THE CITY OF SAN DIEGO
A 

DATE: April 15, 2020

TO: Honorable Council President Georgette ez and Members of the City
Council

FROM: Kris Michell, Chief Operating Officer

Rolando Charvel, Chief Financial Office
Matthew Vespi, Department of Finance Director and City Comptroll?

SUBJECT: Fiscal Year 2021 Proposed Budget

 

This memorandum presents the Mayor's Fiscal Year 2021 Proposed Budget, and includes an
opening message from 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 have worked together to build up our reserves and restore core service
levels since the Great Recession of 2008. This proactive planning has helped us save for a rainy
day. Unfortunately, the ongoing fiscal impacts of the pandemic are more like a hurricane.
Despite volatile revenue projections due to the ongoing closure of the local and national
economy, I have proposed a balanced and fiscally responsible budget for Fiscal Year 2021 that
takes into account all information available in this uncertain time. The Proposed Budget for
Fiscal Year 2021 is $3.9 billion a $427 million, or 10% decrease from the Fiscal Year 2020
Adopted Budget.

This Proposed Budget includes $46 million in General Fund reductions across all branches, and
almost $15 million in reductions to non-General Fund expenditures to help balance the
General Fund budget. I am proposing to access reserves in Fiscal Year 2020 to mitigate more
significant reductions and eliminations of staff and core services. Core community services are
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.
Minimal additions are proposed for Fiscal Year 2021, primarily for critical public safety needs
and $2.0 million for the recently created Small Business Relief Fund to continue offering
financial assistance to local businesses affected by the coronavirus.
The City will continue to monitor the impacts of COVID-19 on revenues and expenditures, and
additional modifications will be made in the May Revise based on new available information.
Additionally, I am committed to a quarterly budget process in Fiscal Year 2021 to more
effectively and proactively manage the City’s finances as the results of the pandemic continue
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 serve San Diego day after day. We
are united in overcoming these challenges, and we will get through this together.
Sincerely,

Kevin L.
Faulconer
Mayor

 Citywide Budget Overview
The City of San Diego's Fiscal Year 2021 Proposed Budget of $3.92 billion is comprised of five
operating fund types and the Capital Improvements Program (CIP):
x

General Fund;

x

Special Revenue Funds;

x

Capital Project Funds;

x

Enterprise Funds;

x

Internal Service Funds; and

x

Capital Improvements Program.

This represents a decrease of $427.0 million or 9.8 percent compared to the Fiscal Year 2020
Adopted Budget. The Fiscal Year 2021 Operating Proposed Budget by Department and Fund is
listed in Attachment 1 while the Fiscal Year 2021 Proposed CIP Budget is detailed by Project in
Attachment 3.

Table 1 shows the change in expenditures from Fiscal Year 2019 to Fiscal Year 2021 by fund
type or program.

Table 1: Change in Total City Expenditures from Fiscal Years 2019 - 2021 by
Fund Type/Program
FY 2019
Actuals

Fund Type
General Fund

$

Special Revenue Funds

FY 2020
Adopted Budget

FY 2021
Proposed Budget

1,462,584,451 $ 1,589,984,689 $ 1,539,758,040 $

FY 2020 –
FY 2021
Change

Percent
Change

(50,226,649)

(3.2%)

532,936,909

755,910,131

706,111,094

(49,799,037)

(6.6%)

13,536,140

17,593,606

36,261,445

18,667,839

106.1%

934,564,412

1,118,672,626

1,126,849,497

8,176,871

0.7%

Internal Service Funds

142,527,331

151,580,954

149,594,859

(1,986,095)

(1.3%)

Capital Improvements
Program

582,193,928

710,812,155

358,929,467

Capital Project Funds
Enterprise Funds

Total

$

(351,882,688) (49.5%)

3,668,343,171 $ 4,344,554,161 $ 3,917,504,402 $ (427,049,759)

(9.8%)

 Table 2 presents the changes in revenues from Fiscal Year 2019 to Fiscal Year 2021 by fund
type.

Table 2: Changes in Total City Revenue from Fiscal Years 2019 – 2021 by
Fund Type
FY 2019
Actual

Fund Type
General Fund
Special Revenue Funds
Capital Project Funds
Enterprise Funds
Internal Service Funds
Total1

$

FY 2020
Adopted
Budget

FY 2021
Proposed
Budget

1,491,627,879 $ 1,549,226,498 $ 1,539,758,040 $

FY 2020 –
FY 2021
Change

Percent
Change

(9,468,458)

(0.6%)

608,518,382

656,120,577

622,909,464

(33,211,113)

(5.1%)

56,545,554

47,029,997

104,701,068

57,671,071

122.6%

1,324,814,679

1,781,535,967

1,418,701,575

132,900,079

158,293,430

152,110,073

(362,834,392) (20.4%)
(6,183,357)

(3.9%)

$ 3,614,406,572 $ 4,192,206,469 $ 3,838,180,220 $ (354,026,249)

(8.4%)

¹Operating revenues may be less than operating expenditures due to the use of fund balance in excess of reserves.

Budget Development Process
The Budget Development Process consists of three main phases: budget development, budget
review, and budget adoption. The Budget Development phase began in November 2019 with
the release of the General Fund Fiscal Year 2021-2025 Five-Year Financial Outlook (Outlook),
which is prepared each year to establish the framework for the development of the Proposed
Budget. Based on this year’s Outlook, General Fund departments (as well as non-general funds
that impact the General Fund) were directed to only submit reduction proposals and budget
requests that maintain core service levels. These budget adjustments were then submitted to
the Department of Finance in January 2020 and were reviewed and prioritized by the City’s
Executive Team in February 2020. In early March 2020, the City had nearly finalized the
Budget Development phase with the completion of projected revenues and expenditures for
the General Fund, non-general funds, and the CIP for Fiscal Year 2021.
In mid-March 2020, the United States and the City were impacted seemingly overnight by the
global pandemic caused by the novel coronavirus, also known as COVID-19. The initial
transmittal of COVID-19 was identified in Wuhan, China in December 2019, and the United
States reported its first case in January 2020. Spreading rapidly across the nation, the County
of San Diego reported its first case of COVID-19 on March 7, 2020. To-date, the City has 899
reported cases of COVID-19, as reported by the County of San Diego on April 13, 2020.
Consistent with orders from the County of San Diego and the State of California, on March 12,
2020, Mayor Faulconer issued a State of Emergency in the City of San Diego. Subsequently, on
March 16, 2020, Mayor Faulconer issued an Executive Order to combat the virus, including
limiting public gatherings, prohibiting the operation of bars, and requiring restaurants to only

 serve patrons with to-go or delivery orders. With the current (as of April 2020) social
distancing restrictions, travel warnings and closing of non-essential businesses, sales tax and
transient occupancy tax revenues have declined significantly and are projected to continue to
have major decreases in Fiscal Year 2020 and Fiscal Year 2021. Other revenues have also been
impacted.
Based on the most current Fiscal Year 2021 Proposed Budget assumptions, revenues are
projected to sharply decline over the remainder of Fiscal Year 2020, and continue to decline at
a slower rate in Fiscal Year 2021 due to the ongoing impacts of COVID-19 and the current
economic recession. This sharp and sudden decline in revenues that support City expenditures
resulted in significant updates to projected revenues and expenditures in the Fiscal Year 2021
Proposed Budget, including additional budget reduction proposals.
During the Budget Review phase, the City Council will hold a series of public meetings in the
month of April and May of 2020 to obtain input from San Diego residents on spending
priorities. The Mayor and City Council will use the information at these hearings to
recommend changes to the Fiscal Year 2021 Proposed Budget. The Budget Adoption phase
begins with the City Council approving the budget, and once the final changes have been made
by the Department of Finance, the City Council will be presented with the Appropriation
Ordinance, where it is anticipated that the Fiscal Year 2021 Adopted Budget will be enacted
into law, concluding the Budget Development Process.

