ESCONDIDO TAX MEASURE FAILS

City will need cut services to avoid deficit spending

A proposed November ballot measure asking Escondido voters to raise the city’s sales tax by 1 cent to close a projected $176 million budget deficit over the next 18 years failed to garner enough votes for passage at a City Council meeting last week.

Although three of the four council members voted in favor of placing the sales tax measure on the ballot, the measure required four votes and therefore went down to defeat. Mayor Paul Mcnamara and council members Olga Diaz and Consuelo Martinez voted for the measure, while Councilman Michael Morasco cast the lone “no” vote.

Before the vote, the council was presented with the results of a public opinion survey conducted by a polling firm in June, which showed that 71 percent of Escondido residents said they would either definitely or probably vote in favor of such a measure. That survey came on the heels of a previous survey conducted last fall that showed 65 percent of respondents said they would support the sales tax increase. Under state law, the sales tax hike would have required only a simple majority for passage.

Council members who supported placing the measure on the November ballot stressed that the council itself was not passing a sales tax increase, but providing voters the opportunity to decide the matter.

“There’s a reality staring us in the face. If we don’t bring in additional revenue, we’ll be in a downward spiral,” said Mcnamara. “I think it will be a failure on our part if we don’t pass this tonight. We need to trust (voters) to make this decision.”

Morasco questioned whether now — in the midst of an economic crisis triggered by the coronavirus pandemic — is a good time to propose a tax increase. He also pointed out that a large chunk of the money will go toward meeting the city’s unfunded pension liability. With three council seats up for election in November, and the city manager about to retire, he said it makes sense to wait.

“Why not wait until after the November election to start making these decisions that a new council may have a completely different perspective on?” Morasco said.

About a dozen Escondido residents submitted written comments to the council about the issue, most of them opposed to the potential tax increase. Due to the coronavirus pandemic, the council chambers remain closed to the public and council members participated in the meeting via video link.

“The pandemic has already economically devastated Escondido and we already pay amongst the highest taxes in the state and in the country. You are driving the values of our homes down and decreasing our employment opportunities,” wrote Amy Peltekian.

“This proposed perpetual tax increase is wrong for our families, wrong for our businesses, and wrong for Escondido!” wrote Erin Lump.

Several residents wrote in support of the ballot measure.

“Please offer the voters the opportunity to approve this critical revenue which ensures our city’s essential services are adequately funded. This was necessary before the COVID pandemic but is essential now given the revenue shortfall due to business closures,” wrote Austin Miller.

The city has projected that the additional 1 cent would bring in about $25 million per year in new revenue. That money is needed, said a city staff report, because revenue has not kept pace with growing costs, despite efforts to trim expenses in recent years.

“It is becoming increasingly challenging to maintain the quality of city services such as crime and gang prevention, 911 response, pothole repair, street and park maintenance, graffiti eradication, homelessness issues and other core services,” said the report.

The current sales tax rate in Escondido is 7.75 percent, which includes the statewide rate of 7.25 percent, plus a half-cent for San Diego County’s Transnet program. Of that amount, the city currently receives 1 percent.

In all, seven San Diego County cities have enacted local sales tax increases, including Oceanside and Vista, where voters approved half-cent increases, according to the report.

Projections of the revenue to be generated by the proposed 1-cent sales tax increase will likely have to be lowered due to the current economic downturn, City Manager Jeffrey Epp told the council. “I don’t think at least in the near-term it will generate anywhere near $25 million,” Epp said, adding that it could take two to three years for sales tax revenue to return to normal levels.

In an interview, Mcnamara said he was “disappointed” by Wednesday’s vote. He said that if Morasco does change his mind about putting the proposed sales tax increase on the ballot, the council could still schedule a special meeting and hold another vote in time to meet the county Registrar of Voters’ Aug. 7 deadline for the Nov. 3 election.