Moderate but slowing growth is predicted for the next five years for the City of San Diego, according to report presented Wednesday to the City Council’s Budget and Government Efficiency Committee.
After a couple of years of good fiscal times, a spike in pension costs will force budget cutbacks next year, according to the financial outlook report which was previewed by Mayor Kevin Faulconer last week.
The city’s five-year financial outlook promises higher yields across all major revenue streams, along with increasing general fund surpluses in the outer years. The general fund pays for basic services, like public safety and libraries.
In the near-term, however, the revenue gains will be more than offset by a change in calculations made by the San Diego City Employees Retirement System board that will require higher city contributions, according to the report.
The committee voted 3-0, with Councilman Todd Gloria absent, to officially accept the report and send it on to the full Council.
The mayor’s office has asked city department heads to offer budget reductions of 3.5 percent for the next fiscal year, in case the shortfall cannot be made up any other way.
City voters four years ago closed the pension system to new employees other than police officers in an effort to control costs. The SDCERS formula change is based on longer retiree lifespans and a poor investment performance, according to the mayor’s office.
Faulconer said a projected $37 million shortfall in the next fiscal year can be partially offset by a reserve fund approved earlier this year by the City Council. The fund currently has $16 million.
–City News Service
