2021 Adopted Budget


A Message From Former Mayor Faulconer

To my fellow San Diegans:


The global COVID-19 pandemic is taking a toll on everyone, and the City of San Diego is certainly no exception. Every day we are confronted by extraordinary challenges that require us to make decisions in a situation never experienced before. In the face of these difficulties, I am confident we will rise to this occasion together, as One San Diego.


The City Council and I have worked together to build up our reserves and restore service levels since the Great Recession of 2008. This proactive planning has helped us save for a rainy day. Unfortunately, the fiscal impacts of the pandemic are more like a hurricane. Despite the significant loss in City revenues from the ongoing closure of the local and national economy due the COVID-19 pandemic, we have adopted a balanced budget for Fiscal Year 2021 that maintains the City’s reserve levels. The Adopted Budget for Fiscal Year 2021 is $4 billion — a $323 million, or 7% decrease, from the Fiscal Year 2020

Adopted Budget.


This Adopted Budget includes $42 million in General Fund reductions across all branches to help balance the General Fund budget. Essential services were given priority during this unparalleled crisis, and we continue to protect essential functions such as public safety, trash collection, water and wastewater, and homelessness programs. The Adopted Budget prioritizes federal CARES Act relief funds for public safety, homeless services, small businesses, and rental relief for our residents. The use of COVID-19 state and federal relief funds as well as other one-time sources have helped maintain essential services and reserves in Fiscal Year 2021. While the Adopted Budget takes a fiscally responsible approach to closing the largest budget deficit in the City of San Diego’s history, one-time resources were needed to balance the budget. As a result, budget shortfalls will continue in Fiscal Year 2022, however, this budget does not use reserves in order to maintain healthy rainy-day funds for future City leaders to consider.


The City will continue to monitor the impacts of the COVID-19 pandemic on revenues and expenditures, and additional modifications will be made, as needed, during the budget monitoring process in Fiscal Year 2021. I will continue my commitment to effectively and proactively manage the City’s finances as the devastation from the pandemic continues to unfold. I want to thank our City employees who have continued to step up every day during this unprecedented health and economic crisis, and who proudly serve San Diegans day after day. We are united in overcoming these challenges, and we will get through

this together.


Sincerely,


Kevin L. Faulconer

Mayor

Signed on August 28, 2020


An Extraordinary Challenge

Revenues will be significantly impacted.

At the start of 2020, San Diego’s economic outlook was trending stable and positive. However, with the start of the COVID-19 pandemic and the economic recession, City revenues have declined significantly and are projected to continue to decline into Fiscal Year 2021. There have been many fiscal challenges attributed to the COVID-19 pandemic, including a projected GDP decline, historic increases in unemployment claims in the region, travel restrictions and a decline in consumer spending resulting from business closures and changes in the way goods and services are sold to consumers.


In comparison to the Fiscal Year 2020 Adopted Budget, the Fiscal Year 2021 Adopted Budget includes projected decreases to three of the four major General Fund revenues—sales tax, transient occupancy tax, and franchise fees—primarily based on the projected impacts of the COVID-19 pandemic. The combined difference is a drop of $82.5 million in revenues from the Fiscal Year 2020 Adopted Budget.

General Fund Revenues

Departments within the General Fund provide core community services such as public safety (including police/fire protection and life safety), parks and recreation, library services, and refuse collection. These core services are primarily supported by major revenue sources that include property tax, sales tax, transient occupancy tax, and franchise fees. These four sources alone account for 65.7 of the City's General Fund revenue and are projected to decrease by $53.8 million, or 4.8 percent, from the Fiscal Year 2020 Adopted Budget.


FY20-21 Adopted General Fund Revenue Changes

Despite the steep drop in the General Fund's major revenue sources, the Fiscal Year 2021 Adopted Budget General Fund revenue has increased by by $71.7 million or 4.6 percent from the Fiscal Year 2020 Adopted Budget. Offsetting the decrease in the major General Fund revenues is an increase of $146.1 million in COVID-19 State and federal relief funds for Fiscal Year 2021. The majority of relief funds are provided through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted by the federal government in March 2020 to provide emergency assistance and health care response for individuals, families, and businesses affected by the COVID-19 pandemic.

New Critical Expenditures

The Fiscal Year 2021 Adopted Budget includes General Fund expenditures of $1.62 billion to provide core community services, as well as funding for new critical expenditures primarily in response to the COVID-19 pandemic. These expenditures are primarily supported by major General Fund revenue sources that include property tax, sales tax, transient occupancy tax, and franchise fees.


The Fiscal Year 2021 Adopted Budget includes critical expenditures that focus on three strategic goals:

• Achieve clean, safe, and livable neighborhoods

• Create an economically prosperous City

• Provide high quality public service


The list on the right highlights some of the General Fund critical new expenditures.

New Critical Expenditures Table
Major Budget Reductions Table

Major Budget Reductions

In order to offset critical new General Fund expenditures and decreases in major General Fund revenues due to the COVID-19 pandemic, the Fiscal Year 2021 Adopted Budget includes budget reductions that were strategically chosen to minimize impacts to core service levels and limit the impact to public safety and public health. The list to the left includes major budgeted reductions grouped by organizational branch for the General Fund and Non-General Funds.


General Fund Departments

The City's Fiscal Year 2021 Adopted Budget reflects General Fund expenditures totaling $1.62 billion, which is an increase of $30.9 million or 1.9 percent from the Fiscal Year 2020 Adopted Budget.

Balanced Budget and Conclusion

Despite volatile revenue impacts and affects on the local and national economy due to the COVID-19 pandemic, the Mayor has proposed a balanced and fiscally responsible budget for Fiscal Year 2021 that takes into account all information available in this uncertain time.


The Fiscal Year 2021 Adopted Budget continues to focus on the City’s strategic plan goals. This budget includes funding for core community services, new critical strategic expenditures, budget reductions with minimal service level impacts, and is balanced.