Mayor Gloria orders immediate cuts amid budget shortfall
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Mayor Todd Gloria is making immediate cuts to city spending in anticipation of a $258 million budget deficit next year, after voters rejected Measure E, a one-cent sales tax increase.
Why it matters: Already staring at a structural budget deficit, city officials proposed the tax increase to align revenues and expenses, but now have to achieve equilibrium through cuts.
Driving the news: Gloria announced Wednesday he was instituting an immediate hiring freeze for most positions, suspending non-essential overtime and focusing the city's capital improvement program on finishing projects that are already underway and repairing existing facilities.
- He'll look to consolidate leased office space for city workers, potentially terminating deals to let more employees work from home.
- The city will also try to make money from city facilities, like its downtown parking structure and Golden Hall, an event space operating as a homeless shelter due to be vacant by next year. City workers could have their offices moved there, he said.
The intrigue: Gloria is also halting the Civic Center Revitalization, its search for a developer to rebuild six city-owned blocks into housing, amenities and a new City Hall.
- The city's attempt to redevelop 101 Ash Street, a neighboring high-rise plagued for years by scandals and mismanagement, into low-income housing will continue, he said.
- He said his office is still negotiating with the owner of a Middletown warehouse to open the city's largest homeless shelter. "Negotiations are going well," he said.
Between the lines: Gloria and Matt Vespi, the city's chief financial officer, wouldn't say how much those moves would save to help patch next year's projected shortfall, except that they'd still need to make structural changes.
- Gloria said the city could request early retirements from city staff, but wouldn't specify which "direct impacts to employees" would be necessary.
Catch up quick: San Diego has dealt with smaller shortfalls in recent years, which it solved by using one-time revenue sources for ongoing expenses.
- But pandemic-era state and federal funds have dried up, and spending has continued to rise faster than collections, leading to the current structural imbalance.
What we're watching: Even without the sales tax hike, the city has two potential incoming revenue streams that are not accounted for in next year's expected $258 million deficit.
- The city can start charging a fee to homes that currently get trash collection for free, thanks to a 2022 voter-approved measure, which could bring in $80 million annually.
- A 2020 measure increasing hotel taxes is still in court, but could be resolved next year.
What's next: The city's budget analyst will present a five-year outlook to the city council on Wednesday as a kick-off to a budget process culminating with a new spending plan in June.
- Council member Joe LaCava said Wednesday he wanted to change that process to allow members to propose cuts before the mayor releases his draft proposal in April.