Expenditure Overview by Fund Type/Program
General Fund
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, as well as vital support functions such as finance, legal, and human
resources. These core services are primarily supported by major revenue sources that include
property tax, sales tax, transient occupancy tax, and franchise fees. The City's Fiscal Year 2021
Proposed Budget reflects General Fund expenditures totaling $1.54 billion, which is a decrease
of $50.2 million or 3.2 percent from the Fiscal Year 2020 Adopted Budget. For additional details
about the Proposed General Fund Budget, please see the Summary of Adjustments in the
General Fund Section and Attachment 1 of this document.

Special Revenue Funds
Special Revenue Funds account for revenues that are received for specifically identified
purposes. The two largest special revenue funds are Transient Occupancy Tax (TOT) and
Engineering & Capital Projects. The Fiscal Year 2021 Proposed Budget for Special Revenue
Funds is $706.1 million, representing a decrease of $49.8 million or 6.6 percent from the Fiscal
Year 2020 Adopted Budget. For a list of the Proposed Special Revenue Funds Budget, please
see Attachment 1 of this document.

 Capital Project Funds
Capital Project Funds are primarily used for the acquisition or construction of major capital
facilities, or for debt service expense associated with general fund capital bonds. When used
to fund capital projects, these funds typically make up a small portion of the overall Capital
Improvements Program, which can be supported by all fund types. The Fiscal Year 2021
Proposed Budget for Capital Project Funds is $36.3 million, which is an increase of $18.7
million or 106.1 percent from the Fiscal Year 2020 Adopted Budget, and is being allocated
primarily to support general fund debt service obligations. For a list of the Proposed Capital
Project Funds Budget, please see Attachment 1 of this document.

Enterprise Funds
Enterprise Funds account for specific services that are funded directly through user fees. These
funds include Water, Wastewater, Development Services, Refuse Disposal, Recycling, Golf
Course, and Airports. Typically, these funds are intended to be fully self-supporting and are not
subsidized by the General Fund. The Fiscal Year 2021 Proposed Budget for Enterprise Funds is
$1.13 billion, representing an increase of $8.2 million or 0.7 percent from the Fiscal Year 2020
Adopted Budget. For a list of the Proposed Enterprise Funds Budget, please see Attachment 1
of this document.

Internal Service Funds
Internal Service Funds support the City's internal operations on a cost-reimbursable basis.
The Fiscal Year 2021 Proposed Budget for Internal Service Funds totals $149.6 million, which
is a decrease of $2.0 million or 1.3 percent from the Fiscal Year 2020 Adopted Budget. For a list
of the Proposed Internal Service Funds Budget, please see Attachment 1 of this document.

Capital Improvements Program
The Fiscal Year 2021 Proposed Capital Improvements Program (CIP) budget allocates available
revenue to rehabilitate, restore, improve, enhance and increase the City's capital assets. The
allocation of funds is based upon an analysis of available funding sources as well as a review
of project needs and priorities. This fiscal year's budget is comprised of various funding
sources such as sewer and water rate fees, a one half-cent local sales tax for transportation
improvements (TransNet Extension), Mission Bay lease revenue, other City funds, and is
summarized in Table 3 below.
The Fiscal Year 2021 Proposed CIP Budget totals $358.9 million and will support various project
types such as water and sewer pipelines, buildings, and transportation projects. The proposed
allocation is a decrease of $351.9 million or 49.5 percent from the Fiscal Year 2020 Adopted
CIP Budget of $710.8 million, primarily due to a decrease in Public Utilities Department
Enterprise Fund projects for the Pure Water Program.

 Table 3: Fiscal Year 2021 Proposed CIP Budget
FY 2021
Proposed
Budget

Funding Source
Gas Tax Fund

18,929,301

5.27 %

Golf Course Enterprise Fund

2,063,816

0.57 %

Mission Bay Park Improvement Fund

7,900,000

2.20 %

1,323,165

0.37 %

Parking Meter Districts

1,500,000

0.42 %

San Diego Regional Parks Improvement Fund

3,200,000

0.89 %

Sewer Funds

136,604,341

38.06 %

TransNet Funds

22,023,904

6.14 %

2,000,000

0.56 %

10,000,000

2.79 %

153,384,940

42.73 %

Other Funding

Trench Cut/Excavation Fee Fund
Utilities Undergrounding Program Fund
Water Fund
Total

$

Percent of
Total CIP
Budget

$ 358,929,467

The CIP budget also projects anticipated funding as shown in Attachment 3. For Fiscal Year
2021, a total of $281.0 million in anticipated funding for CIP projects is included but is not
being appropriated in the Fiscal Year 2021 Proposed Budget at this time. Anticipated funding
may include a variety of sources such as commercial paper, lease revenue bonds, donations,
grants, developer funding, and Facilities Benefit Assessments. As anticipated sources of funds
are received, separate City Council actions will be brought forward to appropriate any
anticipated funding during Fiscal Year 2021.
Additionally, the majority of capital project budget proposals were established prior to COVID19 events. It is anticipated that both the adopted and anticipated CIP budgets will need to be
revised as a result of the economic downturn, as well as shifting priorities. The economic
recession is likely to impact all CIP funding sources in the long term, with the largest nearterm impacts to funds that support General Fund asset improvements—TransNet, Gas Tax,
Infrastructure, Regional Park and Mission Bay Improvement funds—among others.
However, the CIP Program is currently awaiting revised revenue projections from state and
other municipal agencies before implementing capital budget reductions. The CIP Program’s
large continuing appropriation, which is in excess of $1.9 billion, is predominantly cash backed
and will enable the Program to continue project progress with minimal near-term impacts.
This budget allocates additional funding to both new and continuing projects in the City’s
$10.61 billion multi-year CIP.  The City’s multi-year CIP includes assets which are maintained
and operated by a variety of City departments, as shown in Table 4.

 Table 4: Multi-Year CIP
Department

Prior Years

Airports

$

Citywide

$

-

Future Years
$

Total
- $

11,257,990

41,355,337

9,525,696

702,833,766

753,714,799

Environmental Services

83,690,903

-

800,000

84,490,903

Fire-Rescue

119,226,115

-

59,872,694

179,098,809

Library

61,060,461

-

38,356,800

99,417,261

445,542,885

12,538,816

165,046,398

623,128,099

18,585,096

-

2,896,018

21,481,114

2,393,997,889

281,536,750

2,382,422,911

5,057,957,550

39,534,930

875,000

70,374,703

110,784,633

31,732,349

-

1,500,000

33,232,349

1,120,088,909

54,453,205

2,459,383,318

3,633,925,432

358,929,467

$ 5,883,486,608

$ 10,608,488,940

Parks & Recreation
Police
Public Utilities
Real Estate Assets - Facilities
Services
Sustainability
Transportation & Storm Water
Total
1

11,257,990

FY 2021
Proposed Budget

1

$ 4,366,072,865

$

Will be reflected as two departments in the Adopted Budget, once the restructure is approved by Council.

The Fiscal Year 2021 Proposed CIP Budget will add $358.9 million to a planned $10.61 billion
multi-year CIP. For additional details about the specific projects included in the Proposed CIP
Budget, please see Attachment 3 of the Fiscal Year 2021 Proposed Budget.

Citywide Reorganization/Restructuring
The Fiscal Year 2021 Proposed Budget reflects the restructures of several departments and
programs as a result of executive management decisions and department-initiated
reorganizations. Reorganizations include the restructuring of departments and
major divisions within a department, and are intended to increase the overall efficiency and
effectiveness of City operations. The following provides an overview of the newly created
departments in the Fiscal Year 2021 Proposed Budget that add to the City's organizational
structure. These departments were created to provide additional oversight for critical City
functions, and are largely budget neutral due to the repurpose of existing positions, and the
use of new revenue to offset costs when possible.

Cultural Affairs Department
The Cultural Affairs Department is a newly created department dedicated to the centralization
of the City’s engagement with the arts, culture and creative industries. This new department
merges the Commission for Arts and Culture and Office of Special Events & Filming to position
the new department as a consolidated resource for other City departments and the private
creative economy. Through the restructure and repurpose of existing positions, this
restructure is budget neutral.

 General Services Branch
The General Services Branch is a newly created branch which currently oversees the Public
Works Department, the Fleet Operations Department, and the 101 Ash Street project. Through
the restructure of existing non-personnel expenditures and repurpose of existing positions,
this restructure is budget neutral.

