San Diego County's budget proposal erases a projected deficit, but federal cuts loom
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San Diego County officials have proposed a balanced budget, erasing a projected $138.5 million deficit without any expected layoffs.
Why it matters: The county government, like cities and school districts across the region, is grappling with a shortfall because revenue growth has failed to keep pace with spending increases.
State of play: The county's relatively modest cuts could be just a start if the federal government makes good on steep spending reductions called for by the Trump administration.
Follow the money: The county's $8.62 billion budget increased just 1.1% from last year, reflecting the sharp slowdown in revenues coming into local government.
- A year ago, it grew 4.4% following consecutive years of over 8% growth.
- The county has lost federal funds for five straight years and has maintained scaled-down versions of programs created by the COVID-era American Rescue Plan.
Driving the news: The proposed budget — coming from the county's chief administrative officer and due for board approval by the end of June — eliminates 190 staff positions, primarily from its health and human services department.
- But the proposal says those cuts should be able to rely on vacant positions and transferring staff between departments.
- Health and human services — which administers the Medi-Cal and CalFresh programs locally — is home to 168 of those jobs.
The big picture: The county is not facing a budget picture as difficult as the city of San Diego's.
- The county's projected deficit was about 1.6% of its total budget, while the city's was 4.3%.
What's next: Acting County Board Chair Terra Lawson-Remer in her State of the County speech in mid-April proposed increasing spending by reforming the county's reserve policy to free up cash.
- Lawson-Remer and Supervisor Monica Montgomery Steppe are bringing that proposal before the board on Tuesday.
How it works: The county has over $1 billion between two accounts that is currently unavailable, either because it's in a rainy day fund or because it's expected to go to future expenditures.
- The proposal would essentially make $95 million of that available per year for the next four years in what they're calling a "reserve windfall."
- "There would have to be a reason that we'd use it," she said. "Maybe because we're in a recession. We're facing a federal budget cut, a state budget cut. These external shocks are constraining our resources, and we need funds to get through to the other side."
Between the lines: While reserves could be used to prevent further cuts, Lawson-Remer says expanding county services would rely on the tax measure she proposed earlier this year and revived during her speech.
The bottom line: Lawson-Remer and Steppe, the board's two Democrats, are deadlocked with the board's two Republicans, who have indicated they're unlikely to support it.
- Lawson-Remer told Axios she'd bring the proposal back in July if it can't muster three votes this month.
- That would be after the special election for a fifth supervisor, which could determine the pivotal vote on the proposal.