Fail: 137,010 / 38.1% Yes votes ...... 222,166 / 61.9% No votes

See Also: Index of all Propositions

Summary:

Authorizes the City of San Diego to impose a temporary one-half cent sales and use tax for up to five years, only after the City Auditor certifies that specific conditions have been met relating to City pensions, retiree health care, managed competition, and terminal leave for employees.

Fiscal Impact:

If the conditions contained in Proposition D are fully implemented, the total projected savings to the City could range from $3.5 million to $428 million over the next five years, and $8.7 million to $855 million over the next ten years. The implementation of these conditions and the realization of any associated fiscal impact are contingent upon the outcome of the meet and confer process, managed competition and outsourcing requirements of the measure. Some of the conditions are estimated to reduce the City's pension and health care liabilities by approximately $200 million to $500 million and reduce taxpayer financial exposure for pension and retiree health care costs by approximately $20 million to $50 million annually. The other conditions such as managed competition, outsourcing and benefit reductions could save taxpayers an additional $626,000 to $43 million annually. These projected fiscal impacts do not include the additional potential savings from the new Defined Contribution Pension Plan or the results of the Deferred Retirement Option Plan (DROP) Cost Neutrality Study. The estimated savings are based upon current budget information, previous City experience, the application of industry standards and actuarial calculations and are preliminary. Only if the independent City Auditor certifies that the conditions contained in Proposition D are satisfied, will the City's General Fund receive a net estimated $102 million annually for five years in new sales tax revenue from the temporary one-half cent sales tax.

Impartial Analysis from City Attorney

State law authorizes the City to impose a sales tax increase for general purposes if it is approved by a two-thirds vote of the governing body and a majority of the City's voters. On August 4, 2010, six members of the eight-member City Council approved a temporary, one-half cent increase to the sales tax in the City of San Diego that may be imposed only if certain conditions are first met. This measure seeks voter approval of the proposed increase.

The tax increase would not be operative until the City Auditor certifies that the following conditions have been met:

1. The City adopting an ordinance eliminating retirement offsets for elected officials and those City employees not represented by a labor organization. "Retirement offsets" are the amount of an individual's retirement system contribution which the City agrees to pay on behalf of the individual.

2. The City adopting, by ordinance, a managed competition guide for various City services.

3. The Mayor completing a study of costs to the City of the Deferred Retirement Option Plan (DROP) program and presenting findings to the City Council. If the study finds DROP is not "cost neutral," the City will initiate "meet and confer" proceedings with labor unions to make DROP cost neutral.

4. The Mayor soliciting requests for qualifications from bidders to assume operations of the Miramar Landfill.

5. The City adopting an ordinance eliminating terminal leave for City employees. Terminal leave allows employees to remain on the payroll when they end employment, using accrued leave, instead of taking a lump sum payment. Under the ordinance, upon separation from the City, an employee may only cash out accrued leave.

6. The City reducing the total cost of "retirement offsets" existing as of June 30, 2010 for employees represented by labor organizations.

7. The City reducing its retiree health care liability existing as of June 30, 2010.

8. The Mayor soliciting proposals from bidders to provide the City's information technology services.

9. The City establishing a second tier pension plan for new employees represented by the firefighters union, comparable to one in effect for new police officers.

10. The City adopting an ordinance that would allow all City employees to voluntarily select or switch from a current retirement plan to a new alternative Defined Contribution Plan. The new plan may be subject to IRS and other governmental approvals, but obtaining such approval is not part of this condition.

San Diego U-T

• Voters already pay a half-cent sales tax for public safety - 10/23/10
  
  
• Prop D. could force study of DROP benefit - 10/21/10
  
  
• Prop. D could reduce city costs for retiree health - 10/14/10
  
  
• Does sales tax hike dampen sales? - 10/06/10
  
  
• Tax hike's effect on cities mixed - 10/06/10
  
  
• Prop. D would raise city council pension payments - 09/23/10
  
  
• Parsing Proposition D's fine print - 09/14/10
  
  
• City Hall facing challenges of sales-tax reform - 09/06/10

• Business Community Wants More Say Over Prop. D - 09/23/10