The city of San Diego is facing an $81 million budget deficit in the next fiscal year that begins July 1, according to a report released Friday by the Office of the Independent Budget Analyst.
Mayor Kevin Faulconer released a balanced $3.6 billion budget proposal that included cuts to close the shortfall, which has more than doubled from the $36.9 million projected last fall. The IBA's office said the funding shortfall increased by $44.1 "after recognizing a number of critical funding needs."
Those deficits include $8.4 million for an increase in the City's pension payment; $10.3 million for increased personnel costs related to public safety overtime and a decrease in fire-rescue vacancy savings; $5 million for a special election in November 2017 to ask voters to increase the hotel tax to expand the convention center; $10 million in previously overlooked so-called critical expenditures; and $10.4 million in contributions to meet reserve goals.
"Mayoral press announcements, fact sheets and power point presentations on the proposed budget did not address reductions made to the budget including those to key city services such as park and recreation, library, lifeguards, code enforcement and storm water," the report said. "While the mayor focused on recommending reductions that result in little to no service level impacts, the upcoming public hearings provide council an opportunity to discuss these reductions further with department heads and understand if there are any potential service or operational impacts."
RELATED: San Diego City Council Pushes Back Against Arts Funding Cuts
Faulconer's budget proposal, made public April 13, focuses on core community services in the $1.4 billion general fund like street repairs, recreation centers, libraries and public safety. The proposal also includes the largest infrastructure expenditure of this decade at $445 million, he said.
The spending plan funds 349 miles of street repairs, and maintains library and recreation center hours, according to the mayor.
Three members of the City Council criticized Faulconer's proposal to reduce funding to San Diego arts programs by 31 percent, calling the cuts "draconian" and "unacceptable."
City Council disagreement with the mayor's office over a particular cut or two is an annual exercise, and enough shifting of dollars usually takes place over succeeding months to iron out any issues. According to the mayor's office, the $10.4 million that will be spent on the arts is higher than three years ago.
Spending cuts were made necessary to close a shortfall created in part by a by a much higher contribution to the San Diego City Employees Retirement System than was initially forecast. The change was the result of
decisions made by the SDCERS board in light of retirees living longer and a mediocre investment performance.
The IBA also warned of shortcomings ahead in fiscal year 2019.
"We are heading into the new fiscal year recognizing that, based on what we know today, we are likely facing a similar deficit situation for fiscal 2019," the report said. "A number of financial conditions will contribute to fiscal 2019 being another difficult budget year, with the city possibly facing a double-digit deficit that could require more reductions, operational efficiencies, and/or new revenue sources in order to balance the budget."
The council members are scheduled to begin budget hearings on May 3 and adopt the plan in late June.
