Solving San Diego’s Budget Defcit Problem:
l Taxes and the Tourism Ind
Sharanji Singh, Universiy o Caliornia, San Diego
The City o San Diego should increase its Transient Occupancy Tax(TOT) to at least 14% or higher to help curb the current budget defcit.Instead o reinvesting the tax revenue into tourism marketing districts,the income should be directed toward the city’s General Fund to helpsupport under unded city services.
The Ciy o San Diego has a deb looming over is head ha will grow unlessa cu in spending or acquisiion o new capial akes place. The deci refecsununded budgeary needs o ciy services and public goods. Experienced po-lice ocers have fed he ciyo work or agencies providingbeter pay; even consrucionworkers are having rouble x-ing pipe rupures. The deciis expeced o reach $32 mil-lion in 2009 and $85.3 millionin 2011. Insead o relying uponone ime soluions like divingino reserves o balance hebudge, he ciy should seekou more permanen sourceso income. San Diego has alucraive ourism indusry; heciy can aord o levy more axes on he hoel indusry. As San Diego atemps osubsidize he hoel indusry, oher ciies make hoeliers pay or impacs o heirdevelopmens and essenial services.
Increasing he rae o a Tran-sien Occupancy Tax is nouncommon in Caliornia.However, o raise he TOTin a ciy, an amendmen ohe ciy charer is required.In San Diego, he proposalmus be placed on a ballomeasure and muser up herequired a wo-hird voe. Inhe November 2004 elec-
Since 2003, San Diego budge reducions
have amouned o a oal o $126.9 million.The Ciy o San Diego currenly has a Tran-
sien Occupancy Tax o 10.5%, whereas SanFrancisco and Los Angeles have a TOT o 14%.San Diego has a hoel room occupancy rae
o 73.30%, a RevPAR (revenue per availableroom) o $95.843.Only 1/6h o he revenue generaed by he
Transien Occupancy Tax acually goes inohe ciy’s general und.
In 2004, he Ciy o San Diego Fire Deparmen
had an ununded budgeary need o $38 million,and deparmens in he ciy as a whole had anununded need o $274.2 million.San Diego does no require heavy ourism
adverising paid or by he ciy; he ourism in-dusry is largely sel-driven, as evidenced by heciy’s high hoel room occupancy and RevPAR.The revenue generaed by he Transien Oc-
cupancy Tax should be redisribued so ha aleas wo-hirds o i goes ino he ciy’s GeneralFund.