Developers must start paying for growth

Why is the city of San Diego behind by more than $4 billion in infrastructure improvements?

You’d be outraged if the government made you send money to help wealthy developers build their next community. Yet, in effect, that’s what’s happening.

In the early 1970s, some citizens and elected officials were just starting to ask the question in the San Diego region, “Does population growth cost money?” At that time, a clear majority of elected officials held the strong belief that not only did growth not cost money, it added to the tax base and therefore created an additional income source over and above any costs that it created.

Population growth was encouraged as a source of revenue that would pay for itself, add money to government coffers, and improve the quality of life for existing residents.

Local politicians for most of the 1970s had a significant advantage not held by those in local office today. At that time, each City Council could annually set its own property tax rate. This meant that local budgets were easy to balance: Once the annual budget had been agreed to by the council, members simply had to multiply the existing property tax rate by the assessed valuation within the city to determine the income that would be generated that year. If the budget required more dollars to be balanced, it was simply a matter of adjusting the tax rate upward to generate the necessary income.

Generally from the time of World War II into the early 1970s, it was seldom necessary to increase the tax rate by much to “balance the local budget.” This was true largely because inflation continued to increase the assessed valuation of land and buildings by more than enough to generate the needed income.

It is important to understand this history for two reasons. First, it created a mindset that population growth was good because it more than “paid for itself.” Second, because growth never really has paid for itself, it led to a major taxpayer revolt that resulted in Proposition 13, passed by the voters in 1978, that limited property tax increases. This forced a new way to fund growth. “Development impact fees” were the way of the future. But these fees were set too low and have remained too low for the last four decades.

It’s been 44 years since Proposition 13 was passed and many if not most cities and counties in California are still not setting impact fees at a level to cause growth to pay its fair share. These shortfalls (like the $4 billion-plus for streets and roads and other infrastructure in San Diego) mean that existing taxpayers will be required to pay for the mistakes of the past or suffer the problems of insufficient infrastructure.

Unfortunately, this is true not only for roads, but also for schools, police, fire, libraries, water, sewer, storm drains, parks and more.

This shifting of the cost of growth to the taxpayers from the developer needs to stop. It will only if the voters hold their elected leaders accountable or replace them. Think about this the next time you are asked to vote for a “bond” issue!

Jerry C. Harmon, former Escondido mayor