Homelessness Strategies Department
The Homelessness Strategies Department is a newly created department dedicated to the
centralization of homelessness-related programs and initiatives. The establishment of the
department will help the City expand and improve programs and services available for
individuals experiencing homelessness, and support oversight over state grant funds. Through
the repurpose of an existing position, and the use of state grant funds to reimburse the
department for eligible staff costs, this restructure is budget neutral.

Mobility Department
The newly created Mobility Department is the proposed cornerstone of the Shared Mobility
Program citywide. The Mobility Department will coordinate and assist with the
implementation of all mobility programs and includes significant contributions of existing
positions and resources from the Planning Department, Economic Development Department,
and Neighborhood Services branch. The budgeted filled positions that are anticipated to be
transferred from the Planning Department include 8.00 Planners. The Economic Development
Department is contributing 3.00 FTE positions including 1.00 dedicated Program Manager for
the Shared Mobility Device Program. In addition, the Office of ADA Compliance & Accessibility
will be transferred with 3.00 FTE positions (with 1.00 FTE position being transferred to the
newly created Homelessness Services Department) to support ADA-related mobility projects.
Through the repurpose of existing positions, and the addition of Community Parking District
and Shared Mobility Device revenue, the creation of this department is budget neutral.

Storm Water Department and Transportation Department
The Transportation & Storm Water (TSW) Department was formed in 2011 and merged the
Storm Water Department with transportation-related functions from multiple departments.
Since that time, storm water and transportation needs have grown significantly, making it
necessary to reorganize them into stand-alone departments to better manage and plan for
these critical functions. The newly created Storm Water Department is largely budget neutral
due to the transfer of over 200.00 FTE positions primarily from the existing Storm Water
Division, except for the addition of 1.00 Department Director. Additional expenditures
associated with the new Storm Water Department will be offset by revenue from Community
Parking District funds. Except for the transfer of the Storm Water Division, the Transportation
Department remains largely unchanged. Significant budget adjustments for both departments
are included later in the Proposed Budget.

 Summary of Adjustments in the General Fund
The Fiscal Year 2021 Proposed Budget includes General Fund revenues and expenditures of
$1.54 billion and maintains a focus on core essential services. General Fund expenditures are
primarily supported by major General Fund revenue sources that include property tax, sales
tax, transient occupancy tax, and franchise fees. These four major General Fund revenue
sources account for $1.10 billion or 71.7 percent of the revenue in the Fiscal Year 2021 Proposed
Budget, with the remainder of revenues generated by a variety of sources. These four major
general revenue sources are discussed in greater detail in the General Fund Revenues Section
of this document. As described earlier, the impacts of COVID-19 and the current economic
recession have resulted in significant impacts to City revenues, including all four major
General Fund revenue sources. The Fiscal Year 2021 Proposed Budget General Fund revenue
represents a decrease of $9.5 million or 0.6 percent from the Fiscal Year 2020 Adopted Budget
and a decrease of $68.4 million or 5.8 percent when compared to the Fiscal Year 2021-2025
Five-Year Financial Outlook (Outlook).
In recent years, the General Fund Proposed Budget has included the use of one-time fund
balance (Excess Equity) as reported in the Mid-Year Budget Monitoring Report. Although the
Fiscal Year 2020 Mid-Year Budget Monitoring Report projected Excess Equity of $27.9 million,
the reductions in the major General Fund revenues due to COVID-19—Transient Occupancy
Tax and Sales Tax in particular—will eliminate the availability of that resource in Fiscal Year
2021 as it will be used to support Fiscal Year 2020 expenditures. It is also projected that the
impacts of COVID-19 will require the City to use General Fund Emergency Reserves in Fiscal
Year 2020. The Emergency Reserve is maintained for the purpose of sustaining General Fund
operations in the case of a public emergency determined by a two-thirds vote of the City
Council. The Fiscal Year 2020 Year-End Budget Monitoring Report (Third Quarter Monitoring
Report) which will be released in May 2020 will include additional details on the fiscal impacts
of COVID-19 to Fiscal Year 2020 and include recommendations for City Council action to
mitigate those impacts.
The unanticipated decline in revenue due to COVID-19, along with anticipated increases in
baseline expenditures and additions for public safety have resulted in a significant revenue
shortfall in Fiscal Year 2021. In order to balance the General Fund budget, the Fiscal Year 2021
Proposed Budget includes significant budget reductions in General Fund departments and
non-general funds that impact the General Fund. The significant revenue shortfall has also
been mitigated through the use of other revenue sources as discussed in the Fiscal Actions
section of this document. After incorporating all adjustments, the Fiscal Year 2021 Proposed
Budget maintains a balanced budget in accordance with the City Charter.
The following sections provide a summary of General Fund Revenues and significant General
Fund budget adjustments, including baseline adjustments, additions, reductions, and other
fiscal actions included in the Fiscal Year 2021 Proposed Budget for the General Fund.

 General Fund Revenues
The General Fund Revenue section provides background information describing trends,
economic factors, and methods of allocation for each of the City’s revenue sources. In addition,
proposed revenues reflect revised projections as a result of the recent global COVID-19
pandemic.
This information provides insight into the formulation of the Fiscal Year 2021 Proposed Budget
for the General Fund revenues, which funds essential City services including police, fire, refuse
collection, library services, and parks and recreation programs. The Fiscal Year 2021 General
Fund revenue budget is $1.54 billion, which represents a decrease of $9.5 million or 0.6 percent
from the Fiscal Year 2020 Adopted Budget.

Table 5: Fiscal Year 2021 General Fund Revenue Change illustrates the components of the
projected decrease of $9.5 million, or 0.6 percent, in General Fund revenues from the Fiscal
Year 2020 Adopted Budget.

Table 5: Fiscal Year 2021 General Fund Revenue Change
Percent Change from
FY 2020 Adopted Budget
Major Revenues
Other Revenue Sources
Total

(1.25%) $
1.0%
(0.6%) $

Change (in
millions)
(14.0)
4.5
(9.5)

The four major General Fund revenue sources are property taxes, sales taxes, transient
occupancy taxes (TOT), and franchise fees. These sources account for 71.7 percent of the City's
General Fund revenue in the Fiscal Year 2021 Proposed Budget and are projected to decrease
by $14.0 million, or 1.25 percent, from the Fiscal Year 2020 Adopted Budget.

 Table 6: Fiscal Year 2021 General Fund Revenues displays each of the revenue categories in the
General Fund and includes Fiscal Year 2019 actual amounts, as well the Fiscal Year 2020
Adopted Budget.

Table 6: Fiscal Year 2021 General Fund Revenues (in millions)

Revenue Category
Property Tax

FY 2019
Actual
$

FY 2020
Adopted
Budget

FY 2021
Proposed
Budget

FY 2020
FY 2021
Change

570.6 $

601.9 $

629.6 $

304.4

297.9

Transient Occupancy Tax

131.9

Franchise Fees

% of Total
General
Fund
Percent
Revenue
Change

27.7

4.6%

40.9 %

282.2

(15.7)

(5.3%)

18.3 %

136.9

123.0

(13.9)

(10.1%)

8.0 %

80.6

82.0

69.9

(12.1)

(14.8%)

4.5 %

Property Transfer Tax

10.8

10.3

11.9

1.6

15.5%

0.8 %

Licenses & Permits

28.4

34.7

41.7

7.0

20.2%

2.7 %

Fines, Forfeitures, and Penalties

28.5

31.1

30.2

(0.9)

(3.0%)

2.0 %

Revenue from Money and
Property
Interest Earnings

63.9

61.4

62.5

1.1

1.8%

4.1 %

3.9

3.0

3.5

0.5

15.0%

0.2 %

6.9

6.4

6.7

0.2

3.6%

0.4 %

170.8

176.4

169.2

(7.1)

(4.0%)

11.0 %

84.9

104.1

106.2

2.1

2.1%

6.9 %

4.7

3.2

3.2

0.0

1.4%

0.2 %

(9.5)

(0.6%)

100.0 %

Sales Tax

Revenue from Other Agencies
Charges for Current Services
Transfers In
Other Revenue
Total

$

1,490.3 $

1,549.2 $

1,539.8 $

Numbers may not foot due to rounding.
1 Percent change represents the change from the FY 2020 Adopted Budget to the FY 2021 Proposed Budget. Budgeted
growth rates for revenues may differ, as FY 2021 Proposed Budget amounts are based on updated FY 2020
projections.

