City finance officials Wednesday presented a five-year plan to the San Diego City Council’s Budget Committee outlining revenue growth and critical spending needs over the next five years.
With moderate growth in revenues and expenses, the baseline balance sheets are in the black for four of the five fiscal years, running through June 30, 2023. But when expenses for some critical needs in order to meet “core service levels” are figured into the equation, the city faces a potential for budget shortfalls in the next three fiscal years.
“It’s important to note this is not a budget,” said Rolando Charvel, the city’s chief financial officer. “We still need to make important decisions.”
Otherwise, city financial officials foresee surpluses of $2.4 million in 2018-19, and $21.6 million, $61.3 million and $126.5 million, respectively, in the three out years. A $9.6 million deficit is projected in 2019-20.
When the critical needs identified in the report are added in, the result is two additional deficit years, and lower surplus projections.
Those shortfalls begin with the next fiscal year at $10.1 million, according to the report. The next two years are projected to bring deficits of $34.6 million and $19.8 million.
Projected surpluses in the final two years are lowered to $5.6 million and $59.3 million.
One potential for additional revenue is the 5 percent city tax on the sale, production and distribution of recreational marijuana beginning Jan. 1. The tax will increase to 8 percent in July 2020.
It’s still difficult to estimate just how much money the city will make from marijuana sales, city officials said. The report estimates $2.8 million in the next fiscal year and $13.7 million in the 2023 fiscal year. They said they’ll have more accurate numbers after the first few months of sales next year.
Among the major funding needs identified in the report are:
— initiatives to deal with the homelessness problem and an associated outbreak of hepatitis A;
— higher salaries for police officers to stem the tide of experienced personnel leaving for other agencies that offer better pay;
— purchasing a replacement helicopter for San Diego Fire-Rescue Department and staffing three new fire stations;
— staffing three new libraries;
— operating numerous new park and recreation facilities; and
— installing a new electronic voting system in the City Council chamber.
The number of dollars required for each item is broken down over the five-year period, often varying over time as programs get started.
Financial staff said city departments will be asked to submit spending reduction proposals, like they were for the budget of the current fiscal year.
Staff also suggested dipping into certain reserve accounts that might have funds available, and carrying over a nearly $18 million fund balance from the fiscal year that ended June 30.
—City News Service
