San Diego is on track to end the current fiscal year with a deficit of $16.8 million dollars, according to the city's latest budget monitoring report.
The shortfall is primarily due to a delay to the start of parking fees in Balboa Park, city finance officials say, as well as a significant drop in hotel tax revenues and excessive overtime spending by the police, fire-rescue and transportation departments.
San Diego’s Independent Budget Analyst Charles Modica told the City Council's Budget and Government Efficiency Committee on Wednesday that the shortfall in hotel tax revenues was not a huge surprise.
"When the budget was adopted, we noted the volatility our tourism sector has been experiencing, especially given our federal government's posturing towards other countries and the impacts that could have on international travel," Modica said. "Unfortunately we now seem to be seeing this being borne out in our actual revenues."
The city had budgeted for a 2.2% increase in hotel tax revenue compared to last fiscal year, but actual hotel stays indicate revenues from the tax will fall by 1.9%.
Modica added that if the city's financial situation doesn't dramatically improve before the fiscal year ends — either with a sudden increase in revenues, or a sudden drop in expenses — it will have to dip into its reserves to balance its budget.
Some councilmembers have called for the Balboa Park parking fees to be repealed, or for the fees to be suspended for city residents but kept in place for nonresidents. Modica has warned that either action would mean even deeper cuts to city services in the next fiscal year.
Councilmember Sean Elo-Rivera said he wants to protect city services for less affluent neighborhoods as the city is putting together its budget for next fiscal year.
"There's no doubt on my end at least that we're in a situation where we have to make tough decisions, and that those tough decisions will have consequences," Elo-Rivera said. "But as always, I want to make sure we're being thoughtful about where those consequences are felt."
