City Tightens Its Belt After Raising Fees. Should That Have Happened First?

By San Diego Monitor News

San Diego officials are tightening the city’s belt once again, confronting a financial hole that continues to widen despite a wave of new fees and rate increases approved earlier this year. Mayor Todd Gloria has instructed every department to clamp down on spending immediately, warning that the coming budget cycle will demand even tougher decisions.

City leaders have been reviewing virtually every line of spending, from overtime to contracts that provide everything from homeless services to rented construction equipment. The mayor’s financial team issued the directive after discovering that equipment rentals alone cost the city more than six million dollars last year — often without full council review. Now, department managers must justify each contract and revisit their cost projections ahead of next year’s budget process.

Even with new revenue from trash pickup fees, parking charges in Balboa Park, and other rate adjustments, the city still faces a projected deficit nearing ninety million dollars for the fiscal year that starts next July. That number could swell past one hundred million if the city loses expected one-time homelessness funding or must expand staffing to meet operational needs. Roughly half of the gap represents long-term, structural problems that will require permanent fixes.

City finance analysts say it may take several years before revenues stabilize enough to match the city’s obligations. Their long-term forecast suggests relief may not arrive until around 2029, assisted partly by a decrease in pension debt payments. In the meantime, officials are preparing for a series of difficult budget cycles marked by disputes over service reductions and staffing levels. Some suggested cuts have already been rejected, and recent departures among top administrators have added more uncertainty.

San Diego relies heavily on four major revenue sources — property taxes, sales taxes, hotel taxes, and franchise fees — to fund most city services. Early financial reports show mixed performance. Property tax receipts are running higher than anticipated, but sales and hotel taxes, both closely tied to the local economy, have fallen short. Franchise fee revenue remains steady.

Another complication: the rollout of Measure C, the voter-approved hotel-room tax increase earmarked for homelessness programs, Convention Center upgrades, and street improvements. Although the city has collected more than twenty-six million dollars so far, the City Council has not yet approved the rules governing how and when the money can be used. Meanwhile, the city’s new paid-parking program at Balboa Park and the San Diego Zoo is generating far less than projected, leaving an eight-and-a-half-million-dollar gap in anticipated revenue.

City officials say they will reevaluate spending and revenue trends throughout the year and may present additional proposals to keep the budget in balance. Still, as San Diego enters another uncertain budget season, the question remains: could these cost-cutting measures — now deemed essential — have been deployed first, before turning to fee hikes and new charges for residents?