The major General Fund revenue projections included in the Fiscal Year 2021 Proposed Budget
are based on the most current Fiscal Year 2020 projections, and based on the most recent
economic data and information available on COVID-19 at the time the Proposed Budget was
developed. In light of the current economic environment and impacts from the COVID-19
outbreak, actual economic and financial conditions may change materially from those
assumed. The Department of Finance will continue to monitor the situation closely and will
incorporate these changes as needed and report significant changes in quarterly budget
monitoring reports. The Third Quarter Budget Monitoring Report will be released in May 2020.
Changes in the local, State, and national economies can impact each of the General Fund
revenue sources and the effects on the City's finances in Fiscal Year 2021 are outlined below.
Due to the City’s stable financial position leading into the global COVID-19 pandemic, and
through the swift response in the development of prudent estimates and close monitoring of
revenue receipts, the City maintains a strong position to weather the economic impacts of this
global pandemic.

 San Diego’s Economic Environment
At the start of 2020, San Diego’s economic outlook was trending stable and positive. However,
with the recent events of COVID-19, a sharp decline in revenues is now projected for the
remainder of Fiscal Year 2020 and into Fiscal Year 2021. There have been many fiscal
challenges attributed to the global 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 closures of non-essential goods and services. Additionally,
uncertainty exists with inflation, and federal and international policies that may affect these
indicators in the future. The overall expectation and projection for the City's revenues is
consistent with information received from the City's sales tax consultant, the San Diego
Tourism Authority, Tourism Economics—an Oxford Economics Company, the San Diego
Tourism and Marketing District, the UCLA Anderson School of Management Forecast, and
California independent research firm Beacon Economics.
In comparison to the Fiscal Year 2020 Adopted Budget, the Fiscal Year 2021 Proposed Budget
includes projected decreases to three of the four major General Fund revenues—sales tax, TOT,
and Franchise Fees—primarily based on the projected impacts of COVID-19.
The Fiscal Year 2021 Proposed Budget for base property tax assumes that the City will
experience 4.25 percent growth based on increasing home prices offset by fewer home sales.
This growth rate represents a decline when compared to the Outlook. The property tax growth
rate is in line with current San Diego County estimates, but includes an offset of reduced
collection rates as a result of COVID-19 impacts to the economy.
The Fiscal Year 2021 Proposed Budget for sales tax assumes a negative 23.06 percent growth
rate in the first quarter of Fiscal Year 2021, primarily from decreases in projected sales tax
receipts as a result of decreased spending in travel, leisure, and entertainment sectors, all
impacts from the COVID-19 pandemic. The sales tax growth rate for the remainder of Fiscal
Year 2021 is projected at negative 4.00 percent based on current estimates from the City’s sales
tax consultant, the projected continued volatility in consumer confidence, and a continued
decline in the economy.
The Fiscal Year 2021 Proposed Budget incorporates a projected average annual growth rate for
TOT of negative 10.9 percent. This growth rate has been lowered from the Outlook to account
for lower tourism activity as forecasted by the San Diego Tourism Authority and San Diego
Tourism and Marketing District, compounded by uncertainty regarding global health
conditions from COVID-19.
The Fiscal Year 2021 Proposed Budget for franchise fees is based on updated Fiscal Year 2020
projections and are anticipated to decrease primarily due to the continued decrease in cable
franchise fee revenue and lower than expected SDG&E franchise fee revenue. The SDG&E
franchise fee revenue incorporates a projected negative 9.47 percent growth which includes
historical declines in commercial energy consumption levels.
The main economic drivers of General Fund revenues include consumer discretionary
spending and housing market indicators, such as home sales and prices. Mortgage rates are
still historically low, which supports a healthy real estate market, however as median home
prices continue to rise and with the economic uncertainty from COVID-19, we will continue to

 monitor how this may impact the housing market. Consumer discretionary spending is greatly
influenced by employment levels and consumer confidence. Consumer confidence had
increased steadily since its low of 26.0 in March 2009 before settling at 120.0 in March 2020.
However, as a result of COVID-19, it is anticipated that consumer confidence will continue to
decrease significantly until the virus is contained.
“Consumer confidence declined sharply in March due to a deterioration in the short-term
outlook,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.
“The Present Situation Index remained relatively strong, reflective of an economy that was on
solid footing, and prior to the recent surge in unemployment claims. However, the
intensification of COVID-19 and extreme volatility in the financial markets have increased
uncertainty about the outlook for the economy and jobs. March’s decline in confidence is more
in line with a severe contraction – rather than a temporary shock – and further declines are
sure to follow” as reported by The Conference Board by Nielsen, a leading global provider of
information and analytics around what consumers buy and watch.
In addition, the unemployment rate for the City of San Diego is anticipated to significantly
increase over the next several months as a result of impacts from COVID-19. As more
restaurants, retail stores and other non-essential businesses temporarily close, more people
are left without work. As workers lose their jobs and income decreases, consumers will stop
spending money. The reduced consumer spending could result in additional job losses across
the City and nation. The magnitude of these effects is difficult to predict. There are many
variables that will contribute to the final outcome, including how long social distancing
measures will be in place, how effectively state and federal governments provide relief, and
the timing for the ultimate containment and treatment of COVID-19. The City’s
unemployment rate is currently at 3.2% as of February 2020. This percentage is projected to
increase in the months to come as unemployment insurance claims increase. The Nation’s
unemployment insurance claims have increased significantly over the last few weeks reaching
historic levels. National initial jobless claims reached 3.3 million for the week of March 21st
and 6.6 million for the week of March 28th.
While the UCLA and Beacon Economics data both agree that COVID-19 has brought on a sharp
and sudden economic decline to the region that is expected to continue through Fiscal Year
2021; consensus has not been reached on the degree to which the economy will decline. The
revenue projections included in this budget incorporate the sharp decline in economic growth
impacting revenue projections, and assume an economic recession in Fiscal Year 2021.
However, the magnitude and duration of the recession is impossible to predict considering the
limited data and the inability to compare this unprecedented event to any other event in
history. The Department of Finance will continue to monitor economic indicators and expert
reports to determine the severity and length of the economic downturn and impacts of a
recession.
Impacts to the four General Fund major revenues are discussed in further detail in the
following sections.

 Table 7: Fiscal Year 2021 Growth Rates for General Fund Major Revenues displays the Fiscal
Year 2020 Adopted Budget growth rates, the projected growth rates for Fiscal Year 2020, and
the Fiscal Year 2021 Proposed Budget growth rates for the four General Fund major revenues.

Table 7: Fiscal Year 2021 Growth Rates for General Fund Major Revenues
Major General Fund Revenues
Property Tax
Sales Tax

1

Transient Occupancy Tax 2
Franchise Fees (SDGE-Electricity/Cable)

FY 2020 Adopted
Budget
Growth Rates

FY 2020 Projected
Growth Rates

FY 2021 Proposed
Budget
Growth Rates

5.25%

5.25%

4.25%

3.75%

-20.95%

-13.53%

3.00%

-27.10%

-10.91%

3.2%/-2.2%

-6.88%/-4.50%

-9.47%/-9.38%

1

The Sales Tax FY 2021 Proposed Budget growth rate is based on an average annual rate for the fiscal year.
2
The Transient Occupancy Tax FY 2021 Proposed Budget growth rate reflects an average annual rate.

