San Diego City Council Scrambles To Make Up $258 Million Budget Deficit

The San Diego City Council met with members of the public Monday night, hoping to find a way to end the current $258 million budget crisis in the city.

Throughout California, many major cities are currently facing massive budget deficits. San Francisco is looking at an $876 million deficit in the next few years, while Los Angeles is battling a $300 million deficit. Even smaller cities like Sacramento and Oakland have running deficits this fiscal year, with the cities being $77 million and $129 million in the red respectively.

San Diego has proven to be no exception.

For several years, San Diego has been battling against rising city expenditures. During and shortly after the COVID-19 pandemic, the city managed to stay afloat thanks to federal and state funding tied to the pandemic. However, after those funds ended a few years ago, San Diego soon garnered a $170 million deficit. While cuts to libraries and parks were looked at, the city solved those with one-year stop gap solutions like strategically cutting in areas and brining in one-time only funds.

Needing a more permanent solution, the city proposed a 1% sales tax increase ballot proposition earlier last year, which would have increased the rate from 7.75% to 8.75%, to bring in a projected $400 million in revenue. These funds would have solved the deficit, with enough remaining for infrastructure projects, city services, and first responder pay increases.

However, many San Diegans opposed the tax increase, as they said it would put an undue burden on them with the rising cost of living and the high cost of renting and home ownership in the city. The tax measure, known as Measure E, failed by a narrow 288,446 to 284,940 vote total, or 50.3% to 49.7%. A County tax increase also failed by a similar margin.

As a result, Mayor Todd Gloria announced in December that San Diego would be facing a $258 million deficit in the next year. While the City Council came up with several ideas to help alleviate the crisis, residents opposed the proposed fixes, with some calling them draconian. This led to Monday, when the Council went over numerous cuts and revenue generating ideas with the public.

Amongst the proposed fixes were parks services, libraries, street repair, and other ancillary areas. Several Council members likewise noted that both the San Diego Police and the San Diego Fire Department are likely not to see too many cuts, in part because of public backlash and because of how Los Angeles’ fire department cuts only weeks before the January wildfires made the situation there even worse.

$258 million in the red

Most Councilmembers agreed on Monday that increased parking meter fees, as well as more metered spaces and increased enforcement, would be a major revenue generator. The increase in city parking fees last month has already shown more money coming in, with the city hoping that a greater reliance on parking could help put a dent in the budget. Also seeing support from Councilmembers was a trash collection fee and a cannabis business tax.

However, restaurant and shop owners in the city have decried the parking increase, saying that their revenues go down anytime one of these increases happen. Other business owners further charged the Council by saying that they were not listening to them and that if they were to shutter, the city would see business taxes go down as a result.

“I can assure you council members are listening very intently even if they don’t speak or formally indicate support during meetings like this, they are taking notes,” said Council President Joe LaCava in response. “The ones that I’m most worry about is those that are relying on federal dollars given the conflicting rhetoric we are hearing from Washington. There’s going to be a lot of pressure to increase revenue, but that can have an impact on the average San Diegan as well. So how do we navigate that delicate balance.”

While the Council passed budget priorities on Monday, a preliminary budget has yet to be released. But one thing was made clear to everyone on Monday: Cuts were coming and every citizen is likely going to feel them.

“It’s really come to a head. We don’t have the resources to continue to operate the way we have over the past several years,” added city budget analyst Charles Modica. “Now we are struck with needing to actually buckle down and make some structural changes that will actually get us there.”

Overall, San Diego is facing the same budget problem as many other cities in California. What does a city cut? What taxes are raised? And what can a city do to get back in the black financially?

“Right now, every city facing a budget crisis in California is looking at success stories from around the country and what they did to turn things around,” explained Cynthia Wallace, a Southern California pollster, to the Globe on Tuesday. “And they have fewer options now. No one is going to touch police or fire now, not after those wildfires in L.A. And person who proposes cuts, all they have to say is “Do you want to be the next L.A.?” So that is a no go.

“Many places are looking for increased tourism, and there are a few big events this year that can help, like the World Cup having some California games. Many Southern California cities are also now seeing huge increases in hotel revenue thanks to the wildfires, but, you know, measure that against the losses they’ve gotten from them.

“Polling right now shows that Californians are not willing to pay higher taxes to avoid these budget crises’. I know, shocker. People not wanting to pay higher taxes. But, like you pointed out, San Diegans said they would rather go into a budget crisis rather than pay more in taxes. With the cost of living still being high and some of the highest taxes already in the country, it’s little wonder.

“What people have been wanting is to stop housing homeless people and migrants in hotels and other places the city has to pay for. Seriously. In polls when we allow people to give their own opinion, this is a major thing. They want to see the salary of lawmakers go down. They want to see education cuts, especially in districts losing students. These are armchair opinions, but many are also common sense based on critical thinking and cause and effect. We’ll just see what San Diego and all these cities come up with.”