North County Report: Sales Taxes to the Rescue – Sort of

It’s budget season, which means government agencies throughout San Diego County are finalizing their spending plans for the upcoming fiscal year. 

In North County, Escondido and San Marcos recently approved balanced budgets thanks in part to incoming funds from their respective new sales tax measures approved by voters last November.  

Before those measures passed, both cities were experiencing ongoing budget deficits that required city officials to make cuts to city services and programs.  

I wanted to know how these cities are planning to use their new sales tax dollars, and if they’ll be enough to stabilize their budgets. I’m going to keep digging, but here’s what I learned.  

Escondido’s New Sales Tax Won’t Solve its Deficit Woes 

Almost 62 percent of voters approved Measure I, a one-percent sales tax increase that will expire after 20 years. It was initially projected to bring in around $28 million each year in revenue, but city staff is now projecting around $38 million in annual revenue. 

Pre-sales tax measure, Escondido had an ongoing structural budget deficit that was projected to reach an average of $18 million each year over the next 20 years. Though the funds from the new sales tax will help bolster the city’s budget, Escondido is still facing a structural deficit, according to a city staff report.  

“Despite this incredible investment in Escondido’s future, it’s important to recognize that operating revenue has not kept pace with the growing costs of providing city services,” the staff report says. “The General Fund long-term financial plan still projects annual deficits exceeding $10 million annually growing to $24 million by FY2035 which creates a structural budget deficit.” 

Still, the City Council is expected to approve a balanced budget at tonight’s meeting that uses Measure I funds and a one-time transfer of $3.1 million from the city’s Workers Compensation Fund, a pot of money used to cover benefits for employees who are injured or become ill because of work-related incidents. 

What Measure I Will Fund: 

• 30 new staff positions and 6 restored staff positions that were cut in previous years. 

• Positions, as well as maintenance and operations costs, for police, fire department and street maintenance. 

• Funding for one-time investments in police and fire vehicles. 

• Funding for open space and deferred maintenance that includes roof and other building repairs, a historic property facility assessment, repairs at the California Center for the Arts, funding for the Reidy Creek Golf course, and an allocation to prepare an analysis for a Smart City program. 

Voice of San Diego previously reported that an estimated $8 million of maintenance has been deferred annually since about 2008, which is now roughly $130 million in backlogged fixes. 

“As a result of the new resources provided by Measure I … the Operating Budget preserves the essential services and programs provided to our residents, businesses, and visitors,” the staff report says. “The FY2025/26 budget offers the City Council, city staff and the community a sense of optimism, however, we continue to remain conservative and strategic in our operational growth bearing in mind the continued existence of a structural deficit.” 

What it all means: The fact that Escondido is still facing a structural budget deficit even with new sales tax revenue, doesn’t necessarily come as a surprise. I previously wrote about how high the stakes were for the city when it comes to its deficit. 

City officials had to close an $11.3 million budget deficit last year using one-time funds and other cost-saving measures. The city used similar methods to close an $11 million deficit the year before and an $8 million deficit the year before that.  

To balance these budgets, the city has had to defer maintenance on city facilities and parks, eliminate vacant staff positions, put off critical infrastructure needs, reduce or cut funding to some city programs and more.  

In a review of Escondido’s proposed sales tax measure last year, the San Diego County Taxpayers Association supported the measure, but acknowledged that “Escondido cannot tax itself out of a structural budget deficit,” and will likely have to identify other significant structural changes to solve its budget woes even if the measure passes.  

San Marcos 

In San Marcos, voters approved a city sales tax measure by more than 60 percent last November. Measure Q, a one-percent sales tax increase that’s projected to bring in more than $20 million in yearly revenue, is supposed to help ease the city’s budget deficit.  

The city had to dip into its reserves to close a $3.8 million budget gap last year and had to cut vacant staff positions to balance its budget. The city also “held the line” on compensation and reduced service contracts in areas like landscaping and street sweeping, the Coast News reported. 

Now, city staff is expecting Measure Q to generate a total of $26.7 million by next summer, and San Marcos is projecting a 5 percent increase in General Fund revenues from last year. 

What Measure Q Will Fund: 

• $6.8 million will be allocated to operating services, including park and trail maintenance, facility repairs and fire equipment needs. 

• $7.3 million will be dedicated to capital improvement projects. 

•  $7.8 million will be transferred to the infrastructure replacement and rehabilitation funds.  

I spoke to San Marcos Councilmember Ed Musgrove back in December about voters being largely in favor of Measure Q, and he explained why he believes so many residents supported it. 

“I think the community understood that some of the realities are we would have had to cut back on services and that would be noticed,” Musgrove told me. “Things like street sweeping, road repairs, sidewalks, landscaping, little things that after a while you start looking at and saying, ‘wow, it’s starting to really look a little uncared for,’ and that’s not what we want.”  

Around Town: A Setback for Seaside Ridge Developers 

A San Diego judge has granted the city of Del Mar’s motion to dismiss a court petition from developers of a proposed housing project called Seaside Ridge. The judge ruled that the developer needs to exhaust all administrative remedies at the city level before the courts can intervene, according to a report by the Union-Tribune. 

Last year, Seaside Ridge developers filed a lawsuit against Del Mar for repeatedly rejecting the proposed affordable housing project. City officials have maintained that they already have enough affordable housing projects in the pipeline to meet their affordable housing goals. 

But Seaside Ridge says the city doesn’t have a choice in the matter because of a controversial state housing law called the Builder’s Remedy, which says if a city doesn’t have an approved Housing Element, a housing plan required by the state, by the time an affordable housing project is proposed, then the city can’t deny it. 

Seaside Ridge developers will likely have to file an appeal with the Del Mar City Council over the multiple rejections the project received from the city’s planning department before eventually taking the petition back to court if needed. 

In Other News 

• A potential conflict of interest involving Del Mar Mayor Terry Gaasterland and the city’s new short-term rental rules, adopted last year, is raising concerns among some City Councilmembers and residents that the ordinance could be legally challenged. (Coast News) 
• Oceanside’s proposed beach sand restoration and retention project has been endorsed by SANDAG’s Shoreline Preservation Working Group and selected as a regional pilot project and a possible example for other cities facing eroding coastlines. (Union-Tribune) 
• Encinitas’ Homelessness Action Plan now includes goals to use law enforcement to combat illegal behavior by “service-resistant” homeless people, especially in the city’s downtown area. (Union-Tribune)