2023 Proposed Budget


Mayor's Message - Fiscal Year 2023 Budget

Dear San Diegans,


I am proud to present the Fiscal Year 2023 Proposed Budget, which builds on our continuing recovery from the pandemic while investing in enhancements to services and infrastructure that will improve quality-of-life for our residents for decades to come.


Last year, we invested millions in federal and state relief dollars to jumpstart San Diego’s economic recovery by providing aid to small businesses and help to our most vulnerable residents. This helped carry us through the worst effects of the COVID-19 pandemic. As the City’s major revenues continue to recover, we are strategically using an additional $123 million in federal relief dollars to ensure City employees can continue to provide the vital services residents deserve while prioritizing investments in areas where the needs are greatest.


This has put us in a position to where, as a City, we are ready to rebuild – ready to rebuild decades-old infrastructure that has historically been neglected and invest in housing and homelessness solutions that work, ready to rebuild our workforce and deliver high-quality services to every neighborhood and ready to do the hard work of implementing our climate action initiatives.


I made a promise during my 2022 State of the City address to deliver infrastructure improvements faster and more equitably across San Diego. To do that, we need to expand the capacity of our City’s workforce to deliver critical capital projects that benefit San Diego communities. This budget makes significant investments that will allow us to fix sidewalks in 600 additional locations per year and install curb ramps based on the highest Americans with Disability Act (ADA) priority list. To improve traffic flow, we are funding a new, reconfigured traffic-management center to allow operation for 12 hours per day and additional capacity for event management. A new traffic loop replacement crew will replace 250 traffic sensors per year to ensure traffic flows seamlessly through signals and intersections, limiting vehicle idling, while a new traffic-signal technician crew will be able to replace approximately 160 aging signal cabinets and service-meter pedestals annually, with a goal of replacing all 1,600 locations over a 10-year period.


While we are making significant investments in new infrastructure, we cannot ignore the maintenance and upkeep of our existing assets. This budget includes more than $5 million for existing City facilities to repair or replace roofs, heating, ventilation, air-conditioning, elevators and parking lots, and to expand facilities. We are adding in-house staff and infrastructure investments for critical pump maintenance and repair to ensure communities and major transportation routes are protected from floods.


Additionally, addressing housing and homelessness are a top priority of my administration and of this City Council. In the last 12 months, there have been 1,253 housing opportunities created though vouchers, permanent supportive housing, rapid rehousing and other housing interventions to end and prevent homelessness. As we make progress on the housing front, I am laser-focused on expanding our shelter capacity to get more unsheltered San Diegans off the streets and connected to housing and services, with a focus on creating more mental health services in our shelters. This budget continues to leverage federal and state funding while adding $8.3 million in General Fund dollars to accelerate the goal of adding 650 emergency shelter beds for single adults, youth and families. The budget also continues to fund the Coordinated Street Outreach Program, sending out a team of caseworkers assigned to neighborhoods across the City to help people off the streets.


For San Diego to be a global leader on climate action, we must look at all possible ways to combat the climate crisis. The City’s Climate Action Plan (CAP) set an ambitious goal to achieve net zero GHG emissions by 2035. The budget funds key positions that will implement the CAP and pays for experts to assist with the development of the Mobility Action Plan, the Zero Gas Emissions Vehicle Strategy and the Building Decarbonization Strategy. It also includes the addition of a Chief Resiliency Officer, responsible for implementation of the Climate Resilient SD initiative, a plan to prepare our communities for the impacts of climate change.


The City is also making major investments to decrease the amount of organic waste sent to the landfill, which reduces the production of greenhouse gas emissions and produces compost to improve soil quality. The Proposed Budget adds to the investments made last fiscal year to meet new state requirements, including the deployment of 240,000 green waste containers and kitchen pails, route-optimization hardware and software, and an education and outreach campaign to ensure San Diego residents understand these new waste-reduction requirements. This program is a crucial part of meeting our updated climate goal of achieving net zero emissions by 2035.


Our beautiful beaches and waterways rely on the City’s stormwater system to remain clean, safe and healthy. Rainfall that enters storm drains is not treated, and runoff collects pollutants from properties and streets and carries them into our waterways. This year, the City secured more than $359 million in low-interest federal loans, which, together with local and state matching funds, will allow for major investments in this area. To execute these improvements, the Proposed Budget ramps up the engineering team responsible for the CIP stormwater program to meet regulatory milestones and address the backlog of failed storm drainpipes -- an average of $120 million per year of CIP projects must be designed and implemented over the next five years. The Proposed Budget also provides for 6,000 miles of additional street sweeping to prevent contaminants from reaching our beaches and waterways.


