Mayor Jerry Sanders today signed a spending plan for the upcoming budget year that could soon be out of whack depending on how the state balances its own budget.
Three potential state actions floated so far could create a new shortfall of about $72 million for the fiscal year that starts July 1 — on top of the $83 million budget gap the city closed through a combination of compensation cuts, tapping reserves and increasing fees.
If that happens, Sanders said there’s no guarantee the city would avoid layoffs and service cuts. He said specific areas haven’t been identified, but it would likely involve across-the-board cuts.
“Public safety’s not even immune if we get anywhere near the magnitude of what they could take,” the mayor said.
Right now, the most likely action affecting local government will be if the state takes a share of gas tax money that typically goes to cities and counties, which could mean a $24 million hit to San Diego’s budget. Cities say that proposal violates the state constitution.
“We feel like under the constitution, all they can do with the excise tax is borrow it,” said Job Nelson, San Diego’s director of intergovernmental affairs. “They’re proposing to take that tax and use it to close the budget deficit.”
Another proposal to borrow property tax money from cities and counties — a potential $36 million hit to San Diego — has been dismissed by legislative leaders, though city officials believe that still could change because of the state’s desperate budget situation. The state’s legislative analyst has also floated the idea of taking gasoline sales tax money (which is different than the gas tax money previously mentioned) from municipalities, though that idea hasn’t gained traction in the Legislature. That could cost the city $12 million.
Sanders said the city hasn’t factored potential state cuts into the budget because they don’t know how much they’ll be, and to avoid inviting the state to raid their funds.
“I don’t want to give the state the opportunity to say, well, they already figured all this out, so we can just cut it,” the mayor said.
Councilman Tony Young, chairman of the Budget and Finance Committee, said public meetings could be held as early as next month to gather input on how state cuts will affect the city’s budget.
Sanders said he’ll continue to lobby for municipalities to hold on to those funds. “It’s time to stop sending city and county money to that giant sinkhole in Sacramento,” the mayor said. “They need to solve their structural problems without taking services from our citizens.”
The mayor has also relied on one-time fixes to the city’s budget, including tapping more than $20 million from reserves. Sanders said he didn’t think the city was making the same mistake as the state because most of the reserve money was going to city expenses that don’t recur year after year.
Instead Sanders said “almost all” of the cuts came from decreasing employee compensation. Employee cuts have been estimated to save the city $33 million out of the general fund, the city’s main account, which pays for libraries, parks and public safety.