Property Tax
Property tax revenue is the City's largest revenue source, representing 40.9 percent of total
General Fund revenue. Property tax revenue is collected by the San Diego County Tax Collector
from a 1.0 percent levy on the assessed value of all real property. Proposition 13, passed by
voters in 1979, specifies that a property's assessed value may increase at the rate of the
California Consumer Price Index but cannot exceed 2.0 percent per year unless the property is
improved or sold to establish a new assessed value. The 1.0 percent property tax levy is
collected and distributed to a number of agencies including the County, the City, school
districts, and special districts. According to the County of San Diego Assessor's Office, for every
$100 collected in Fiscal Year 2020, the allocation to the cities in San Diego County total $18.00.
Additionally, per City Charter requirement, a special tax levy, held separate from the General
Fund, of $0.005 per $100 of assessed value is collected for funding the maintenance of
zoological exhibits in Balboa Park.
As a result of the dissolution of redevelopment agencies in Fiscal Year 2012, funding for
continuing obligations as approved by the State Department of Finance are distributed to the
City as Successor Agency from the Redevelopment Property Tax Trust Fund (RPTTF) after the
Recognized Obligations Payment Schedule (ROPS) is met. These residual funds in the RPTTF
are distributed to the local taxing entities per their individual allocation formulas at a rate
ranging from 17.0 to 22.0 percent.
The Fiscal Year 2021 Proposed Budget for property tax is $629.6 million, which assumes 4.25
percent growth for the base property tax (which is covered by Proposition 13) and a projected
increase in collection rates for "in-lieu of motor vehicle license fee" payments. The property
tax in lieu of motor vehicle license fee is property tax from the State of California that is
provided to the City to replace the Motor Vehicle License fee (MVLF) that was repealed in 2004.
This growth rate is a decrease from the rate projected in the Outlook as the market conditions
have changed since the release of the Outlook. Property tax has a general delay of 12-18 months
from when assessed valuations are established to when taxes are received by the City.
Therefore, the City continues to project growth in property tax from the Fiscal Year 2020
Adopted Budget and does not anticipate a major impact from the COVID-19 pandemic. The
anticipated impact to property tax revenue as a result of COVID-19 is the rate of collection.

 The rate of collection for the past three years during economic expansion has been historically
high at a rate of 99.2 percent. The Fiscal Year 2021 Proposed Budget estimates a decrease of
1.6 percent in collection rates for the first half of the fiscal year, at a collection rate of 97.6
percent.
The $629.6 million property tax budget consists of an estimated $432.1 million in base
property tax, $160.8 million "in-lieu of motor vehicle license fee" payment, $8.8 million in
tax sharing pass-through payments from the former Redevelopment Agency (RDA), and $27.9
million in anticipated residual property tax payments. The total property tax for the Fiscal
Year 2021 Proposed Budget is $6.5 million lower than the Outlook due to updated projections
from COVID-19, and updated ROPS activity.

Sales Tax
Sales tax is the second largest General Fund revenue source totaling $282.2 million and,
representing 18.3 percent of the total General Fund revenue. Collected at the point of sale, sales
tax receipts are remitted to the California Department of Tax and Fee Administration, which
allocates tax revenue owed to the City in monthly payments. According to the Bradley-Burns
Sales and Use Tax law, the City is to receive one cent of the total statewide sales tax levied on
each dollar of taxable sales.
The total citywide sales tax rate in San Diego is 7.75 percent. Included in the 7.75 percent sales
tax rate are two voter approved supplemental sales tax add-ons: TransNet Extension
Ordinance and Expenditure Plan (TransNet) and safety sales tax. TransNet was implemented
in 1987 to fund the San Diego Transportation Improvement Program for the maintenance,
construction, and expansion of roads and bridges. The TransNet Extension Ordinance and
Expenditure Plan, which went into effect April 2008, renewed the half-cent obligation for an
additional 40-year term. Additionally, the total citywide sales tax rate includes a half- cent
tax approved by California voters in 1993 for the purpose of funding local public safety
expenditures.
The Fiscal Year 2021 Proposed Budget for sales tax was developed assuming a negative 23.06
percent growth rate in the first quarter of Fiscal Year 2021, primarily from decreases in
projected sales tax receipts as a result of decreased spending in travel, leisure, and
entertainment sectors, all impacts from the COVID-19 pandemic. The sales tax growth rate for
the remainder of Fiscal Year 2021 is projected at negative 4.00 percent based on the projected
continued volatility in consumer confidence and a continued decline in the economy.
Economic indicators that drive spending and growth in sales tax receipts include
unemployment rate, total number of persons employed, and consumer confidence. While CY
2020 showed record numbers for these indicators, recent uncertainty, volatility, and slower
growth estimates have tempered our projections. The City of San Diego had 710,500 persons
employed as of December 2019 resulting in a near all-time low unemployment rate of 2.7
percent. However, recent COVID-19 impacts have resulted in a sharp increase in the
unemployment rate across the nation and within the City of San Diego within the last few
weeks.

 Consumer confidence, which is highly correlated with sales tax, is reported at 120.0 in March
2020, a 10.6 percent decrease from the 134.2 reported in March 2019. The March 2020 San
Diego Consumer Price Index has increased by 1.8 percent from 297.226 in March 2019 to
302.589, leading to higher prices of goods, and therefore sales tax. The U.S. Bureau of Labor
Statistics notes the impacts of COVID-19 on March 2020 data stating “The Consumer Price
Index (CPI) program suspended data collection by personal visit on March 16, 2020. Data
collection in March was affected by the temporary closing or limited operations of certain
types of establishments. These factors resulted in an increase in the number of prices being
considered temporarily unavailable and imputed. While the CPI program attempted to collect
as much data as possible, many indexes are based on smaller amounts of collected prices than
usual, and a small number of indexes that are normally published were not published this
month.” Additional information is available at www.bls.gov/bls/effects-of-covid-19pandemic-on-bls-price-indexes.htm#CPI.
It is unclear how current uncertainties around the global health conditions will ultimately
impact the full fiscal year. The City will closely monitor sales tax revenues and adjust the
projections as necessary.

General Fund Transient Occupancy Tax (TOT)
Transient Occupancy Tax is the third largest revenue source and makes up 8.0 percent of the
City's General Fund revenue budget. TOT is levied at 10.5 cents per dollar on taxable rent for a
transient's stay of less than one month. The use of TOT is guided by the City's Municipal Code
which stipulates that of the 10.5 cents of collected TOT, 5.5 cents is to be applied toward
general government purposes, 4.0 cents towards promoting the City as a tourist destination,
and the remaining 1.0 cent towards any purposes approved by the City Council. The Fiscal Year
2021 total Transient Occupancy Tax (TOT) proposed budget for the City of San Diego is $233.7
million, of which, $123.0 million is applied directly to the General Fund. The remainder
supports Special Promotional Programs which develop, maintain, and enhance visitor–related
facilities and support the promotion of the City's cultural amenities and natural attractions.
Of the remainder, $46.6 million reimburses tourism and safety related expenditures in the
General Fund.
The Fiscal Year 2021 Proposed Budget incorporates an annual average growth rate of negative
10.9 percent, a decrease from the projected growth rate of 3.8 percent as reported in the
Outlook. This decrease is primarily due to lower tourism activity as forecasted by the San Diego
Tourism Authority and San Diego Tourism and Marketing District, which incorporates the
immediate impacts of the COVID-19. However, as noted in the Economic Environment section
of this report, uncertainty around global health conditions and the duration of non-essential
business closures still exists.
Additionally, the City has entered into a compliance contract with VRBO (Vacation Rentals by
Owner) and anticipates new revenue from this contract which is not incorporated into the
average annual rate of negative 10.9 percent.

