San Diego could have to cut nearly $84 million from its budget next year as the city projects spending to outpace revenue growth. The deficit is included in the city's five-year financial outlook reviewed by City Council members Wednesday.
While the local economy continues to grow, bringing more money into city coffers through things like sales, property and hotel taxes, expenditures are growing faster.
The report cites rising salary costs, especially for police officers, and the addition of new homeless services and programs as reasons for the deficit. It projects a funding gap of $83.7 million in fiscal year 2021, which starts in July of next year. Mayor Kevin Faulconer is required in April to propose a budget that closes that deficit.
Beyond next year, the five-year outlook projects deficits of $66.6 million in fiscal year 2022, $33.6 million in fiscal year 2023 and $7.6 million in fiscal year 2024. Not until fiscal year 2025 does it project a surplus, totaling $25.5 million.
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The projections could worsen if the economy enters a recession, or if negotiations with city labor unions result in promises of higher wages or benefits. But the potential deficits could be significantly lower if city voters approve a tax increase, such as the one scheduled for the March 2020 ballot to raise the local hotel tax to fund a Convention Center expansion, homeless programs and infrastructure.
"Our budget remains, I think, in a very precarious situation," said City Councilwoman Vivian Moreno at a meeting of the council's Budget and Government Efficiency Committee on Wednesday morning.
The financial outlook report is an annual exercise in long-term budget planning. The projected deficits have gotten progressively worse in recent years, with a main driver being increased pension costs as city employees live longer after retirement.
Councilwoman Barbara Bry, who chairs the budget committee, laid the blame for the deficits on Mayor Kevin Faulconer.
"This outlook is very sobering," Bry said. "It projects four straight years of deficits. It relies on one-time revenue resources to balance these budgets, leading us straight into a structural deficit. This mayor inherited a balanced budget in 2013, yet will leave a structural deficit behind us as his legacy."
Faulconer's office did not respond to a request for comment.
