Faulconer’s Proposed Tourism Tax Increase: Perpetuating the Hourglass Economy

by on June 8, 2017 · 2 comments

in San Diego

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By Lori Saldaña

I’ve been reviewing various reports about the proposed ballot measure and special election that seeks to increase the Transient Occupancy Tax (TOT). Proponents tell us this is needed to fund a Convention Center expansion, pave our streets, and provide shelter for homeless people — wow!

Impressive — if true.

I’ve shared these thoughts and research points with others, including a member of the Convention Center board, and wanted to include others in the conversation.

First: for 20+ years I’ve taught Business IT skills as part of the Community College’s Workforce Development program. Throughout that time I’ve been looking at what actual jobs result from different types of taxpayer “investment” and what that means for my students.

Related: The classes I teach are free — subsidized by taxpayers via the State of California’s community college funding to develop and support the state’s skilled workforce.

Many of my students are immigrants, English learners, disabled, women, and/or older workers who have lost their jobs and are returning to school as part of retraining for new employment. Many are veterans, and/or homeless or living in supportive housing, and are dealing with physical and learning disabilities, addictions, PTSD and related health issues.

These students are in school because they want to be prepared for good-paying jobs to support themselves and their families. They see education as a step to achieving those goals. We research job postings, refer them to career counselors, help with their resumes, and look forward to turning them from “tax eaters” to “tax payers.”

This year, the largest graduating class in district history completed their studies and earned certificates, diplomas or degrees. As the Chancellor noted: “A total of 11,542 degrees, certificates, and diplomas were awarded to the Class of 2017, or, by another measure, 11,542 dreams were achieved.”

So my concerns about San Diego taxpayers subsidizing the convention/tourism/hospitality sector — and for that matter, picking “winners and losers” in any economic market — is that many of the related jobs that are created are not permanent or good paying. They will not help our students achieve their dreams.

This, in turn, contributes to a low-wage regional economy and increasing homelessness/food insecurity rates among working people in San Diego.

“Between April 2016 and April 2017…Five sectors experienced year-over job losses: Trade, Transportation & Utilities (down 800), followed by Leisure & Hospitality (down 300)…

Question: Why would we raise taxes to fund an industry that consistently loses jobs and often pays low wages?

Moreover, if an expanded Convention Center would bolster these sectors, the jobs are often seasonal. They are the types of jobs that contribute to people becoming “working poor” who can’t afford housing or food.

According to another report:

“In some of San Diego County’s major industries, almost half of employees have incomes too low to live self-sufficiently.”

“Jobs that pay too little to cover basic expenses are concentrated in some of the largest industries in the region, including tourism (hotels, restaurants, and entertainment), other services, retail sales, construction.”

hourglass economy

Credit: Center on Policy Initiatives

So even though BUILDING an expanded Convention Center employs many people during the construction phase (mostly, but not always, men) — this is for a relatively short time. This is simply not sustainable in the long term, if the buildings they create will not be used by people doing good paying jobs in the future.

And I write this as a former union carpenter, who appreciates the skills — and the risks — of this work. I was able to save enough money to return to SDSU, earn a master’s degree in education, and receive a teaching contract. Now, I see students in my computer labs who were injured doing construction work and are being retrained with skills for different work.

Finally: the idea that local General Fund revenues will increase with more tourism jobs may be true — but TOT is dwarfed as a revenue source by property taxes and sales taxes.

Let’s look at what that means in real terms:

Low-wage workers in San Diego cannot afford to buy a home with the median price of over $500,000, so they don’t pay property taxes (directly) or get a federal mortgage tax benefit.

Instead, they pay other people’s mortgages and property taxes via high rents, which means they have less money to spend on shopping, which means lower sales tax revenues for the city. From 2016-17, they declined by $13 million, or 4.5%.

So the Mayor’s proposal, in the long run, is a bad deal for most San Diegans. And a few million (or less) for homelessness won’t keep up with the structural problems that result from subsidizing low-wage, seasonal and/or temporary jobs in construction, tourism, hospitality and related services.

If the Mayor and others in San Diego continue to create low-paying jobs and an hourglass economy, they will undermine our region’s long-term capacity to develop good-paying jobs, expand home ownership vs. lifetime renters, and stimulate retail sales.

Credit: HRMagazine/UK

This, in turn, undermines many other sectors of economic growth. It contributes to high housing prices, which discourage businesses from expanding and/or relocating here since their employees can’t afford housing without increases to their salaries.