 Franchise Fees
The Fiscal Year 2021 total Franchise Fee proposed budget for the City of San Diego is $69.9
million. Franchise fee revenue makes up 4.5 percent of the General Fund revenue budget and
results from agreements with private utility companies in exchange for use of the City's
rights-of-way. The largest of the franchise fee payers in the City are San Diego Gas and Electric
(SDG&E), Cox Communications, Spectrum TV, AT&T U-verse, and California American Water
(Cal AM). In addition, the City collects franchise fees from private refuse haulers that conduct
business within the City limits. The revenue received from the agreements with SDG&E, cable
companies, and Cal AM is based on a percentage of gross sales, while the revenue received
from refuse haulers is based on tonnage. SDG&E is the single largest generator of franchise
fee revenue in the General Fund and remits 3.0 percent of the gross sales of gas and electricity
within the City of San Diego. Revenue from SDG&E is split between the General Fund (75.0
percent) and the Environmental Growth Funds (25.0 percent), based on the City Charter. Cable
providers, which are the second largest contributors to franchise fees, remit 5.0 percent of
gross revenues.
SAN DIEGO GAS & ELECTRIC. The Fiscal Year 2021 Proposed Budget for total SDG&E franchise
fee revenue of $55.1 million is based on updated Fiscal Year 2020 projections and assumes a
negative 9.47 percent growth rate for Fiscal Year 2021. The projected growth rate includes
historical declines in commercial energy consumption levels. This growth rate represents a
decrease from the growth rate assumed in the Outlook.
In accordance with the City Charter, 75.0 percent of the revenue received from SDG&E, or $41.3
million, is allocated to the General Fund. The remaining 25.0 percent of revenue received from
SDG&E, or $13.8 million, is deposited into the Environmental Growth Funds (EGF). One-third
of the EGF is used to fund the maintenance of parks that would otherwise be supported by the
General Fund; the remaining two-thirds are designated for parkland maintenance and debt
service payments for open space acquisitions. This will provide funding for park and open
space maintenance. The impacts of less revenue deposits in EGF have been reflected in the
Fiscal Year 2021 Proposed Budget.
The City also receives an undergrounding utility franchise fee from SDG&E. The Fiscal Year
2021 Proposed Budget for SDG&E undergrounding utility fee revenue is $54.2 million. This
revenue is budgeted in the Underground Surcharge Fund.
CABLE COMPANIES. The Fiscal Year 2021 Proposed Budget for cable franchise fee revenue of
$13.0 million is based on updated Fiscal Year 2020 projections and assumes a negative 9.38
percent growth rate for Fiscal Year 2021. The projected growth rate is based on four years of
historical actuals compounded by the cancellation of major televised events such as national
sports leagues and live studio performances due to COVID-19.
REFUSE HAULERS AND OTHER FRANCHISES. The Fiscal Year 2021 Proposed Budget for refuse
hauler and other franchise fee revenues is $15.6 million and is based on updated Fiscal Year
2020 projections. The City anticipates $13.5 million from refuse collection fees, $1.5 million in
revenue related to the Police Department vehicle tow program, $0.2 million in franchise fees
from the EDCO facilities, and $0.4 million from other franchise fee sources.

 General Fund Baseline Budget Adjustments
The Fiscal Year 2021 Proposed Budget includes baseline budget adjustments in the General
Fund. These adjustments primarily reflect increases in existing contractual obligations and
other non-discretionary payments. The Fiscal Year 2021 Proposed Budget reflects the current
Memoranda of Understanding (MOU) with the City's six Recognized Employee Organizations
(REOs), which are all currently being negotiated. This budget includes no salary increases
while negotiations are ongoing. In addition to the significant departmental baseline
adjustments below, General Fund fringe benefits have increased by $15.8 million or 3.4 percent
from the Fiscal Year 2020 Adopted Budget, of which $12.7 million is due to an increase in the
annual pension payment, Actuarially Determined Contribution (ADC).
Table 8 provides a summary of significant baseline budget adjustments by department in the
General Fund included in the Fiscal Year 2021 Proposed Budget.

Table 8: Significant Baseline Budget Adjustments by General Fund
Department
Department

Citywide Program
Expenditures

Fire-Rescue
Homelessness
Strategies

Police

Purchasing &
Contracting

Description

FTE

FY 2021 Proposed
Budget 1

Public Liability Insurance

-

3,400,000

Citywide election costs
Transfer to E&CP Fund for inspection of right-of-way
utility permits
Redistricting commission
Citywide Program Expenditures Total

-

1,989,015

-

1,096,258

-

$

198,411
6,683,684

Fringe benefit costs associated with overtime
Fire-Rescue Total

-

$

1,680,267
1,680,267

Use of grant funds for homelessness expenditures

-

(2,174,085)

Homelessness Strategies Total

-

Restoration of holiday credit on day off benefit
Annualized overtime costs due to salary increases in FY
2020
Police Total

-

3,011,628

-

876,304

-

$

$

(2,174,085)

3,887,932

Animal services contract

-

Continuation of FY 2020 funding for disparity study
Purchasing & Contracting Total

-

1,842,910
$

124,392
1,967,302

Grand Total

-

$

12,045,100

1

FY 2021 Proposed Budget column reflects the net impact to the General Fund - Expenditures less Revenues

General Fund Budget Additions
The Fiscal Year 2021 Proposed Budget includes approximately $18.6 million of expenditure
budget additions, including the addition of 64.16 FTE positions in the General Fund. The
budget additions identified in the Fiscal Year 2021 Proposed Budget are primarily in support
of public safety and maintain current service levels and resources.

 Table 9 provides a summary of significant budget additions by department in the General Fund
included in the Fiscal Year 2021 Proposed Budget.

Table 9: Significant Budget Additions by General Fund Department
Department
Citywide Program
Expenditures

Description

FTE

FY 2021 Commercial Paper Issuance: Debt service

Small Business Relief Fund

Ethics Commission

Fire-Rescue

Homelessness
Strategies

Mobility

Ethics Commission Director Succession Plan

0.25
Total 0.25

New Facility: North University Fire Station
9.00
Grant match requirement for lifeguard vessel
Replacement plan of structural Personal Protective
Equipment (PPE)
Fire-Rescue Relief Pool
37.00
Fire-Rescue Total 46.00
Veteran's Village bridge shelter
Creation of Homelessness Strategies Department
3.00
Homelessness Strategies Total 3.00
Creation of Mobility Department

2.50
Mobility Total 2.50

Sustainability

1.66
0.50
0.25
2.41

Maintain Clean SD Current Service Levels: Overtime
Sexual Assault Evidence Testing
2.00
Police Total 2.00

Smart & Sustainable
Energy Franchise Fee Agreement Consultant
Communities
Smart & Sustainable Communities Total
Storm Water

-

Maintain Clean SD Current Service Levels - Positions and
3.00
Contractual Services
Clean SD Positions and Equipment
4.00
Environmental Services Total 7.00

New Facility: Bay Terraces Senior Center
Parks and Recreation New Facility: Harriet Tubman Charter Joint-Use
New Facility: 14th Street Promenade
Parks and Recreation Total
Police

-

Creation of Storm Water Department

1.00
Storm Water Total 1.00

Maintain Smart Streetlights Program current service levels:
Data hosting, cellular service, and Lightgrid software

-

Sustainability Total

-

Grand Total 64.16
1

$

500,000
2,000,000

$

2,000,000
2,869,586

$
$

320,782
3,190,368
(15,346)
(15,346)
1,456,920
250,000
237,986

$

(503,427)
1,441,479

$

5,687,965
(439)
5,687,526

$

(579,793)

$

148,524
100,670
48,078
297,272

$

3,600,873
342,861
3,943,734

(579,793)

-

1

500,000

Economic Development Total

Environmental
Services

Budget

-

Citywide Program Expenditures Total
Economic
Development

FY 2021 Proposed

750,000
$

750,000

$

(16,086)
(16,086)
1,358,280

$

1,358,280

$

18,557,434

FY 2021 Proposed Budget column reflects the net impact to the General Fund - Expenditures less Revenues.

 The following sections include summaries of key programmatic additions for the Clean SD
program and for homeless programs and services.

Clean SD
In May of 2017, the City began a pilot program for litter and graffiti abatements throughout
the City called Clean SD. The program proactively addresses illegal dumping throughout the
City and responds to public requests. The objective of Clean SD is to maintain the public right of
way, keep City property clear of waste, and ensure that private property owners and other
public agencies comply with the City’s Municipal Code. The program utilizes City staff and
non-profit contractors to conduct waste abatements associated with illegal encampments,
remove illegal dumping and litter, and enforce applicable municipal codes.
The Fiscal Year 2021 Proposed Budget includes additional funding of $7.5 million to support
the Clean SD Program, including $3.2 million in the Environmental Services Department and
$3.6 million in the Police Department. Of the $7.5 million added, $6.5 million will be used to
maintain service levels for items that were funded on a one-time basis in Fiscal Year 2020. An
additional $1.0 million will expand Clean SD efforts, with $320,000 budgeted in the General
Fund and $720,000 budgeted in the Refuse Disposal Fund. Table 10 displays the Fiscal Year
2021 Proposed Budget additions for Clean SD by fund and department.

