City Council Backtracks on Tax Increase : Budget: After stormy session, it appears likely that revenue issues will be put before San Diego voters on June 5 ballot.

Responding to public outrage, the San Diego City Council rescinded Thursday a $20-million property-tax increase it enacted two weeks ago, then failed in repeated efforts to raise enough revenue from other sources to balance next year’s budget.

In its second chaotic four-hour budget hearing this month, the council agreed that it wants to spend $492.5 million to keep city services at current levels and finance for mandated programs when the 1991 fiscal year begins July 1. The sum is $59.9 million more than the city expects to have in its treasury next year.

But separate proposals by Mayor Maureen O’Connor and council members Bob Filner, Ron Roberts, Judy McCarty and Bruce Henderson to pay for those services through tax and fee increases were defeated in an afternoon that left council members visibly weary and frustrated.

Thursday’s decisions mean that city voters most likely will be asked June 5 to approve four separate tax and fee increases totaling $79.4 million, according to revised city budget estimates, and a fifth measure to override the city’s Gann spending limit for fiscal 1992. The council must vote once more Monday or Tuesday to formally place the measures, endorsed Feb. 8, on the June ballot.

But, even if all four measures are approved--an unlikely eventuality because two of them require two-thirds voter approval--City Manager John Lockwood will be about $30 million short of the $492.5 million needed to fund basic city services beginning in July.

That, he said, will mean cuts in library hours, park and recreation programs, police storefronts, social services, improvements to Mission Bay park and promotional programs. The precise cuts will be determined later.

Left unfunded and unaddressed Thursday was much of the wish list that the council tentatively added to the city budget Feb. 8, including a proposed $54-million housing trust fund for the poor, $8 million for new jail cells and $1.6 million to fight San Diego Gas & Electric’s proposed merger with Southern California Edison. The trust fund is scheduled for a separate review next month.

Henderson, who favors budget cuts over tax increases to balance next year’s budget, called Thursday’s actions “a great victory for reality and a great victory for city taxpayers.”

But Councilman Wes Pratt, in a lengthy, impassioned speech, implored the council to enact some revenue-generating measures itself and accused his colleagues of evading their responsibility to solve the city’s looming budget crisis.

“I know they’re tough decisions,” Pratt said, “but we simply abdicate our responsibility during this budget crisis by saying ‘let the voters decide.’

“I’m not here to get reelected. I’m not here to run for higher office. I’m here to to deal with the real financial crisis we have before us,” he said.

The debate turned political when Filner and Roberts, potential rivals for the mayor’s office that O’Connor will vacate at the end of 1992, sparred over taxes and spending. Filner demanded to know whether Roberts would campaign for tax and fee increases that he voted to place before voters; Roberts said he would not promise to support the revenue measures if they would be spent on the housing trust fund that Filner favors.

But the council spent most of the afternoon growing irritated at its futile efforts to fashion a five-vote majority for packages of linked tax and fee proposals. Most were made up of increases in the business license tax, establishment of a commercial and industrial utility users tax, increased property taxes and diversion of some of the city’s hotel tax funds from promotional programs to other city needs.

O’Connor and Councilwoman Linda Bernhardt favored placing every measure before voters; Filner and Pratt supported council enactment of several of the measures. Henderson demanded that any tax increase receive two-thirds voter approval, even if the law requires only a simple majority.

Other than adopting a spending plan, the council’s only successful vote was to repeal a $20-million property tax enacted Feb. 8 that would have added $44 to every $100,000 of assessed valuation. The revenue, which would have funded city employees’ pension fund and freed $20 million to pay for other city services, was voluntarily rescinded by the city in 1978 and can be reimposed without a vote of the public, city attorneys have ruled.

Council members John Hartley, Abbe Wolfsheimer, Roberts and Bernhardt, who voted for the measure two weeks ago, switched sides to form an 8-1 majority that left only Pratt favoring the tax.

Roberts, Wolfsheimer and Hartley said they had thought they were voting last week merely to put the measure on the ballot, not to enact a tax increase. But Thursday, the council defeated attempts to place the tax increase before voters.

As a result, voters will see only these measures on the June 5 ballot:

- A plan to establish a 5% commercial and industrial utility users’ tax on use of electric, gas, telephone, cable television, water and sewer service. The tax would raise $18.7 million during fiscal 1991. The measure needs majority voter approval to pass and will be considered by the council to be advisory only.

- A proposal to repeal the People’s Ordinance of 1919 that mandates free city trash pickup, primarily for single-family homeowners. The council then would impose a $7.50 monthly collection fee that many apartment and condominium owners already are paying. Discounts would be made available for homeowners who recycle trash.

The new fee, which would generate $12 million in fiscal 1991, needs majority approval from voters. Together, the fee and the utility tax would generate $30.7 million, or about half of the amount needed to balance the city budget.

- A special, undetermined “parcel tax” to hire more police officers. The tax would generate $23.7 million in fiscal 1991 and escalate to $44.7 million in fiscal 1992, $67.7 million in fiscal 1993 and $69.4 million in fiscal 1994. The money would be set aside to hire police and could not be used for other services. The measure requires two-thirds voter approval.

Homeowners would pay identical taxes, regardless of the value of their property, said Pat Frazier, director of the city’s financial management department. Commercial and industrial property owners would likely pay more. City staffers will determine average costs to property owners by next week, she said.

- A $25-million property-tax increase to pay for police communications equipment. Taxes would rise $6 per $100,000 of assessed valuation to pay for general obligation bonds. Two-thirds voter approval is required, and the money could not be used for other city services.

- The Gann waiver, which would authorize as much as $700 million in additional spending over the next four fiscal years.