San Diego's risky bets on budget

San Diego Budget Battle Escalates as Mayor Vetoes Council's "Risky" Revenue Plans

Gloria cuts nearly $5 million from council-approved budget, calling revenue assumptions "shaky"

By SD Civic Reports - June 18, 2025

SAN DIEGO — The most turbulent budget season in San Diego in at least a decade took another dramatic turn Tuesday when Mayor Todd Gloria exercised his rarely used line-item veto power to reject nearly $5 million in spending approved by the City Council just one week earlier.

Gloria vetoed several council-approved expenditures while preserving the restoration of library and recreation center hours that had been the most contentious issue in recent budget battles. The mayor cited warnings from city financial experts about what he called "shaky assumptions" and said he could not "in good conscience allow a budget built on shaky assumptions to move forward".

The Council's Gamble

Last week, the City Council voted 7-2 to approve a $6.09 billion budget that restored many services the mayor had proposed cutting, including library hours, recreation centers, beach fire rings, and the Office of Race and Equity. But to pay for these restorations, the council made what critics called risky bets on future revenue.

The controversial revenue sources include:

• Charging non-residents for parking in Balboa Park and at the San Diego Zoo
• Allowing digital billboards in exchange for millions in payments from billboard companies
• Adding credit card processing fees to parking meter transactions
• Eliminating 12 middle management positions, including five currently filled positions

Charles Modica, the city's Independent Budget Analyst, had warned the council it was "exposing the city to additional risk" by relying on revenue sources that "may or may not be realistic".

The Mayor Strikes Back

Gloria's vetoes reduced the council's $19.2 million in new spending by $4.91 million and adjusted revenue projections downward by $3.55 million. The mayor preserved the five management positions the council had targeted for elimination, including communications staff and deputy chief operating officers.

Among the items Gloria vetoed:

• $900,000 for Community Projects, Programs and Services
• $450,000 for Arts, Culture, and Community Festivals grants
• $225,000 to reinstate the Chief Operating Officer position
• $450,000 for two management roles in the Office of Race and Equity

This marks the first time Gloria has used the line-item veto since taking office in 2020. The controversial tool has been used sparingly since San Diego adopted strong-mayor government in 2006.

The Underlying Crisis

The budget battle stems from a structural deficit that grew from an initial $258 million to potentially $350 million due to declining sales tax revenue, lower franchise fees from San Diego Gas & Electric, and increased pension costs. In November, voters rejected a 1% sales tax increase that would have generated $400 million annually.

"We have never been resourced the way a city of our size should be," Gloria said during budget discussions, "but we are required by law to have a balanced budget".

The mayor's original budget proposal called for dramatic service cuts, including:

• Closing all libraries on Sundays and Mondays
• Reducing recreation center hours
• Eliminating beach fire rings
• Cutting 400 positions citywide

Political Tensions Boil Over

The budget process has exposed deep tensions between the mayor and council members. Councilman Sean Elo-Rivera criticized Gloria's revised budget as "a revise that's not a revise," arguing the mayor failed to propose new revenue sources like Balboa Park parking fees.

In a testy exchange, Councilman Henry Foster III repeatedly asked Gloria whether keeping libraries and recreation centers open played a role in public safety. Community activists have rallied against the cuts, with some calling for transparency in police spending.

Digital Billboards Controversy

One of the most contentious revenue sources involves striking deals with billboard companies to convert existing static billboards to digital displays in exchange for millions in payments to the city. San Diego has strictly limited billboards since the 1980s following legal battles that reached the U.S. Supreme Court.

Critics worry the digital billboard plan could face significant opposition from residents and may not generate the projected $3 million annually.

What's Next

The City Council now has until June 26 to either accept Gloria's vetoes or override them with a supermajority of six votes. The council's original 7-2 vote suggests an override is possible, but that vote represented a hard-fought compromise with some members offering only tepid support.

"I urge them to accept this compromise — a budget that restores essential services without overcommitting the city's finances," Gloria said.

If the council overrides the vetoes and the projected revenues fail to materialize, Gloria warned the city could face mid-year budget cuts, including layoffs, library and recreation center closures, and reduced fire and road services.

The final budget must be adopted by June 30 to meet legal requirements for the fiscal year beginning July 1. Whether through compromise or confrontation, San Diego's elected leaders have less than two weeks to resolve a budget crisis that has tested the city's strong-mayor form of government like never before.

The budget includes $2.15 billion in general fund spending to cover basic city operations including police, fire, libraries, parks, and infrastructure maintenance.

Why It Matters: San Diego's risky bets to restore budget cuts | KPBS Public Media