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San Diego supervisors hear staff's early framing of an $8.63 billion budget and warn of state, federal risks
Summary
County staff told the Board of Supervisors on Jan. 27 that San Diego's $8.63 billion fiscal year budget relies heavily on state and federal program revenues, faces growth in salaries and infrastructure needs, and will be shaped by uncertain state and federal funding; board members asked for clearer prioritization and options ahead of the CAO's May recommendation.
San Diego County staff outlined the structure, legal limits and looming risks for the county's $8.63 billion operational plan during a Jan. 27 budget workshop, urging early public input as officials prepare the CAO's recommended budget.
The presentation, led by Chief Administrative Officer Ebony Shelton and the county's finance team, described three core funding categories—program (state/federal) revenue, general-purpose revenue and one-time fund balance—and stressed that nearly three-quarters of the county's program revenue is restricted to specific uses. Joan Brockie, the county finance official who explained legal rules, said state law (the County Budget Act) requires a balanced annual budget and that some budgetary actions that increase spending require a four-vote supermajority.
Shelton and staff framed the workshop as an early engagement point to shape priorities before the CAO releases a recommended operational plan on May 1; the board's public hearing period is scheduled for June 1— and adoption for June 23.
"This is an early step, but it's an important one," Shelton said, noting the county will be monitoring state developments and federal uncertainty as staff draft recommendations. Amy Thompson, who outlined major cost drivers, said salaries, benefits and contracted services account for the largest shares of rising costs, with contracted services totaling about $2.1 billion and a capital improvement needs assessment of roughly $1.1 billion for 2026—2031.
Matthew Parr, the county's director of economic development and government affairs, told the board the governor's January proposed budget and nonpartisan analyst estimates show structural pressure at the state level and that the proposal did not include additional county offsets for HR 1 or continued funding for the Homeless Housing Assistance Program. Parr also warned of federal uncertainty and a possible partial government shutdown if Congress did not pass an omnibus spending bill by Jan. 31.
Board members pressed staff on specifics. Supervisor Jim Desmond asked how the vehicle license fee replacement with property tax in lieu of VLF works and why the capital program appears reduced in the near term even though large projects (including the Vista Jail) remain on the horizon. Staff said prioritization occurs year-round, begins with a program inventory and legal mandates, and is refined through the five-year financial forecast and board direction.
Staff emphasized an approach that protects mandated services while identifying discretionary programs that could be reduced, delayed or restructured. They also noted a modest staff reduction of roughly 1% and improvements in retirement fund funded ratio, which may reduce future pension contribution requirements.
Next steps: staff will continue to build a recommended operational plan informed by the five-year forecast and community input; the CAO's recommended plan will be posted and presented on May 1, followed by public hearings in June and board adoption later that month.
