Sanders predicts $179M budget deficit next year

By JOE BRITTON

City News Service

Plummeting tax revenues and rising pension costs will push San Diego’s budget deficit next fiscal year to $179 million, Mayor Jerry Sanders said Thursday.

At a briefing on San Diego’s five-year financial outlook, Sanders said hundreds of positions will have to be cut to cover the shortfall and the pain will be shared by all city departments, including police and fire.

“A deficit this size is so significant we can no longer shield the

public from its impacts,” Sanders said.

“As we begin putting together a solution to close our budget gap, we’ll examine every responsible alternative to cutting services,’’ Sanders said.

“But, make no mistake about it: there will be cuts in services and the public will feel them.”

Sanders said the spending shortfall for fiscal year 2011, which begins July 1, is the largest in the city’s history. It is driven by a sizable decline in sales and property tax revenues amid the ongoing recession and mounting retirement system expenses due to heavy investment losses on Wall Street.

Sanders said the city faces a $67 million drop in sales and property tax revenues in the coming fiscal year. Meanwhile, the city’s annual required contribution to the San Diego City Employees’ Retirement System will grow by about $57 million in fiscal year 2011 to $224 million.

Other large cities around California are also feeling the pinch.

San Jose faces a nearly $170 million deficit next fiscal year, Los Angeles’ shortfall is expected to top $400 million and San Francisco’s is predicted to hit $750 million.

“San Diego is certainly not alone in its budgetary challenges,” Sanders said.

This fiscal year, the city overcame an $83 million spending shortfall, largely through employee pension concessions, without having to make major cuts to services such as parks and libraries.

This time around “we’re not taking anything off the table,” Sanders said, adding that police and fire aren’t immune.

“We’ll certainly look to minimize any impact on public safety to the community,” he said. “But I have to tell you, when you have a deficit this large, everyone is going to have to be part of the solution.”

Sanders declined to outline any specific cuts or new sources of revenue he will propose.

Councilman Tony Young said he will convene the council’s Budget Committee on Wednesday to begin to the process of dealing with the massive spending shortfall.

“Clearly, the numbers are sobering to us,” Young said.

According to the mayor’s five-year financial outlook, San Diego faces

sizable budget deficits through at least 2015. The city’s budget deficit in fiscal year 2012 is estimated at $169 million, with shortfalls each year through 2015, when it is predicted to be $136 million.