April 13, 2017 – The San Diego Union Tribune – David Garrick reports – Local leaders are praising the budget Mayor Kevin Faulconer unveiled on Thursday as a set of reasonable compromises that makes strategic cuts in careful ways and maintains San Diego’s recent focus on street repair and neighborhood services.
While the proposal includes the elimination of 60 jobs to help close a projected $81 million deficit, the leader of the city’s largest labor union praised the mayor for adjusting reserve policies to soften the blow.
“Given what the mayor was facing, I think he did a pretty good job protecting essential services — and our employees are the essential services of the city,” said Mike Zucchet, general manager of the Municipal Employees Association.
Arts groups voice concern about budget cuts
The proposed $1.4 billion operating budget, which would cover the fiscal year that begins July 1, closes some of the gap by wiping out a $16 million pension reserve and cutting the city’s workers’ compensation reserve in half.
“We appreciate his thoughtful use of reserves and his creation and use of the pension stabilization reserve and the changes to the workers compensation reserve that are allowing the shortfalls he was facing to have a more moderate impact,” Zucchet said.
Councilwoman Barbara Bry, chair of the council’s budget committee, said the cuts are regrettable, but minor in comparison to what the city faced during the Great Recession.
She also praised the budget’s focus on neighborhoods while maintaining spending on public safety. But she said the fine print will matter.
“The council is eager to review the budget with a fine-toothed comb,” she said.
Nicole Capretz, executive director of local nonprofit Climate Action Campaign, had a mixed reaction to the proposed budget and how it would impact implementation of the city’s ambitious climate action plan, or CAP.
“We are pleased to see CAP implementation called out as a specific budget category and the addition of one new CAP staff person,” Capretz said. “But to reach the CAP targets we need significantly more investment into building affordable housing near jobs and transit, as well as more investment into implementing our bike and pedestrian master plans and our public transportation system.”
The budget does include $1.1 million to cover some of the mayor’s affordable housing initiatives and to launch creation of a parks master plan.
Faulconer said he’s disappointed that the budget cuts city funding for the arts by slashing the “Penny for the Arts” contribution from hotel taxes by $4.7 million, from $15.1 million to $10.4 million.
The mayor noted that arts funding would still remain above the amount spent in fiscal 2015, and contended that his staff had little choice with the city’s annual pension payment increasing this year from $191 million to $236 million.
“You don’t like to make any reductions, but the fact of the matter is that pension bill came due and you have to deal with that in a way that’s responsible and that focused on neighborhood services,” Faulconer said after unveiling the proposed budget during a noon press conference at the Malcolm X Library branch in southeastern San Diego.
“We are so fortunate to have such a thriving and vibrant arts and culture community in San Diego,” he said. “The fact that we’ve added so much in recent years is something that I’ve been proud of.”
The proposed budget includes far fewer new programs and services than the three previous spending plans Faulconer has proposed since becoming mayor in 2014.
Those budgets have restored hours at libraries and recreation centers to where they were before the Great Recession and sharply increased spending on homelessness, street repair, building neighborhood parks and other infrastructure projects.
He said on Thursday that it was tough to face cuts for the first time as mayor.
“We had to make some tough decisions,” he said. “We had to prioritize what’s most important. That’s why this budget is focused squarely on neighborhoods.”
Former Mayor Jerry Sanders, who now serves as chief executive of the San Diego Regional Chamber of Commerce, said the mayor struck the right balance.
“Paved roads, community parks and reliable infrastructure are good for business, and we appreciate that these priorities are funded in this plan,” said Sanders. “It’s never simple to balance a budget in the face of San Diego’s pension obligations, but this plan shields neighborhoods from major cuts and preserves the public services that residents and workers rely on.”
Bishop William Benson of Total Deliverance Worship Center in southeastern San Diego said the new budget continues Faulconer’s focus on boosting the city’s low-income neighborhoods.
“Since becoming mayor he has consistently said he wants to put the neighborhoods first and he has consistently backed up his word with each and every budget,” said Benson, praising the mayor for not slashing hours at library hours and recreation centers despite facing a deficit.
Faulconer stressed that despite the change in reserve policies, the city honored a commitment to increase the size of its general fund reserve to 15 percent in fiscal year 2018, which required an increase of $7 million to $181 million.
Mary Lewis, the city’s chief financial officer, said the elimination of 60 jobs won’t mean 60 layoffs because many of the eliminated positions are vacant and the Personnel Department will work hard to place workers in cut positions in other city jobs.
The size of the city’s general fund budget would increase by 5.3 percent, from $1.34 billion in Fiscal 2017 to $1.41 billion in Fiscal 2018.
When the city’s water, sewer and capital improvement funds are included, the overall city budget proposed by Faulconer would be $3.57 billion, a 5.4 percent increase from the $3.39 billion projected for Fiscal 2017.
The capital improvement fund, the city’s primary source of money for infrastructure projects, would increase from $421 million to $445 million, significantly more than double the $179 million spent in fiscal 2014.
The operating budget continues to grow in size because city revenue continues its rise since the Great Recession, but officials stress those increases have begun to plateau.
Property tax revenue is projected to increase 5 percent to $531 million, sales tax is estimated to go up 2.5 percent to $277 million and hotel tax revenue, formally called transient occupancy tax revenue, is projected to climb 5.7 percent to $121 million.
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