Show me the money! How San Diego pays for stuff

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February 8, 2013 by Omar Passons

The closest I could come to real baller status for this post - I'm no Sam Hodgson

The closest I could come to real baller status for this post – I’m no Sam Hodgson

This blog is filled filling up very slowly with simple explanations to questions like “how does our city pay for a new fire station or a park?” No offense to Cuba Gooding, Jr., but we can’t answer that question just by screaming into the phone. So this post will give you what you need to know to march right down to City Hall and ask our Mayoral version of Tom Cruise to show you the money. Here goes…

First up, if you want a background on this site, click here. Or if you like food and drink and community, hop over to my slightly more fun site here. Please remember, this is a voluntary effort that includes my own brand of humor, it may not be for everyone. Okay, really, the first thing you need to understand is that our pipes and buildings and roads and parks and such are called infrastructure. Think of it like the skeleton of our city. You can’t run with a broken leg and the city can’t “run” with a broken fire safety system or not enough street lights. Instead of using the word infrastructure, I’ll just talk about our city’s public property. A guy named Almis Udrys is spending alot of time focused on this issue in the office of City Councilmember Mark Kersey and hopefully these posts will explain why we should pay attention too.

So, the first thing to know about how we pay for our public property is that the majority of the money comes from the Capital Improvement Program, or “CIP”. You can read about that here. The CIP is a collection of funding sources, in fact here is a list from our current (2013) budget. There are lots of pots of money in our CIP. Think of these pots of money kind of like your own take home pay. Some money goes to rent/mortgage, some goes to craft beer or the San Diego Public Market or day care, etc. Similarly, we have pots of money in the CIP budget for different things. Here’s how the city explains them. Before I talk about specific examples, there are a couple big picture things to realize about money in the CIP. I’ll start with a photo

Our CIP has big, dedicated sources like the quarter, small, flexible sources like the dime, and scrawny, hard to use sources like the penny

Our CIP has big, dedicated sources like the quarter, small, flexible sources like the dime, and scrawny, hard to use sources like the penny

The quarter is like the Enterprise Funds in that it’s the biggest part of our CIP. But unlike a regular quarter, the Enterprise Funds can’t be spent on anything you want. An easy example is the Water Fund. It comes directly out of your water bill. The budget link above shows it was $90 Million. That’s alot of money….and NONE OF IT can go to put a new street light on your block so your grandma can get her Bingo on and shuffle home after sunset. It’s restricted by law to pay for the cost of bringing us water. The dime is like the General Fund portion. Dimes are easy to come by and easy to use, but they are small compared to the quarter. Our General Fund pot of money for public property this year is about $11 Million. It can be used alot of ways, but like the dime it can only go so far. The scrawny little penny is kind of like our Maintenance Assessment District funds. This year, that was less than one half of a percent of the total budget for these things. And, just like a dingy old penny, you can’t really use that money for much. It has to stay in the District where the assessment (which is kind of like a tax) was created. This is like an HOA fee, except no one gets to tell you how big your BBQ is allowed to be or makes sure your neighbor cuts that out of control dried up forest he calls grass. I digress. These differences help explain why it can be hard to get basic things around your own neighborhood built. Not all the money can be used anywhere and it can’t all be used for every purpose.

You can "follow the money" to better understand how our local system of paying for public property works

You can “follow the money” to better understand how our local system of paying for public property works

Follow the Money

I’m going to talk about three of these pots of money: Developer Impact Fees, the General Fund and TransNet dollars. These matter for various reasons, but they are a good example of how following the money can help you understand how our city pays for stuff. Perhaps most importantly, it can tell you why certain pots of money might be better than others for fixing the city depending on your point of view. First, for this year we had:

  • $11.5 Million in General Fund money
  • $9.3 Million in Developer Impact Fees; and
  • $17.6 Million in TransNet money

General Fund dollars come from the city’s main bank account. It’s where your sales tax and business license fees and even the hotel tax we hit the tourists with ends up. This year, we had $11.5 Million in money from the General Fund to spend on building stuff. How this money is spent is really up to the Mayor, and to a much lesser extent the City Council (aside: this last point is my own opinion, but if you look at the budget the mayor puts forward and the one the Council approves, not that much usually changes). It’s not the point of this post, but if you look at the revenue from last year, you can see alot of it comes from property tax, sales tax and tourist tax (hotel “transient occupancy” tax). I’ll get into why that matters another time. Back to the point.

