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Waive the Limit

September 27, 1987

In a mini-version of the statewide debate over returning money to the taxpayers versus spending it on needed services, voters in the City of San Diego will decide in November whether to waive for four years the restrictions of the Gann limitation.

Approved while Proposition 13 euphoria was still at its peak in 1979, the Gann limit does not affect the amount of tax money the city collects , but does control how much it spends. This is the same law Gov. George Deukmejian is using to return $1.1 billion to state taxpayers despite overwhelming public support for giving that money to the public schools.

The law uses the tax revenue collected by a governmental entity in 1979 as its base and allows increases according to population growth and inflation. If more money is collected than can legally be spent--as would happen here for the first time next year--it must be returned to the taxpayers.

Whether that is a good idea on the state level or not, at least it can be done equitably by sending rebates to those who filed income tax returns. At the local level, however, the city would have to figure out a way to give back money collected from property tax, sales tax and even the transient occupancy tax. It would be a logistical nightmare--and an expensive one.

Another problem with the law is that it uses national inflation factors that do not necessarily represent the cost of government in California and that have not grown as rapidly as the costs of providing services such as police and fire protection, road repair and sanitation.

The city projects that about $160 million in revenues is at issue during the period of the waiver, beginning with $10 million in the next fiscal year and ending with $65 million four years from now. At that time, the city would have to return to the voters if it wanted to continue the waiver.

This may be the only time such a waiver request is necessary, however. Bill Honig, state superintendent of public instruction, is trying to qualify for the ballot next year a statewide initiative that would liberalize the Gann limitation. That would be a benefit for local governments as well as for state government. But for now, it is important that San Diego residents vote yes on Proposition E on the Nov. 3 ballot so that city government is not artificially constrained from doing its job.

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