Table 10: Clean SD
FY 2021 Proposed
Budget

General Fund
Environmental Services Department

$

2,869,586

$

3,190,368

Police Department Total

$

3,600,873

General Fund Total

$

6,791,241

Restoration of funding and positions to maintain FY 2020 service levels

320,782

4.00 FTE positions and truck rentals for encampment abatements
Environmental Services Total
Police Department
Restoration of Neighborhood Policing overtime to maintain FY 2020 service levels

3,600,873

Refuse Disposal Fund
2.00 FTE positions and vehicles for community clean ups and abatements

718,528

Refuse Disposal Total

$

718,528

Clean SD Programs and Services Total

$

7,509,769

Homeless Programs and Services
The Fiscal Year 2021 Proposed Budget includes $13.7 million in funding for homeless programs
and services, with $13.4 million budgeted in the General Fund and $250,000 budgeted in the
Low to Moderate Income Housing Asset Fund. In the coming months and based on Federal
guidance regarding the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the City
Council will be asked to approve an item that includes Community Development Block Grant
(CDBG) funding for homelessness and housing related programs for Fiscal Year 2021. In
addition to these three funding sources, the City will leverage $26.6 million from the State’s
Homeless Emergency Aid Program (HEAP) and Homeless Housing, Assistance and Prevention

 (HHAP) program in Fiscal Year 2021 to address the immediate emergency needs of individuals
and families experiencing homelessness or at imminent risk of homelessness. Table 11
displays the Fiscal Year 2021 Proposed Budget for homeless programs and services by
department and fund.

Table 11: Homeless Programs and Services by Department and Fund
General Fund

FY 2021 Proposed
Budget

Homelessness Strategies Department
1
Coordination of City Homeless Programs and Services $
Veteran's Village Bridge Shelter

Homeless Shelters and Services Programs

6,636,652
2,162,106

Housing Navigation Center
Total Homelessness Strategies Department

1,335,173

300,000
$

10,433,931

Police Department
Homeless Outreach Team (HOT)

$

2,972,210

Total Police Department

$

2,972,210

Total General Fund

$

13,406,141

Housing Navigation Center Operations

$

250,000

Total Low to Moderate Income Housing Asset Fund

$

250,000

Total Citywide Resources

$

13,656,141

Low to Moderate Income Housing Asset Fund

Note: Table not intended to capture all staff related costs.
1
The General Fund is anticipated to be reimbursed $648,269 by HEAP and HHAP
grant funds for eligible expenses associated with the administration of the grants.

Community Development Block Grant (CDBG) Funding
It is anticipated that proposed Fiscal Year 2021 CDBG program allocations, including those
related to homelessness and housing, will be available to the public in April or May 2020. The
Economic Development Department anticipates that $1.0 million in CDBG funding will be
proposed for Housing Navigation Center operations in Fiscal Year 2021, pending approval by
the City Council in the spring.

Homeless Emergency Aid Program (HEAP) and Homeless Housing, Assistance and
Prevention (HHAP) Funding
In September 2018, the State of California approved the City’s application for $14.1 million
from the Homeless Emergency Aid Program (HEAP), and in December 2018, the City Council
voted to accept, appropriate, and expend the block grant. The HEAP funding allows the City to
address the immediate emergency needs of individuals experiencing homelessness and
individuals at imminent risk of homelessness. The funding was 50 percent contractually
obligated by January 1, 2020 and will be fully expended by June 30, 2021. To continue the success
of HEAP, the State announced a second round of funding called the Homeless Housing,
Assistance and Prevention (HHAP) program in July of 2019. HHAP is a $650 million one-time
block grant that provides local jurisdictions with funding to support regional coordination and
expand or develop local capacity to address immediate homelessness challenges. These funds
are expected to be available in July 2020 and must be spent within five years.

 During the development of the Fiscal Year 2021 Proposed Budget, the City anticipated using
$26.6 million in HEAP and HHAP funding for the homeless programs and services included in
the bullet points below; however, due to recent developments with COVID-19, it is anticipated
that the $26.6 million will be reevaluated for how it can best meet the immediate emergency
needs of individuals and families experiencing homelessness or at imminent risk of
homelessness during this crisis. As of the release of this Proposed Budget, the homelessness
strategies division is evaluating the impacts of the Convention Center shelter, and any
potential savings to existing bridge shelters, to determine the impacts to this budget. The
division will also be evaluating new grant opportunities to support these new costs.
x
x

Operating costs and ancillary services for the bridge shelters operated by Alpha Project
and Father Joe’s Villages at 16th & Newton, 17th & Imperial, and Golden Hall
Sherman Heights, Lea Street, and Think Dignity Transitional Storage Facilities

x

Aero, Balboa, and Mission Valley Safe Parking Program lots

x

Family Reunification

x

Rapid Rehousing

x

Youth Focused Programs

x

Flexible Spending Pool

x

Prosecution and Law Enforcement Assisted Diversion Services (PLEADS)

x

Prevention and Diversion

x

Landlord Engagement and Assistance Program (LEAP)

x

San Diego Misdemeanants at Risk Track (S.M.A.R.T.) Program

x

Administrative Costs

General Fund Budget Reductions
Based on the projected revenue shortfall in the Outlook, General Fund departments were
required to submit budget reduction proposals equating to 4.0 percent of the department’s
Fiscal Year 2020 Adopted Budget. But as summarized earlier, due to the impacts of COVID-19
to the City’s major general fund revenues, General Fund departments were required to submit
additional reductions. A total of $45.7 million in budget reductions, including 341.93 FTE
positions, are reflected in General Fund departments. As mentioned earlier, non-general funds
that impact the General Fund were also required to submit budget reduction proposals. The
approximate impact of these reductions on the General Fund totals $15.5 million, primarily
due to a 50 percent reduction in Arts, Culture, and Community Festivals funding; fleet fuel
savings; and savings associated with the lease of the Stadium assumed for July 1, 2020.
Although budget reductions that provided efficiency and minimized impacts to service levels
were prioritized first, the loss of revenue projected as a result of COVID-19 required that
reductions with significant service level impacts also be taken to ensure the City maintains a
balanced budget.
Table 12 provides a summary of budget reductions by General Fund department included in
the Fiscal Year 2021 Proposed Budget. For a more detailed list of reductions by Department,
please see Attachment 2.

 Table 12: Budget Reductions by General Fund Department
FY 2021 Proposed
Department

Budget

FTE

City Treasurer
Communications
Debt Management
Department of Finance
Development Services
Economic Development
Environmental Services
Fire-Rescue
Homelessness Strategies
Human Resources
Internal Operations
Library
Non-Mayoral Departments
Office of Boards and Commissions
Office of the Assistant COO
Office of the Chief Operating Officer
Office of the Mayor
Parks and Recreation
Performance & Analytics
Planning
Police
Public Utilities
Public Works & Utilities
Purchasing & Contracting
READ - Facilities Services
Real Estate Assets
Smart & Sustainable Communities
Storm Water
Transportation

(9.00)
(1.00)
(3.50)
(7.80)
(16.00)
(5.00)
(8.00)
(2.33)
(3.00)
(1.00)
(96.51)
(1.00)
(1.00)
(2.00)
(88.79)
(10.00)
(23.00)
(5.00)
(40.00)
(6.00)
(12.00)

Grand Total

(341.93)

1

(899,389)
(148,032)
(407,928)
(789,270)
(1,621,752)
(1,109,822)
(1,497,317)
(616,363)
(420,106)
(381,825)
(412,941)
(7,001,480)
(3,919,289)
(123,581)
(1,700)
(134,501)
(364,481)
(5,904,206)
(220,593)
(1,467,572)
(6,292,379)
(648,501)
(22,452)
(533,217)
(942,898)
(874,971)
(79,130)
(4,872,864)
(3,961,273)
$

(45,669,833)

1

FY 2021 Proposed Budget column reflects the net impact to the General Fund Expenditures less Revenues.