As part of my commitment to build more homes that San Diegans can actually afford, we have launched the “Homes for All of Us” initiative, which seeks to address the housing crisis by making it easier to create new homes throughout the city by streamlining regulatory measures like building affordable and middle-income homes on City-owned sites and implementing a recently passed state law allowing the split of a single-family lot into two and permitting up to two new homes on each lot. Beyond these regulatory streamlining measures, we plan to facilitate citywide housing production by reducing the amount of time it takes to permit new units. For this reason, this budget adds staff capacity for the City’s Development Services Department to process permits that result in net new housing units. The desired increase for home production annually in the City is three-fold, from 5,000 to 15,000 units per year to solve the City’s housing crisis based on the City’s Regional Housing Needs Assessment. These new positions are cost-recoverable and will enable the City to focus a subset of permit technicians, reviewers and supervisors to permit only projects that deliver net new homes.


We are making strategic additions in public safety to improve response times to residents’ safety and quality-of-life priorities.  We are adding two squads to allow coverage for seven days a week of parking enforcement, improved response times to resident notifications and more consistent coverage throughout the City. The budget also includes additional staff to allow the Police Department to reduce response times to 72-hour parking complaints from the current 45-60 days down to six. We also are increasing overtime to better reflect the needs of the department to address increases in violent crime. Lastly, we are continuing the No Shots Fired Program, an intervention and prevention program that seeks to reduce violence through strategic partnerships with faith leaders and developing exit strategies from gang culture to reduce gang violence in communities of concern.


We also have a goal to improve public spaces for residents and visitors alike. That’s why the City and its dedicated partners in Balboa Park have been working together to upgrade and enhance many of the physical spaces in the park. This budget restores a crew specifically dedicated to upkeep and maintain Balboa Park, focusing on general repairs, litter removal and overall beautification of this treasured destination.


We are also investing in the personnel that perform important city services and seeking to address key vacancies. After nearly a decade of stagnant salaries, the City’s employee compensation is not competitive with other agencies throughout the region. This has resulted in the City’s inability to fill positions that provide basic services like road repair, trash pickup and public safety. Building on modest gains over the last fiscal year, this budget continues to address this challenge with compensation increases to better align salaries with the current employment market. It also restores retirement benefits to make them comparable to those offered by most government agencies in California. We are also deploying an approach used successfully to fill vacancies in our Library Department last year to fill Parks and Recreation positions with chronically high vacancy levels. By converting many of our hourly positions responsible for servicing and maintaining our parks from hourly to benefited positions, we expect to fill those positions quickly and retain valuable employees who ensure our parks are clean and well maintained for our residents to enjoy.


City employees are this organization’s most valuable resource. Without them, we cannot provide core neighborhood services like road repair, trash pickup or public safety. Unfortunately, after close to a decade of stagnant salaries, employee compensation is not competitive when compared to other agencies throughout the region. Our City has become the training ground for employees who join the City for a couple of years and then leave to work for other agencies that pay more. We are losing our best and most experienced employees to other local governments. Not only do we want to prevent this continuous attrition, but we want to attract the best and the brightest employees to transform this City into the best-in-class organization San Diegans deserve. We understand that we will not be able to solve this challenge in a single year. But this budget begins to address this fundamental issue and includes compensation increases to begin to align employee salaries with the current employment market.


This budget includes approximately 8.9 million in General Fund budget reductions resulting from minimal service level reductions, savings from operational reorganizations and efficiencies, and new revenue sources identified by City departments.


Conclusion


The City continues to recover from the devastating effects of the COVID-19 pandemic with some of our major revenues coming back stronger than expected and others on the path to recovery. I am optimistic that we’ll soon see the return of large conventions that generate so much local revenue to fund many of the critical services the City provides. The Fiscal Year 2023 Adopted Budget continues the fiscally responsible, multi-year strategy we developed last year. We are using federal relief funds over three years while the City’s major revenues continue to recover. This will allow us to maintain the services that our residents rely on while rebuilding and prioritizing key investments in the areas of infrastructure, clean water, homelessness solutions and housing and climate action. Make no mistake, our city is ready to get back to business and ready to rebuild.


