate as well.  They take a long time to train, just like sworn officers.Shouldn’t we be dealing with retention problems like these? 

    Richard Gardiol
    Richard Gardiol

    The Mayor and City Council are playing San Diego citizens with a con game. They have a revenue stream to work with that will pay for current service and infrastructure needs but choose to spend the money on low priority feel good projects that benefit a small but vocal segment of the population, like ball parks and convention centers; thus creating a short fall that they plan to make up by dedicating a portion of the revenue from future development and borrowed money. This is the antithesis of fiduciary responsibility. San Diego deserves better.

    DavidM subscriber

    What if Paul is simply grabbing what Peter took for several years?

    Derek Hofmann
    Derek Hofmann subscribermember

     "For a large city like San Diego, as population grows, not only does it generate a greater demand for services, but the cost of providing those services to each person also increases alongside increases in population density."

    Did you know that the cost of infrastructure per person decreases as density increases? If you need 'x' fire hydrants per square mile, then if you put more people into that square mile, the cost per person of fire hydrants drops. http://www.strongtowns.org/journal/2015/9/14/lafayette-pipes-and-hydrants

    "The city of San Diego’s population is projected to grow by almost 40 percent, to 1.8 million by 2040...according to the San Diego Association of Governments."

    If we don't build it, will they still come? Does SANDAG still not believe in induced demand?

    Greg Martin
    Greg Martin subscriber

    @Derek Hofmann The type of growth matters.  Sprawl is expensive as it increases long-term liabilities relative to the taxes to pay for them.  There's a reason the city is crumbling and sprawl is a big part of it.  We are unwilling to pay the taxes necessary to maintain all of that infrastructure. 

    We do have a few options:
    - Reduce infrastructure to a level the current taxes can properly maintain.

    - Stay sprawled and either raise taxes significantly to properly maintain it or not raise taxes and watch it continue to crumble.

    - Increase density (and tax revenue over a given area) which helps reduce the maintenance deficit. 

    Ron Hidinger
    Ron Hidinger subscriber

    @Greg Martin @Derek Hofmann Yes, but the author specifically said cost per person increases with density.  That can only happen if there are bureaucratic inefficiencies built into the delivery system, i.e. featherbedding the maintenance of those fire hydrants.  Which is it?

    Murtaza Baxamusa
    Murtaza Baxamusa subscribermember

    @Derek Hofmann The statement refers to increasing service costs with increased density. In a ground-breaking study of 247 large counties across the nation, Dr. Helen Ladd of Duke University found that except in sparsely populated areas, all else being equal, higher density typically increases public sector spending. In addition, the results suggest that when municipal spending is not able to catch up with rapid population growth, it results in lower service levels.