San Diego Proposes Major Budget Cuts To Offset COVID-19 Revenue Losses

Speaker 1: 00:00 Tourism is way down, beaches are closed, the Padres are idle and many thousands of businesses are shuttered. It all means a massive revenue hit for the city of San Diego. Mayor Kevin Faulkner is responding with an austere budget trying to fill an anticipated $250 million hole. Here's Faulkner on his budget plan. Speaker 2: 00:18 It's budget of course as a snapshot in time, but it's based upon what we know right now and what we know is that every minute that our economy is closed, our budget challenges grow deeper. Speaker 1: 00:30 Joining me to discuss the cuts is KPBS Metro reporter Andrew Bowen. Welcome Andrew. Hi, thanks. Mark will walk us through some of the most significant reductions that the mayor is proposing. Speaker 3: 00:41 I think one of the biggest changes that folks will notice, um, you know, if this budget is approved by the city council as it is, is the reduction in library hours. So the mayor is proposing a five day schedule for libraries, closing them on Sundays and Mondays, which he says is when the libraries get the least amount of traffic. Also reducing rec center and pool hours. You know, we're just coming up on the summer. So that's gonna mean. A lot of folks don't have, you know, places to take their families. Um, you know, to, to recreate the grants that the city gives to arts and cultural organizations. Think a bed that ballets, the theaters, the museums and arts education foundations, things like that. The mayor is proposing to cut that grant funding in half, um, which is a significant reduction. Um, the slight footnote to that being that the mayor is supposed to announce some sort of news related to arts and culture this evening at his four 30 press conference. So maybe another shoe could drop there. Um, the city council is also fought for arts and culture funding in the past, um, to not reduce it quite as much as the mayor's proposed. So, um, you know, I think we'll, we'll probably see a bit of back and forth between the mayor and the city council on that issue. Speaker 1: 01:47 And do we know how many city jobs this might end up? Speaker 3: 01:50 Yes. He says that he's proposing 354 positions be eliminated and that, uh, the biggest numbers are in unsurprisingly the library and the parks and rec department since they're, um, having their hours reduced. Um, but he's also proposing job cuts to the police department to transportation development services department. Almost every city department is, is being touched with a job cuts. What is not clear at this point is how many of those 354 positions are currently filled, meaning somebody will have to be laid off and how many of them are vacant? Meaning basically the money that they budgeted for hiring somebody will just go away. Speaker 1: 02:27 Infrastructure has been a major priority for the mayors that spending effected Speaker 3: 02:32 it is. So, uh, you know, the, a lot of, um, communities have been waiting for a new library or a new fire station or, uh, you know, repairs to their police station for many, many years. Uh, in the past, you know, in years of plenty, let's say. Um, the mayor has been, you know, adding a bit more money to all of those accounts that are, you know, they're saving up to buy, you know, build a new library, let's say, um, that is virtually ground to a halt where he is preserving quite a bit of infrastructure spending is with road repair. Uh, also the city's pure water project, um, to, to start recycling wastewater and um, uh, you know, add that to our drinking water supply. Um, that's being preserved. Uh, largely. Uh, what's interesting about the, the infrastructure spending that the city does year to year is that some of the money comes from sales tax and hotel tax and property tax revenues. Speaker 3: 03:27 Um, those projects, you know, like repairs to libraries or new libraries, things like that. Those are what are being hit the hardest where, uh, the city's infrastructure spending is actually staying the same or going up are in, uh, areas where the city has more control over the revenue and the revenue is not being hit as hard. So think the waste, uh, the water and wastewater department, the city will still be able to, uh, be repairing the broken pipelines, um, throughout the city because all of that spending is funded by people's water rates and the revenue from water rates is not being hit in the same way that, you know, sales, tax and, and revenue from tourism is being Speaker 1: 04:05 yeah. And that's where the revenue losses are really coming from, right. Tourist and sales tax. Speaker 3: 04:10 That's right. So the mayor estimates that between the current fiscal year and the next fiscal year, the city is expecting, um, the transit occupancy tax or the hotel room tax to drop by $121 million. They're not expecting any revenue from the, uh, tot and April, um, sales tax in that same timeframe expected to drop by $55 million. So that's really where the bulk of this revenue shortfall is coming from. Speaker 1: 04:36 And after the governor announced mass gatherings this summer are unlikely until there's herd immunity or a vaccine. San Diego County fair was canceled along with San Diego pride and city officials must believe the budget situation could get way worse the longer this drags on. You know, we didn't really hear anything Speaker 3: 04:52 predictions from the mayor on that topic. As the mayor said, this budget is a snapshot in time. So we're essentially, uh, the city finance officials are trying to predict where the economy will be, uh, from July of this year all the way through June of 2021. That's an extraordinarily difficult task, uh, given there's so much uncertainty just in the next week or two. So it's really tough to put together a budget with all that uncertainty at this point in time. What that's probably going to mean is that we're going to have a much bigger change to the proposed budget in may when the mayor always puts out his may revise. Um, typically it's, you know, a few million dollars here and there, but, um, given the new information that will have, you know, several weeks from now or a month from now, it's likely that may revise will be pretty significantly different than what he originally proposed. And also as the year goes on, we may see even more budget revisions because you know, predicting, uh, 12, 13, 14 months into the future is really tough right now. Speaker 1: 05:51 And what's been the response so far to this proposed budget? Speaker 3: 05:54 Well, several city council members have put out statements, uh, reacting to the proposed budget. We're not hearing much dissent from them so far. I think everyone is acknowledging that these are, uh, unbelievably tough times and every decision that we're going to have to make will be painful. Um, as you know, as folks get deeper and deeper into the budget, it's several hundred pages long. Uh, I think we might, uh, start hearing maybe, you know, some descent on, well, this department's being cut in this much, but that department isn't taking its fair share. So maybe we'll see a bit more discussion about, um, how appropriate all of these cuts are. The union that is the largest union that represents city employees, the municipal employees association, you know, has been, they've basically said we're not stupid. We know that th that layoffs are, are probably coming. So I think that they're, you know, they've been preparing all of their members for this kind of budget. Um, but we still got a lot of details to, to learn. Uh, so we'll be keeping an eye on it and continuing to analyze as the time goes on. Speaker 1: 06:55 And very fluid. You mentioned the may revise this coming, but uh, I'll, all sorts of things can happen. Speaker 3: 07:00 Yeah. And so the, what happens next is that the city council is going to start their budget review committee meetings. All nine council members get together and go through, uh, the entire budget department by department and look through all of the different spending cuts. Um, it's a, it's a pretty long process, very deep and wonky and everything. But you know, that's how it goes every year. And then we'll get the may revise the, the council will ask for some additional changes probably, and the, the council vote ultimately is, uh, in early June. Speaker 1: 07:34 Well, we'll be watching the stories. A, undoubtedly a lot of this is a yet to unfold here, and as we work through the weeks and the months ahead, I've been speaking with KPBS Metro reporter Andrew Bowen. Thanks, Andrew. Thank you, Mark.