Sincerely,


Todd Gloria

Mayor

Signed on April 15, 2022

Economic Recovery

In the spring of 2021, the City began to show signs of recovery from the deeply impacting COVID-19 pandemic; revising the major General Fund revenue projections to reflect the positive impacts from the acceleration of the vaccine distribution, a decrease in COVID-19 infection rates, the passing of the American Rescue Plan Act, and the lifting of federal and State restrictions. The Fiscal Year 2023 Proposed Budget continues to incorporate a positive economic outlook that balances the continuing trend of positive key economic indicators, with corresponding growth in property tax, sales tax, and transient occupancy tax. The Fiscal Year 2023 Proposed Budget reflects a multi-year analysis that addresses the projected recovery growth of the City’s major general Fund revenues, funds critical expenditures, and responsibly uses the one-time resources from the American Rescue Plan Act.

General Fund Revenues

The Fiscal Year 2023 Proposed General Fund revenue budget is $1.89 billion, which represents an increase of $143.3 million, or 8.2 percent, from the Fiscal Year 2022 Adopted Budget. Departments within the General Fund provide essential City services including police, fire, refuse collection, homelessness services, library services, and parks and recreation programs. These core services are primarily supported by major revenue sources that include property tax, sales tax, transient occupancy tax, and franchise fees. These revenue sources account for 68.9 percent of the City's General Fund revenue in the Fiscal Year 2023 Proposed Budget and are projected to increase by $130.7 million, or 11.2 percent, from the Fiscal Year 2022 Adopted Budget. The increases in the major General Fund revenues is primarily attributed to the continuing robust growth of the economic recovery from the COVID-19 pandemic. In addition to the major General Fund revenues, $123.5 million in federal funding from the American Rescue Plan Act of 2021 is included in the Fiscal Year 2023 Proposed Budget to fund critical expenditures and offset past revenue loss from the COVID-19 pandemic.


Additionally, the Fiscal Year 2023 Proposed Budget includes an increase of $12.6 million in other revenue sources. The increase in other revenue sources is primarily attributed to reimbursements from the Transient Occupancy Tax Fund to support the safety and maintenance of visitor-related facilities, new or revised user fee revenue as a result of the Fiscal Year 2023 Comprehensive User Fee Study, and one-time revenue increases related to the implementation of the Short-Term Residential Occupancy Program.

Critical Expenditures

The Fiscal Year 2023 Proposed Budget invests in the right-of-way, public safety, capital improvement projects, parking enforcement, streets, parks and library facilities, and maintains homeless shelters and services. Additionally, funding for employee compensation increases negotiated with the City’s Recognized Employee Organizations are included in the Fiscal Year 2023 Proposed Budget. New services include efforts to comply with stormwater regulations, achieve climate action plan goals, enhance and implement State requirements associated with Organics Waste Diversion and the Street Vending Ordinance. This also includes a $29.7 million General Fund transfer to the Capital Improvements Program, which will be used to fund flood resilience infrastructure, stormwater and facilities improvements. The list highlights some of the General Fund critical expenditures.

Critical Expenditures

General Fund Expenditures

The Fiscal Year 2023 Proposed Budget for General Fund expenditures is $1.89 billion, which represents an increase of $143.3 million, or 8.2 percent, from the Fiscal Year 2022 Adopted Budget. These expenditures are primarily supported by major General Fund revenue sources that include property tax, sales tax, transient occupancy tax, and franchise fees. These critical expenditure additions maintain current services and address the needs of residents.

Balanced Budget and Conclusion

The Fiscal Year 2023 Proposed Budget continues to focus on the City’s goals and make investments to address the City's various needs including: infrastructure, stormwater compliance, and climate action plan goals. This balanced budget includes funding to maintain current services and fund new critical expenditures. The Proposed Budget includes an increase of $130.7 million in additional Major General Fund revenues from the continuing economic recovery from the COVID 19 pandemic and uses one-time funding from the American Rescue Plan Act. However, to maintain a balanced budget in future years it will require further mitigations such as the suspension of the General Fund reserve contributions and transfers to the infrastructure fund, expenditure reductions or identification of new revenue sources. Additional details are included throughout the Budget document.