Budget Review Committee Meeting – May 3, 2023

The Budget Review Committee of the San Diego City Council met on May 3, 2023, to review the proposed Fiscal Year 2024 budget. The meeting included presentations from the Independent Budget Analyst (IBA), the Chief Operating Officer, the Department of Finance, the Department of Race and Equity, and several operational departments (Public Utilities, Stormwater, Transportation, Special Promotional Programs). The committee also held a public hearing on the proposed budget in the evening. No formal votes were taken; the meeting was informational and focused on gathering input and asking questions.

Public Comments & Testimony

• Morning Session: Public comments on the IBA overview and COO presentation included praise for the IBA's analysis, concerns about the structural imbalance, calls for more transparency in homelessness spending, and support for harm reduction shelters. Specific speakers: Joyce San Yata (supported IBA work), Lori Saldania (questioned criminalization of homelessness), Judy Strang (suggested revisiting marijuana tax reduction), and Danny (called for more public bathrooms and transparency).
• Afternoon Session (Transportation, Stormwater, etc.): Multiple speakers, including family members of traffic victims, urged increased funding for Vision Zero, protected bike lanes, street safety, and tree planting. Representatives from Circulate San Diego, Families for Safe Streets, and others requested doubling the STAT team mileage targets, fixing dangerous intersections, updating the bike master plan, and installing physical protection on bikeways. Speakers also advocated for increased funding for urban forestry, youth drop-in centers, and the World Design Capital 2024.
• Evening Public Hearing (Item 16): Approximately 80 speakers provided testimony, many representing community organizations. Key themes: support for the World Design Capital 2024 ($3 million requested), funding for youth centers in Southeast San Diego ($3 million), eviction prevention programs, arts and culture funding (Penny for the Arts), opposition to smart streetlight surveillance technology, and requests for improved street safety, tree maintenance, and library funding. Several speakers from the Mountain View and Stockton communities highlighted the need for violence prevention and youth programs.

Discussion Items

• IBA Review of FY2024 Proposed Budget: The IBA (Charles Monica) presented an overview, noting the budget is balanced but uses $113 million in one-time funds, creating a structural imbalance. Revenues and expenditures are at historic highs. The budget includes equity lens in department requests. Key issues: vacancies, infrastructure backlog, homelessness, climate action, fentanyl crisis, and pension costs. The IBA recommended addressing the structural imbalance and establishing a new revenue source. Council members thanked the IBA and noted the need to prioritize funding.
• Office of the Chief Operating Officer (COO): COO Eric Dargan emphasized the “Get It Done” budget focusing on homelessness, housing, infrastructure, and public safety. He noted that despite $5.12 billion, many needs remain unfunded. The COO budget increased by $1.2 million largely due to transferring the Office of Immigrant Affairs. Council members discussed the need for better coordination across departments and the challenge of filling vacancies. The IBA noted that the youth care and development program was not funded.
• Fundamental Budget Concepts and Equity Process: Department of Finance Director Rolando Charvel presented on revenue projections, vacancy savings, overtime vs. new hire costs, and contracts. He explained that the budget assumes moderate growth and that a mild recession could reduce major revenues by $74 million in the first year. The presentation also covered the cost of overtime for firefighters and police officers being higher than hiring new employees. The IBA commented on the budget equity process, noting it is a positive first step but needs refinement. Council members asked about vacancy savings and contracts.
• Department of Race and Equity: Chief Race Equity Officer Kim Desmond presented on the department's work, including the equity lens in the budget, tactical equity plans, and a community equity fund. She emphasized that equity is a team effort and that the department is small but growing. The IBA noted that the department requested but did not receive a deputy director and program manager. Council members expressed support for the equity work and asked about the community equity fund timeline.
• Public Utilities Department: The department presented on its $1.6 billion budget, including water and wastewater services. Key additions: 16 FTEs for dam maintenance and replacement, 8 FTEs for customer service improvements, and funding for Pure Water Phase 1. The IBA noted that dam replacement costs could exceed $1 billion. Council members discussed customer service improvements, dam safety, and the need for water rate increases. The department reported progress on reducing water main breaks and sewer spills.
• Stormwater Department: The department presented a $202.5 million budget, with a decrease of $5.5 million due to removal of one-time funds. Unfunded requests totaled $76 million and 167 positions. The IBA highlighted the risk of not meeting WIFIA spending deadlines and potential fines for non-compliance with TMDL regulations. Council members expressed concern about the unfunded needs and the impact on stormwater infrastructure. The department noted that emergency repairs cost $24 million this fiscal year.
• Transportation Department: The department presented a $100 million operating budget, with additional funding for overlay ($83.8 million) and slurry seal. Key unfunded items: 57 positions and $13.8 million, including a sidewalk repair team, additional electricians, and Vision Zero positions. The IBA noted that the overlay funding is financed through debt and is not sustainable. Council members discussed the need for Vision Zero investments, streetlight repair backlog (6,000 cases), tree planting, and a dedicated funding source for streets. Public testimony emphasized safety improvements.
• Department of Finance: The department presented its budget, which includes six additional positions for grants and budget support. The IBA noted that the department is reassessing KPIs. Council members had no questions.
• Special Promotional Programs (TOT Funds): The department presented a $161.2 million budget, funded by 5 cents of the 10.5 cent TOT tax. Arts and culture funding increased by $1 million but dropped to 4.7% of TOT (below the 7% goal). The budget includes $31 million for homelessness programs, $25 million for lifeguards, and $20 million for parks. The IBA noted that to reach 7% of TOT, an additional $7 million is needed; to reach the Penny for the Arts goal, $15 million more. Council members expressed disappointment and urged increasing arts funding.

Key Outcomes

• No votes were taken. The meeting was informational, with committee members asking questions and noting priorities for the May revision and final budget.
• Council members identified several funding priorities: increasing Vision Zero investments, restoring arts funding to 7% of TOT, funding youth drop-in centers ($3 million), supporting the World Design Capital 2024 ($3 million), adding a sidewalk repair team, additional electricians for streetlights, and a mill and pave team. Many council members also supported the eviction prevention program and the Office of Labor Standards Enforcement.
• The IBA's analysis and recommendations were well received, particularly regarding the structural imbalance, equity integration, and the need for sustainable revenue sources.
• The public hearing provided extensive input, which will be considered in the May revision and final budget adoption. The next budget review committee meeting is scheduled for May 4, 2023.