A People’s Reporter riddle.
Why does the city of San Diego have a deficit annually if it closes a budget gap each year?
The answer is at the center of the city’s financial problems. Each year, it taps money that only can be used once for costs that continue annually. In budget parlance, that’s a “one-time solution,” which includes selling land, deferring payments to reserves and vacuuming up funds from previously untapped city accounts.
San Diego has what’s called a structural deficit, meaning it takes in less money than it needs to keep pace with expenses regardless of the economic cycle.
The city has had deficits each year since 2003. Mayor Jerry Sanders has used a combination of one-time and on-going solutions, such as cutting library hours, to fix them.
Profligate use of one-time solutions to close deficits is a budget no-no. The mayor himself has called one-time solutions, “magic.”
For the most part, one-time solutions just delay budget problems another year. For instance, even if the City Council adopts Sanders’ proposed 2012 budget entirely, city officials estimate there will be a $40 million gap left to close in 2013.
Sanders has used one-time solutions to close 51 percent of the $284 million deficit cut in the past three budget cycles, according data provided by Independent Budget Analyst Andrea Tevlin.
These remedies sometimes have their place, Tevlin said. They should be used to make up revenue shortfalls in poor economic times and pay for one-time costs, such as elections, she said.
“It’s not a blanket bad thing,” Tevlin said.
Still, they’re a reason budget cuts rarely hit as hard as city leaders say they will. During last fall’s campaign to raise the city’s sales tax, Sanders and other supporters warned of Armageddon-like cuts to all city departments if it didn’t pass. (Though the city’s chief operating officer admitted back then all those cuts weren’t the likely Plan B.)
The sales tax didn’t pass and all the warned cuts didn’t happen. One-time solutions helped cushion the blow — and prolong the problem.
Here’s the dollar breakdown of one-time budget solutions since 2008 from Tevlin:
2008: $26.2 million
2009: $33.9 million
2010: $22.1 million
2010/2011 (18-month budget approved mid-year): $96.5 million
2011: $14.1 million
2012 (proposed): $35.1 million