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City staff warn FY25 revenues slipping; IBA flags reserve shortfall and overtime pressures
Summary
City finance staff and the independent budget analyst told the San Diego City Council that first-quarter monitoring shows major general-fund revenues about $10 million under the FY25 budget, rising public-safety overtime and a reserves gap that could require a $31.2 million contribution to meet policy targets.
City finance staff and the Independent Budget Analyst (IBA) told the San Diego City Council on Dec. 16 that the city's first-quarter budget monitoring shows material pressure on several revenue sources and rising expenditure risks.
Assistant Director Ben Vitaglia and financial operations manager Chris Purcell outlined department projections showing "major general fund revenues are currently projected at 10,100,000.0 below budget," driven principally by weaker sales tax and transient occupancy tax (TOT) receipts. Purcell said the Department of Finance reduced growth rates for sales tax and TOT to reflect recent trends, and that several departmental revenues also are projected lower than budgeted.
Charles Modica, the city's independent budget analyst, and his team presented a separate analysis that reached a similar conclusion. "As of the release of our office's fiscal year 20 25 first quarter budget monitoring report, general fund revenue from the City's 4 major revenue fund sources are projected to be about $10,000,000 below the FY 25 adopted budget," Noah Fleischman of the IBA said. The IBA noted that property-tax apportionments came in higher than budgeted because of higher calendar 2023 assessments, but cautioned that an expected $5.8 million in revenue tied to a Tailgate Park sale is contingent on litigation outcomes.
On the expenditure side, Lisa Byrne of the IBA highlighted public-safety overtime as a major driver of increased costs. Byrne said Fire Rescue is projecting increased overtime associated with deployments and backfill; the Police Department is projecting higher overtime, principally in extended-shift categories, tied to staffing shortages and patrol priorities.
The combined effect of revenue shortfalls and higher expenditures is a reserve policy shortfall the IBA quantified. "In order to meet the reserve policy target, a $31,200,000 contribution would be needed this fiscal year," Purcell said. Staff and the IBA said they will provide a more comprehensive analysis in the midyear report scheduled for Jan. 31, 2025.
Councilmembers asked staff for follow-up briefings on several technical questions, including online sales-tax collection (how the city receives its share from the county pool) and potential mitigation strategies for FY26. Public commenters raised linked concerns, pressing the council to prioritize housing and homelessness solutions and to scrutinize large shelter proposals such as the proposed Kettner site.
The presentations were informational and required no council action; staff and the IBA said they will return with the midyear monitoring report and the cost-of-service work tied to other agenda items.
