NEWS

City services cuts proposed

City services cuts proposed

(April 15) In the midst of a worldwide financial crisis caused by a global health pandemic, Mayor Kevin L. Faulconer introduced today the City’s annual budget – a balanced proposal that prioritizes essential services, calls for targeted workforce and service level reductions, and takes an approach to close the largest deficit in San Diego history. The new budget year begins July 1.

“COVID-19 has impacted all of us, and city government is no exception. Just like every family right now we have to make difficult choices, but just like every family we are going to do it with care,” Mayor Faulconer said. “All of us, from our city employees to our city residents, are going to get through this together. This budget is fully balanced and makes responsible decisions today so we can enjoy a better tomorrow. We’re going to put the city in the strongest financial position possible to weather this crisis and emerge prosperous and thriving on the other side.”

Mayor Faulconer proposed balancing a budget deficit that exceeds $250 million projected for the remainder of Fiscal Year 2020 and the entirety of Fiscal Year 2021 with reductions across all General Fund departments, and anticipates the use of $54 million in fund reserves the Mayor and City Council have built up over the past several years. This year’s deficit, prompted by a near-complete shutdown of parts of the global economy, exceeds what the City faced during the Great Recession in 2008.

The shuttering of restaurants, hotels and other businesses stemming from COVD-19 public health orders have caused a significant drop in sales and transient occupancy tax – two of the City’s largest revenue sources. The transient occupancy tax, which visitors pay when they stay in San Diego hotels, is projected to drop by approximately $121 million. Sales tax is expected to drop by $55 million. These figures combine losses for FY 2020 and FY 2021 and will likely be revised again next month based on economic conditions at that time.

The City is also expecting revenue losses of $8 million in property tax revenue and $16 million in franchise fees for the coming fiscal year. In total, the City expects to lose approximately $176 million from its key revenue sources – an amount that could fund the entire Park and Recreation Department for nearly a year.

Mayor Faulconer proposes $145 million in budget reductions and mitigation actions, including:
• Closing libraries on Sundays and Mondays, the days with the fewest visitors ($6.8 million in savings)
• Decreasing next year’s round of arts and culture grants by 50 percent ($5.8 million)
• Reducing park and recreation center hours from 60 to 45 hours per week ($3.4 million)
• Cutting back on tree trimming ($1.8 million)
• Reducing STAR-PAL program ($1.4 million)
• Reducing economic development support for outside organizations ($1 million)
• Decreasing maintenance at City facilities ($900,000)
• Eliminating 354 budgeted positions from the City’s current workforce of more than 11,000

“The unprecedented loss of tourism funds has been a shock to all of us resulting in a great financial burden,” said Arts and Culture Commission Chair Janet Poutre. “Our commitment to the arts and culture sector, and in particular the thousands in our cultural workforce, is unwavering. I thank the Mayor for his work to keep arts funding as whole as possible, given the many pressures on the City budget.” 

To address the funding gap for the remainder the current fiscal year, Mayor Faulconer instituted a freeze on hiring and all non-personnel expenditures (such as contracts and supplies). Other actions include using anticipated $54 million in emergency reserves and $27 million in revenue left over from midyear adjustments.

The City will closely monitor revenues and expenditures and present a revision to the budget proposal in May. The final budget will be adopted in June following several weeks of review by the public and the City Council.

For more information, view the entire proposed budget online: https://www.sandiego.gov/finance/proposed

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