SAN DIEGO (KGTV) — The City of San Diego's projected budget deficit for the next fiscal year is about 44% higher than previously projected, according to a recent update by city staff. Estimated to be $115 million at last report, that number has now ballooned to $166 million, largely due to lower-than-expected sales and hotel tax revenue fueled by 2023's struggles with inflation.
“Both food and housing are non-taxable. So if people are spending more money than on food and housing, that leaves them with less money to spend on taxable items,” explained University of San Diego Associate Economics Professor Alan Gin.
The increased budget challenges come at the same time that San Diego is trying to figure out how to pay to repair and upgrade storm infrastructure that was overwhelmed during the recent storms, leading to catastrophic flooding in some neighborhoods. City staff estimate it would cost roughly $9.25 billion dollars to tackle San Diego's capital improvements between 2025 and 2029. However, current budget projections anticipate only $4.4 billion to be available to pay for it.
“The political leaders are going to have to change their plans," Gin suggested. "They’re going to have to maybe cut back on spending. That involves delaying projects. That might involve reducing some services. Unfortunately, that has some negative impacts.”
City Council president Sean Elo-Rivera has suggested a new water quality tax to raise revenue to pay for storm infrastructure. However, some question any plan that involves new taxes, suggesting instead that San Diego cut spending in other areas to make the necessary investments.
“We can’t just depend on a new fee or tax to be a band-aid for bad spending habits," said Haney Hong, CEO of the San Diego County Taxpayers Association. “Right now there’s just money going down the drain, literally, and we’re not getting what we want out of the city and I think that those questions need to be answered before we start talking about new revenue.”
According to the timelines for the city's budget process, Mayor Todd Gloria will unveil his official proposal by April. After negotiations, the city council takes its final vote in June.
