San Diego Mayor Todd Gloria unveiled a proposed budget Thursday that includes many millions for small business aid, expanded homelessness efforts and social equity initiatives like a “sexy streets” program in poor neighborhoods.
The mayor plans to cover the new spending with federal COVID-19 relief money and targeted budget cuts, including a 23 percent reduction in library hours and sharp reductions in overtime hours for police.
The proposed budget also includes modest pay raises for city workers, hiring triple the usual number of firefighters, funding to keep the convention center operational and money to significantly strengthen the city’s climate action plan.
Gloria’s $1.73 billion proposed spending plan for the fiscal year that begins July 1 would use $141 million of the $306 million in federal aid San Diego was awarded this spring.
Another $51 million would help balance the budget in the ongoing fiscal year, leaving $113 million in federal aid for future years.
The proposed budget cut with the most impact on residents would be closing all 36 city branch libraries every Sunday and Monday to help reduce weekly hours at each branch from 55 to 42.5.
The move would save $6.9 million, but Gloria plans to spend $1.25 million of that to make more electronic materials available online and to add “virtual” library hours in the low-income areas of Council Districts 4, 8 and 9.
Gloria is touting his proposed budget’s aid for small business as something that will help jumpstart San Diego’s economy in the wake of the pandemic and help create an equitable recovery that includes the entire city.
The budget includes $10 million for loans to small businesses, plus $900,000 more — $100,000 for each of the city’s nine council districts — for small business grants.
“Despite a structural budget deficit inherited from the previous administration, we took a pragmatic approach to balancing this budget while protecting core services and investing in the people who have suffered the most throughout this past year,” he said.
Gloria, who is unveiling his first budget since being elected last November, calls his efforts to aid businesses hurt by the pandemic “Back to Work San Diego.”
The budget includes $10 million in additional funding to fight homelessness, increasing the city’s annual funding for homelessness from about $70 million to $80 million.
The new money will cover expanded detoxification beds for substance abusers, 300 new interim shelter beds, more rapid rehousing assistance and additional staff for homelessness efforts.
The mayor also is proposing $40 million —$10 million in cash and $30 million in borrowed money — for what he calls “sexy streets,” upgraded roadways with bicycle infrastructure, wide sidewalks and calming congestion improvements.
The program would be reserved for historically underserved neighborhoods, which are sprinkled throughout the city but located primarily south of state Route 94.
Gloria also wants to spend $10.2 million keeping the convention center operational so that experienced staff will be in place when the tourism economy rebounds, possibly as early as this fall.
The proposed budget also includes $22 million for employee pay raises. That translates to roughly 3.6 percent across-the-board, but city officials said raises might be targeted to specific jobs where San Diego pays less than other local cities.
All six of the city’s labor unions are in negotiations on pay raises this spring, so the $22 million could change when new contracts are signed.
Gloria is proposing to have three fire academies during the new fiscal year, up from the usual one. Hiring more firefighters could reduce overtime for existing staff.
The mayor estimates the cuts he’s proposing will save $15 million. In addition to library hours and police overtime, he would shrink the number of people on his executive team, reduce spending on vehicles and shrink contract expenses for neighborhood clean-ups.
Other money to help balance the budget includes spending the city’s $8 million pension reserve and an expected $9 million windfall from a class action settlement with Monsanto.
In addition, Gloria proposes the city invoke a financial crisis waiver of a voter-approved law that requires a specific amount of annual spending on infrastructure projects. This year the requirement would be $20.3 million.
Another factor allowing Gloria’s proposed budget to be balanced is sharply rising property tax values as local home prices continue to surge, and rising sales tax revenue as the economy recovers.
Property tax revenue is projected to climb from $630 million in the ongoing fiscal year to $670 million in the new fiscal year, while sales tax revenue is expected to climb from a COVID-depressed $274 million to $321 million.
The city’s cannabis tax is also on the rise. Gloria predicts it will increase from $19.7 million in the ongoing fiscal year to $23.1 million in the new fiscal year.
Hotel tax revenue, however, continues to be far less than usual in the tourism-reliant city. It is projected to remain under $100 million, less than half of the $250 million the city was taking in before the pandemic.
Gloria’s finance staff estimates the pandemic will have cost San Diego $369 million in total tax revenue by summer 2022.
The proposed $1.73 billion budget is $107 million larger than the ongoing budget adopted last summer, which was $1.62 billion.
A companion capital improvement budget Gloria is proposing would increase from $367 million this fiscal year to $747 million next fiscal year. That’s primarily because the city will begin construction of the Pure Water sewage recycling system.
The mayor will propose revisions to his budget in May, and the City Council will adopt a final budget in June.
