When Mayor Todd Gloria released his $5.12 billion budget for fiscal year 2024, calling it the “Getting It Done” plan, he said it reflected the city’s top priorities: solving homelessness, upgrading critical infrastructure, improving services and keeping the city safe. He also said it was balanced and conservative.
"(The budget) recognizes the potential for an economic slowdown in the next couple of years and so it is conservative in its spending," said Gloria.
But is the money going to the right things?
"Over the next two weeks, I and my office, will be determine whether or not it does strike the right tone," said San Diego's Independent Budget Analyst Charles Modica. His job is to make sure that the budget allocates enough money toward the right things, like homelessness. Some have already said it’s not enough.
"We’ll be going through the budget and talking with folks who actually provide those services in the city and out of the city to make sure that the amounts that are added are reasonable and sufficient to kind of tackle those programs," he said.
Modica said — while at first glance — the budget does look balanced, his office will be going over it with a fine-tooth comb and ready an in-depth report. But he already he sees an area of concern.
"Right now, while the budget as a whole is balanced, it does not appear structurally balanced. Next year we’ll need to either grow city revenues or potentially cut ongoing costs ," he said, adding that the reason is some of the money that pays for some of the services are one-time sources of income, like the $56 million in federal funds from the American Rescue Plan.
"This is the last of the amount that we had allocated. In addition to that we’re relying on a little over $60 million in budgetary savings from the current year that we’re in right now," Modica said.
He says about half of the spending will go to public safety — and that’s typical.
"Our police and fire perform absolutely critical work for the city. Their very core functions in what a city does — is providing public safety to the folks that live and work in that city," he said, adding that the proposed budget includes civilian positions to offset the overtime. He said they will be analyzing if that money is enough, and a lot of questions will be asked as they go through their review.
University of San Diego economics professor Alan Gin said there seems to be the right emphasis on housing and homeless services, but there are trade-offs when a budget is proposed.
"Ideally more money would go towards homelessness, but choices need to be made," Gin said, adding that there’s a lot of money for overtime because there is a shortage of officers and firefighters.
"We’re below the typical standard then, in terms of police officers per resident. We have about 1.43 police officers per 1000 residents. The typical standard or goal is about two, so we're considerably low for what is desired," he said. "It's important that money go into these areas.
Gin said he doesn't know if the right amount of money was put aside for the rainy-day-fund, but he said that it's not currently wise to overspend, to go into debt or spend on programs that can't be funded in the long term.
According to the budget proposal, "The Debt category for the Fiscal Year 2024 Proposed Budget totals $9.2 million, a decrease of $5.7 million — or 38% — from the Fiscal Year 2023 Adopted Budget. The debt category includes long-term debt service on liabilities such as bonds, loans, and capital lease obligations."
Gin said, "There's an ideal situation, and then there's a more realistic situation, and given the difficulties that we may be having in the future, it's wise to plan for that," he said.
Those difficulties would include an economic downturn. Gin said he thinks the economy will go into a slowdown in the second half of 2023, and said, "If that's the case that could affect revenue and, so I think it's wise to put money away in a rainy-day-fund."
Gin also said those who do the job of analyzing are going to make sure an appropriate amount is set aside this fiscal year.
Gin said if the economy does go into a recession, he does not think it will be as severe as the one in 2008, but if that happens the city will have to readjust and change gears to help people who will be struggling to keep their housing.
Gloria said he was setting aside over $6.8 million to General Fund reserves, calling it the responsible thing to do with a possible recession. His press release said it "keeps in reserve for future years, the $52 million balance of the $120 million excess equity fund — funds created when expenditures are lower than projected, revenues are higher than expected, or both."
Gin said overall the budget seemed like it did hit all the right categories as far as emphasis.
"I think it’s balanced in terms of addressing some of the needs, and I think it’s realistic given the uncertain economic outlook that we’re facing," Gin said.
The Office of Independent Budget Analyst will take two weeks to complete an in-depth report and will discuss their findings and recommendations with the council.
"There is still time to make changes to the budget," Modica said. "This is only the first, initial proposal. Over the next two weeks my office will be analyzing everything in the budget, asking all the questions, and put together a report that lays all that out — lays out any good thing we see and any concerns that we have. We will release it on April 28."
Then he said that the following week, the city council will have budget hearings. The mayor will release a revised budget in May, and the city council will have another opportunity to make amendments and revise. The actual budget is not adopted until June.
"So budget process is officially kicked off," Modica said.
