Mayor Todd Gloria today announced a series of actions he will take to help mitigate the $258.2 million projected deficit for the coming next fiscal year and communicated his approach to re-imagine and right-size City operations to fit within existing revenues. The steps come as the Registrar of Voters certified election results showing the Measure E 1-cent sales tax lost by a slim margin. 

“Measure E would have stabilized the City budget for the foreseeable future and allowed us to build on progress we’ve made with record infrastructure investments in recent years,” Mayor Todd Gloria said. “Without these additional funds, next year’s budget process will be difficult, but we’ll use this as an opportunity to reimagine how the City operates, with a focus on delivering core services: repairing roads and other critical infrastructure, building more housing, addressing homelessness, and keeping San Diegans safe.” 

Mayor Gloria detailed the initial mitigation measures in a memo sent today to the City Council. They include:

• freezing all but the most essential hiring
• suspending all non-essential overtime
• pausing non-essential spending such as expenditures on travel and training
• halting the Civic Center Revitalization process
• reviewing all projects in the City’s Capital Improvement Program to ensure that projects currently under construction are prioritized and construction of new facilities is limited
• evaluating office space leases, including the potential for early termination or renegotiation
• exploring the opportunity to monetize City facilities such as Golden Hall and the adjacent parking structure, as well as other revenue-generating measures for the General Fund 

“The Five-Year Financial Outlook makes it clear that projected revenue is insufficient to meet the needs of our city. The takeaway is unmistakable: We must cut expenses, and some cuts will be deep — very deep,” said City Council President pro Tem Joe LaCava. “I ask my council colleagues to engage now to safeguard the safety of all San Diegans, protect our most vulnerable residents, meet the needs of under-resourced neighborhoods, and ensure a thriving economy. We begin with our Council Budget Committee on Wednesday, December 11, and we urge the public to participate as your voices will be essential in crafting this budget.”  

The budget shortfall the City is facing represents a structural deficit inherited from past administrations – an imbalance of revenues and expenditures that has been exacerbated by the inflation that has driven up costs worldwide in recent years. In 2024, in advance of the Measure E election, Mayor Gloria and the City Council eliminated a $170 million budget deficit with a mix of strategic cost reductions and use of one-time funding sources.  

“As we seek to address our fiscal challenges ahead, it will be critical for the council to work collaboratively with the Mayor‘s Office, the Independent Budget Analyst, and the public to ensure that we deliver a balanced budget that maximizes our limited resources while continuing to reflect the needs of each of our communities,” said Councilmember Kent Lee, chair of the City Council’s Budget and Government Efficiency Committee. 

Looking ahead to the FY2025-26 budget process, Mayor Gloria intends to align the City’s expenditures to match fiscal realities. That means taking steps necessary to address the structural budget deficit in one year rather than slowly making cuts over the course of multiple fiscal years.  

The Mayor asked the City Council to be mindful of the challenging fiscal environment and partner with him to steward a City budget that is focused on keeping our communities safe, repairing and maintaining existing infrastructure, getting people experiencing homelessness off the street, and building more housing.