City in deep budgetary hole due to COVID-19, report shows

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SAN DIEGO (CNS) – San Diego is projected to face an $86 million shortfall in fiscal year 2021 largely due to the ongoing COVID-19 pandemic, a city mid-year budget report revealed Monday.

General Fund Revenues are projected to be under budget by $86 million at the end of fiscal year 2021 — a deficit $30 million more than the entire San Diego Library’s operating budget for the last fiscal year. City officials said most of the revenue shortfalls are due to the ongoing COVID-19 pandemic and the impact of the state’s stay-at-home orders on travel, special events and revenue generated from city property and facilities.

“The city faced structural budget deficits even before the pandemic wreaked havoc on our economy, leaving us with fewer resources to address our crumbling infrastructure,” Mayor Todd Gloria said. “Repairing our city budget won’t be a quick or painless process. Our city departments are proposing reductions in the coming weeks, and I am confident that we will propose a balanced and responsible budget while doing all we can to protect core neighborhood services.”

Gloria said he inherited a deficit from former Mayor Kevin Faulconer’s administration, compounding the issue.

With continued uncertainty facing the city this fiscal year, Gloria is exploring various mitigation options to address the budget shortfall and will announce next steps in coming weeks. While there is news of a federal stimulus package on the horizon, the amounts and restrictions remain unknown and approval by Congress remains uncertain.

According to Gloria, it is anticipated that the status and uses of any federal or state stimulus funds will be fully known prior to the release of the third quarter monitoring report this spring. That report will include any necessary budget adjustments for the City Council’s consideration, including the use of reserves if still necessary.

“This will be one of the most challenging budget cycles in San Diego’s history,” said Council President Jen Campbell said. “While there may be tough decisions ahead, I look forward to working with the mayor and my council colleagues to ensure we’re protecting essential services that residents deserve.”

Gloria did not recommend any actions on Monday due to the uncertainty of receiving stimulus funding, how vaccine distribution will affect the economy and the ongoing impact of the pandemic on the city’s revenues.

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