San Diego's fiscal outlook begins with projected deficit for nex - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

San Diego's fiscal outlook begins with projected deficit for next year

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SAN DIEGO (CNS) - The city of San Diego will be able to maintain current service levels over the next five years, but mayoral candidates and the City Council will need to temper their demands for new spending, Interim Mayor Todd Gloria said Thursday.

The city's new five-year financial outlook starts off with a $19.1-million shortfall in the next fiscal year, but Gloria and Financial Management Director Jeff Sturak called the figure "manageable."

Without additional spending, surpluses are projected over the following four years.

However, the City Council has approved various initiatives that will add costs, including arts funding, construction of new fire stations and boosting the ranks of police officers.

"When the council and the public are faced with things like supporting the arts or building much-needed fire stations, the answer is yes, these things are obvious," Gloria said at a news conference. "When piled together and seen with their full financial impacts, it can be a bit surprising."

Combined with state and federal mandates, the council actions swell the deficit to $62.1 million for the next fiscal year, and no surpluses are projected through Fiscal Year 2019.

The list does not include other things on the wish lists of either council members or city department heads, such as additional personnel or technological improvements.

"We don't have funds to cover all the needs and desires," Gloria said.

The mayoral candidates can use the financial outlook "to see what the future looks like and hopefully adjust their representations to match that," he said.

Gloria said the projections are still better than several years ago. Sturak pointed out that in 2009, city officials had to make $90 million in cuts just to balance their baseline budget.

The projected shortfall for next year was around $7 million just last week, but the San Diego City Employees Retirement System board adjusted its investment strategy on Friday. While the move will reduce the pension system's investment risk, it is estimated the city will have to increase its annual pension contribution by $12 million, pushing the deficit up to the $19.1 million figure.

Councilman David Alvarez, who is running for mayor, said the projected deficit for next year is a concern.

"It is critical that we look for adjustments we can make to the budget that do not make cuts to our neighborhood services that San Diegans rely on each and everyday," Alvarez said. "I believe we've made the tough decisions needed to continue chipping away at the budget gaps and I think we can do what needs to be done to handle this one."

Councilman and mayoral candidate Kevin Faulconer said the outlook shows the importance of continuing reform efforts.

"Today's news proves that now more than ever, the next mayor must continue with financial reform, so we can balance the budget and invest as much money as possible into improving our neighborhoods," Faulconer said.

Another candidate in Tuesday's special election, ex-Assemblyman Nathan Fletcher, did not immediately respond to requests for comment.

On her Twitter account, Councilwoman Myrtle Cole wrote "Kudos to (Gloria) & his team for a very transparent 5-Yr Outlook. Tough decisions ahead. The more informed we all are, the better #CD4." The code at the end refers to Council District 4, which she represents.

Felipe Monroig, executive director of the San Diego County Taxpayers Association, also applauded the document's transparency.

"Displaying costs associated with basic services levels as well as legal mandates will help elected officials and the public understand the total fiscal impact of major policy initiatives," Monroig said. "We encourage the city to continue being open and transparent with taxpayers during the budget process."

The outlook includes a breakdown of current service levels, and the impact of the budget of state and federal mandates, approved City Council initiatives and city department wish lists, which were divided into critical and discretionary needs.

The document also includes risks that could alter revenue projections.

For the next fiscal year, the city's general fund is expected to receive $1.216 billion in revenue, and spend $1.235 billion. But those numbers will be balanced before the actual budget is adopted next June.

Also, reserves in the next two fiscal years are expected to be around 16 percent of revenues, which is double the City Council's policy. Reserves are projected to drop to near 14 percent by the fifth year.

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