Other Fiscal Actions
City staff strategically evaluated all available funding sources as part of the Fiscal Year 2021
Proposed Budget to ensure those resources were deployed to maintain public safety and
minimize impacts to current service levels. In addition to the budget reduction proposals noted
previously, the Fiscal Year 2021 Proposed Budget includes the following fiscal actions:
x

Due to the sudden and sharp decline in revenue growth in Fiscal Year 2020 and Fiscal
Year 2021, the Mayor is requesting to suspend the requirements of section 77.1 of the
City Charter for one fiscal year to allow for the use of approximately $29.4 million for
other general fund purposes in lieu of the transfer to the Infrastructure Fund;

x

Use of $20.9 million in anticipated Stadium sale proceeds that will be deposited in the

 Capital Outlay Fund for ongoing Stadium debt service and one-time General Fund debt
service in Fiscal Year 2021 in accordance with section 77 of the City Charter allowing
sale proceeds to be used for capital financing costs;
x

Delay the anticipated contribution of $13.6 million to General Fund Reserves for Fiscal
Year 2021 that would have achieved the 15.75 percent target level;

x

Use of $8.0 million from the Pension Payment Stabilization Reserve that is projected
to be available in Fiscal Year 2021 for increases in the annual pension payment,
Actuarially Determined Contribution (ADC). The Pension Payment Stabilization Reserve
is maintained to mitigate service delivery risk due to increases in the ADC as calculated
in the most recent Actuarial Valuation Report produced by the San Diego City
Employees’ Retirement System’s actuary. The most recent Actuarial Valuation Report
reflects an annual increase of $15.1 million citywide, of which $12.7 million is in the
General Fund;

x

Delay the anticipated contribution of $4.2 million to the Pension Payment Stabilization
Reserve for Fiscal Year 2021;

x

Use of $4.2 million in excess General Fund fleet replacement funds over five fiscal years
to provide annual ongoing rate relief in anticipated vehicle replacement costs. The
General Fund Fleet Replacement Fund utilizes the City’s Equipment Vehicle Financing
Program on all General Fund vehicles, except for Police black and white patrol vehicles
and Police motorcycles. The transition from cash to debt financing in Fiscal Year 2020
and 2021 has reduced the need for cash on hand in the General Fund Fleet Replacement
Fund resulting excess and available fund balance. The available fund balance is being
reduced to provide ongoing rate relief to the General Fund;

x

Reduction

in

anticipated

Other

Post-Employment

Benefit

contributions

of

approximately $1.0 million in the General Fund based on an actuarial analysis of
current cash and investments held in the retiree medical trust fund and projected
payments pursuant to obligations under the Retiree Healthcare Memorandum of
Understanding between the City and the Represented Employee Organizations; and
x

Increase to General Fund budgeted vacancy factor of $3.2 million, or 8.3 percent, from
the Fiscal Year 2020 Adopted Budget to address personnel savings associated with
projected vacant or underfilled positions. Table 13 displays the citywide budgeted
vacancy factor from Fiscal Year 2019 to Fiscal Year 2021.

 Table 13: Budgeted Vacancy Factor Fiscal Years 2019 - 2021

Departments/Funds
City Attorney
City Auditor
City Clerk
City Council
City Treasurer
Communications
Debt Management

$

FY 2019

FY 2020

FY 2021

Adopted

Adopted

Proposed

Budget

Budget

Budget

603,241

$

2,489,386

$

2,369,017

-

-

91,333

39,084

40,373

36,941

-

64,803

85,852

265,548

276,872

710,696

44,950

85,849

119,745

-

57,691

126,672

Department of Finance

189,005

-

67,829

Development Services

179,540

326,226

339,123

Economic Development

120,152

128,940

547,445

Environmental Services

355,877

498,444

599,694

Facilities Services
Fire-Rescue
Human Resources
Library
Office of Homeland Security
Parks and Recreation
Performance & Analytics
Personnel
Planning
Police
Purchasing & Contracting
Real Estate Assets
Storm Water
Transportation
Transportation & Storm Water
Total General Fund

313,049

857,936

596,234

3,873,144

6,616,559

9,789,879

55,843

57,691

115,398

566,134

587,508

363,704

43,983

-

194,636

696,569

1,407,745

1,377,888

-

85,849

117,229

37,236

-

33,613

254,469

545,318

488,903

23,248,651

21,248,895

19,757,193

414,987

535,820

744,285

117,165

57,691

255,611

-

-

451,754

-

-

1,770,632

1,790,712

2,026,413

-

$ 33,209,339

$ 37,996,009

$

41,151,306

 Departments/Funds
Airports Fund
Central Stores Fund

FY 2019

FY 2020

FY 2021

Adopted

Adopted

Proposed

Budget
$

Budget

32,810

$

Budget

43,068

$

117,229

-

-

57,090

Development Services Fund

2,987,202

1,326,664

2,998,384

Engineering & Capital Projects Fund

4,212,166

5,323,300

7,435,254

-

-

69,950

Facilities Financing Fund
Fire/EMS Transport Program Fund
Fleet Operations Operating Fund
GIS Fund

-

-

47,986

134,400

229,518

810,557

-

-

133,058

63,084

56,187

169,143

144,431

85,849

306,696

Metropolitan Sewer Utility Fund

1,290,991

2,085,092

3,451,825

Municipal Sewer Revenue Fund

1,179,582

1,955,768

3,378,643

-

-

171,704

Golf Course Fund
Information Technology Fund

OneSD Support Fund
Recycling Fund

307,275

431,956

705,912

Refuse Disposal Fund

396,154

345,953

539,355

Risk Management Administration Fund

115,639

149,782

368,317

Underground Surcharge Fund

119,550

123,504

33,613

2,553,972

2,906,138

6,095,062

Water Utility Operating Fund
Wireless Communications Technology Fund

109,624

101,760

94,674

Total Non-General Fund

$ 13,646,880

$ 15,164,539

$ 26,984,452

Citywide Total

$ 46,856,219

$ 53,160,548

$ 68,135,758

Conclusion
The City of San Diego's Fiscal Year 2021 Proposed Budget is $3.92 billion, and is comprised of
five operating fund types and the CIP:
x

General Fund;

x

Special Revenue Funds;

x

Capital Project Funds;

x

Enterprise Funds;

x

Internal Service Funds; and

x

Capital Improvements Program.

This represents a decrease of $427.0 million or 9.8 percent compared to the Fiscal Year 2020
Adopted Budget. The Fiscal Year 2021 Proposed Budget reflects a balanced budget proposal,
and is based on currently available information. It includes economic impacts associated with
COVID-19, and utilizes significant budget reductions and other fiscal actions to protect
essential core services and public safety.
The Department of Finance will continue to monitor the impacts of COVID-19 on revenues and
expenditures, and will propose additional modifications to the budget as part of the Mayor’s
May Revision.

 Attachments:
1. Financial Summary and Schedules
2. Fiscal Year 2021 Proposed Budget Reductions by Department - General Fund
3. Fiscal Year 2021 Capital Improvements Program Proposed Budget - Project Pages

cc:

Honorable Mayor Kevin L. Faulconer
Honorable City Attorney Mara Elliott
Aimee Faucett, Chief of Staff, Office of the Mayor
Andrea Tevlin, Independent Budget Analyst
Jeff Sturak, Assistant Chief Operating Officer
David Nisleit, Chief of Police, Police Department
Colin Stowell, Fire Chief, Fire-Rescue Department
Erik Caldwell, Deputy Chief Operating Officer, Smart & Sustainable Communities
Alia Khouri, Deputy Chief Operating Officer, General Services
Johnnie Perkins Jr., Deputy Chief Operating Officer, Public Works & Utilities
Robert Vacchi, Deputy Chief Operating Officer, Neighborhood Services
Matt Awbrey, Chief of Civic and External Affairs, Office of the Mayor
Almis Udrys, Chief of Innovation & Policy, Office of the Mayor
Francis Barraza, Deputy Chief of Staff, Community Engagement, Office of the Mayor
Jessica Lawrence, Director of Policy & Council Affairs, Office of the Mayor
Department Directors