San Diego’s financial officials have announced that the city will have to withdraw $10.1 million from its reserves to cover expenses for the fiscal year ending June 30.
This necessity marks a troubling start to the next fiscal year, set to begin on July 1, which comes amid a projected shortfall exceeding $300 million.
In response, Mayor Todd Gloria has proposed significant cost-cutting measures.
These include reducing hours at recreation centers, closing all city libraries on Sundays and Mondays, and cutting funds from the city’s animal control contract.
The current fiscal year shortfall stems from lower-than-expected sales tax revenues and a decrease in franchise fees, which utility companies pay for using public rights-of-way.
Moreover, City departments, particularly police and fire, have been exceeding their predetermined overtime budgets.
San Diego maintains a general fund reserve totaling $207.1 million, comprising two separate funds: $107.6 million in an emergency reserve and $99.5 million in a stability reserve.
The city plans to draw from the stability reserve, intended to mitigate financial risks and manage unexpected shortfalls or unanticipated critical expenditures, as outlined in their reserve policy.
Remarkably, current reserves are in a stronger position compared to the last time funds were accessed during the onset of the Great Recession when reserves stood at only $71.5 million in 2009.
Nevertheless, the city’s reserves still fall short of the goal, which is to cover two months of expenses.
During a city council meeting on May 19, Councilmember Vivian Moreno expressed her reluctance to tap into reserves.
Moreno noted that the city avoided this route during the pandemic, attributing her caution to the unpredictable nature of financial crises.
The council is set to vote on the authorization of the reserve withdrawals on June 10, coinciding with the budget vote for the upcoming fiscal year.
The City Charter mandates that San Diego balance its budget each fiscal year, complicating efforts to overcome financial challenges.
Mayor Todd Gloria emphasized that the city’s budget situation would be far worse without implementing cost-saving measures, which included a hiring freeze for nonessential positions and elimination of certain executive roles.
However, Gloria faced criticism from Michael Zucchet, general manager of the Municipal Employees Association, who pointed out that several non-public safety middle management positions had still been filled during this hiring freeze.
Additionally, Councilmember Sean Elo-Rivera criticized city officials for their slow pace in pursuing new revenue sources, such as instituting paid parking for visitors at Mission Bay Park.
Executing such a plan would require approval from the California Coastal Commission.
Elo-Rivera questioned the city’s urgency in generating new revenue, expressing frustration over the lack of progress on this front.
He remarked on the necessity for the city to initiate sustained efforts to generate the revenues needed to effectively serve its residents and maintain city operations.
The financial landscape in San Diego continues to evolve, prompting officials to find immediate solutions to navigate the anticipated economic downturn.
image source from：https://www.kpbs.org/news/economy/2025/05/29/san-diego-to-use-10-1m-in-reserves-to-balance-current-fiscal-years-budget