Developer Impact Fees (or “DIF”) are fees that private companies who build houses/office complexes, malls and things must pay to account for the impact of those projects on the community around them. I explained it more here, too. For example, there’s a lot of information in the paper right now about the One Paseo project. It’s a commercial project for stores and things up in Carmel Valley. There are opponents and supporters of that project. Even Voice of San Diego has done work on it here. If the One Paseo project increases the traffic, the project developer might be assessed a fee to pay for stuff to offset that traffic–like dedicated bike lanes or wider streets or rickshaws (kidding about that last part). The point is the DIF money fixes infrastructure, but only in the place where that project is located. More on why this matters in a moment.

TransNet money comes from the 1/2 cent sales tax the county voters approved several years ago. Yes, you may clutch your pearls now, we did approve a tax in San Diego. Here’s the explanation from the local agency that administers that money about how it came to be. The trick with SANDAG’s TransNet money is that it has to be used on transportation related projects. There’s a very complicated explanation in the law that created TransNet here. That means that bike lanes and (more frequently) roads are okay, fire stations and soccer fields are not.

Enough Background Already – what’s the heck is the point!?!

Okay, if you’ve stuck it out this far, I might as well get to the point. Our CIP budget has lots of pots of money, most of which can only be used for certain things in certain places. When you take away the “Enterprise” Funds (the ones, like the water fund, that have to be spent on a specific thing only), there isn’t much money left. That’s great to keep our water system working, but what about the other things we care about? Here’s a simple set of questions and answers to explain the main points:

Issue: The amount of Developer Impact Fees in this year’s budget is almost as much as the General Fund.

Question: Why does this matter?

Answer: Well what do you think happens if no developer wants to build anything in your neighborhood? You miss out on any of that money to fix public property or build new property. Also, if we pass the cost solely to the developer, we might not reasonably be able to capture the whole cost of those impacts and others who aren’t paying still get some benefit. Maybe paying for impacts of these types with dedicated fees isn’t fair to some San Diegans or to the companies that do the building and we ought to have a broader system that everyone pays into and everyone can use.

Issue: The TransNet money generally comes from a pre-set formula (see pg 10 here) and once it gets to the city it becomes part of the normal budget process.

Question: So?

Answer: Our local government has some ability to influence which transportation projects should receive money, but it’s not as good as if the money could be used for any need we have.

Issue: The General Fund money seems like it could be a larger portion of the CIP

Question: Why isn’t it a larger portion of the CIP?

Answer: Great question. In part it’s because we have to pay for public safety, too. And it’s because we have all those other sources of money. The General Fund, like your main bank account, is how the city pays most of its bills, so it’s like the fund of last resort for the CIP when there isn’t another reasonable source for an important infrastructure project.

So that’s it. If there are other angles you’d like to know about for how our CIP money is spent, please let me know. This isn’t supposed to be comprehensive, just a snapshot to help it make sense a bit. I’d be happy to look at some aspects more specifically. Thanks for reading.

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2 thoughts on “Show me the money! How San Diego pays for stuff

  1. Great Post! I often hear people say “gas taxes pay for our streets”. This is usually in protest against bicycles and pedestrians who are seen as not paying their fair share to use the streets. I know that gas taxes pay very little (if any) toward the construction and maintenance of San Diego’s local streets. Do you have any detail about where the money comes from to pay for streets, and what percentage comes from “user fees” (i.e. gas taxes)?

    • Omar Passons says:

      Thanks Walter. I don’t have it handy but may dig it up after my next effort. I am working on some follow up items specific to our upcoming condition assessments and the Enterprise Asset Management System (and related planning). Asset Management is as important as it is boring (to some), but we really need to focus in before the databases are all established and shifting priorities or variables becomes virtually impossible. Will keep you posted as I find the data you mention

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