Tourism also hurts affordability, by taking formerly affordable housing off the market (see: Air BnB and vacation rentals in beach areas). So for those who are already here: housing insecurity (e.g., couch surfing), homelessness and other problems have been escalating in recent years.

Bottom line: the proposed Tourism Occupancy Tax and the city’s continuing emphasis on expanding and relying on tourism/hospitality vs. other job sectors is simply not sustainable. It does not create enough good-paying jobs, and will not adequately fund services for preventing/managing homelessness, which may continue to increase under this scenario.

I welcome your comments and thoughts on this topic. And please share if you think it’s worthwhile.

{ 2 comments… read them below or add one }

daniel beeman June 9, 2017 at 1:53 am

Ms. Saldana, I think one other point that you’ve forgotten to put in is the cheapness of employers today! Back when you & I started working we didn’t even have a answering machine(most of us). So we were not obligated to help out until scheduled again, and hard for employer to change! Today the employer anticipates, and really demands you have a smartphone and high speed internet/connection! In fact all the company policy manuals are online too! They need you to have a vehicle so you can work 24/7 because buses & trolleys don’t run all night! And they don’t accommodate the #(employee)! Only bean counters appreciate the #. Few employers even care to know your name, address, etc, except it is required to fill out the (gov’t)form. They expect you to remain healthy as they don’t cover you with good health insurance if any! And you always have to pay a part of premium even if you only make minimum wage which we all know doesn’t cover rent let alone food, transportation expenses and clothing needs. Entertainment?! Yeah washing dishes, doing chores, reading your email or company facebook page! When they do hire you then they start the game switch, oh you want to stay? We need you Saturdays…just 3 hours, and don’t complain lots of others wanting a job. WE reduce your other weekly hours, 6.5 each day to accommodate! And we expect you to take home some deliveries, pick-ups, etc. on your way home: see new business fad Amazon, Walmart & more! So how much is a business rental car a day, and cell phone business package a month, business computer (your home computer!!!) & connection (high speed needed to run programs for work). Look another thing I was homeless when I went to Aero Continuing Ed. Ctr. No one knew, and I wouldn’t tell anyone! It marks you, they benefit, more subsidy money, and you get weird eye from then on! And when they find out they use you in a marketing piece. See current catalogs, facebook pushes, and other marketing pieces. NONE of their/your business! Homelessness & financial difficulties can easily mark you for life! Treat everyone well & the same and there won’t be any problems. Help if they ask, but don’t pry to solve “their” problems. Only if they ask for help, and then don’t judge…just help. We know pity, lining up to get some extra benefit dollar$ or “look good” piece. NOW, let me tell you big broken with SDCCD! No place to buy food with food stamps! YEAP, no place. There all day, no refrigeration, and can’t buy food without cash/credit card! Also they have system set up for only one way, the system way or track…not for individuals, but that is what community/continuing education is! Individual/personal training via a group for progress…human, work, community. As for outside employers that is another sham, that is regularly let be under “partnership” for mutual benefit with minor benefit for Student & worker! Look Sharp Healthcare, largest non-gov’t employer in County, so called “non-profit” w/ Millionaire Admin. people, doesn’t give anything beyond forced basic benefits! Most jobs now per diem, get away without benefits until new recent City Labor law changes! Then when you go to get benefits they look at you skewed while marking it in their book against you! And most companies give you the bait and switch, especially lower level jobs. Anything semi physical means they can get you to do what ever they want physically, and with a smile! And then when you do finally get the raise they have some lame excuse not to totally pay you what they suggested, ask you to work more hours/different shift, and probably won’t pay you extra for new duties! What if employers had to see you were housed, had to pay for training for job specifics, and not just on-the-job training where you slow down the customer, making them upset b/c not taught before hand. What if they paid out of pocket for off sight education…b/c they benefit the most, and quickest! What if they jointly with other area companies built affordable housing near the workplace!???! Now they have another valuable asset! And even bought vacation properties so you could get away for sure during vacation rather than doing catch-up chores, stay vacations cause you can’t afford anything else! What if they even had a fund for troubled times, rather than need for paid-day loans, when roof leaked, a/c went out, or car broke down suddenly?? Hmmm, true community rather than just carrot & stick program! Funny how people that do little physical work (not wearing themselves out) get to go to catered meetings, luncheons off property, retreats, and out-of-town paid for seminars & paid travel! God forbid you have a child needing help during work although they want the kid later for cheap summer employee when turns 16!! Yes, We CAN, make better workplace, education centers, and coalition building, but not if we keep doing same-old, same-old with NIMBY attitude. Peace, Love, Joy, ~daniel,human


Val June 12, 2017 at 11:32 am

Great article


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