San Diego County projects $52.6 million year‑end general fund balance; officials warn of federal, state funding risks

County Chief Administrative Office staff and fiscal experts briefed the San Diego County Board of Supervisors on May 20 on the third‑quarter operational plan and budget status for fiscal year 2024–25, reporting a projected $52.6 million year‑end surplus in the general fund but cautioning that a number of economic and policy uncertainties could erode that cushion.

The presentation, led by county staff and financial officers including Chris Herrera, chief deputy treasurer, and Matthew Parr, director of economic development and government affairs, emphasized that the projected general‑fund result represents 0.7% of the general fund. Herrera said, “While inflation continues to moderate from previous highs, it remains above the Federal Reserve’s 2 percent target,” and noted elevated interest rates are constraining housing affordability and could slow property‑tax growth.

County staff identified the largest positive drivers as FEMA reimbursements for prior emergency‑response costs, higher‑than‑budgeted assessed value growth and one‑time state corrections to sales tax distributions. Those are being partially offset, the CAO said, by lower interest earnings and continued expenditure pressures in public safety groups — especially the Sheriff’s Office and the Public Defender — where rising facilities, insurance and specialty service costs are becoming harder to absorb without staffing or service changes.

The county also reported a sizeable amount of projected fund balances outside the general fund — about $126.4 million, largely in land‑use and roads funds where projects have been delayed by permitting, easement acquisitions and procurement schedules. Joan — the CAO presenter — told supervisors those project schedule changes will be rebudgeted in the CAO’s recommended operational plan for the next fiscal year.

Retirement fund performance remains an important variable. Herrera told the board that San Diego County Employees Retirement Association returns are being smoothed and that, as of April, the fund had earned 4.8% year‑to‑date versus the board’s assumed 6.5% discount rate; lower returns would increase the county’s retirement contribution pressure in future years.

Parr summarized several federal and state budget developments that could materially affect county finances, including recent House reconciliation proposals that would change SNAP and Medicaid rules and a “skinny budget” released by the White House proposing deep cuts to nondefense programs. Parr noted that California’s May revise showed a roughly $12 billion gap and that the state proposed measures such as freezing some Medi‑Cal expansion enrollments; he stressed the county was tracking the evolving federal and state negotiations closely.

Board reactions focused on contingency planning. Supervisor Anderson asked about the timing of federal proposals and their phased implementation; county staff said details remain fluid and that mitigation plans will be proposed as impacts become clear. Several supervisors urged planning for worst‑case outcomes while protecting frontline services and county employees who deliver them.

The CAO closed by reminding the board of upcoming budget hearing dates and inviting public participation at the county budget open house scheduled for May 22.