Captive City: How Public-Sector Unions Broke San Diego's Budget
A guide to San Diego’s brutal budget cuts
Why City Hall Won't Admit The Cause
As arts centers shutter and libraries cut Saturdays, police and fire budgets rise by $42 million, middle management has exploded 461 percent in fifteen years, and a single pension bill now costs taxpayers more than half a billion dollars annually.
⬛ Bottom Line Up Front (BLUF)
San Diego faces a cascading structural fiscal crisis that is not primarily driven by insufficient revenue—it is driven by the compounding cost of public-sector union contracts, defined-benefit pension obligations, and a management bureaucracy that has ballooned while frontline services remain understaffed. The city's $563 million annual pension payment now exceeds what it spends on libraries, parks, arts, and recreation combined. Middle-management positions grew 461 percent between 2011 and 2026—twenty-three times faster than frontline workers. Police and fire agencies absorb a combined $1.27 billion in the proposed budget while the city eliminates 85 percent of arts funding and cuts library hours for a second consecutive year. Individual officers collect hundreds of thousands of dollars in annual overtime atop six-figure salaries, while Fire-Rescue ran $71 million over its overtime budget in five years. The political architecture that prevents reform is explicit: every major city union endorsed the incumbent mayor's re-election, and the mayor's budget rewards them with the only departmental increases in a sea of cuts. San Diego taxpayers—whose median individual wage is roughly $71,600—are subsidizing a government workforce whose total compensation packages routinely exceed $300,000 per year, with defined-benefit pensions inaccessible in the private sector. Structural reform of pensions, overtime dependency, and management bloat is possible but will not occur as long as the unions that benefit from the status quo control the political levers of city government.
San Diego Mayor Todd Gloria unveiled his proposed $6.4 billion budget for fiscal year 2026–27 on April 15 with a declaration that it makes "targeted, across-the-board decisions to restore balance and protect the city's long-term financial health." What the mayor's framing conspicuously omitted is that the budget's most consequential choices are not targeted at all—they are precisely calibrated to protect the two most powerful labor constituencies in San Diego politics while cutting everything that cannot fight back: arts, libraries, parks, and recreation centers that serve the city's most economically vulnerable residents.
The numbers tell the story that city hall declines to. San Diego carries a $146 million deficit heading into fiscal year 2027. Yet the mayor's budget increases police funding by nearly $15 million—bringing that single department's budget to $726 million, the largest in the city—and adds $27 million more to the Fire-Rescue budget, pushing it to $547 million. Together, police and fire now claim roughly 20 percent of a $6.4 billion budget and nearly 40 percent of all discretionary General Fund spending. Meanwhile, arts funding faces an 85 percent reduction, library hours are cut for the second consecutive year, and twenty recreation centers will reduce weekly operating hours.
- $563M Record Annual Pension Payment Due July 2026
- 461% Growth in Mid-Management Positions, 2011–2026
- $1.27B Combined Police + Fire Budget, FY2027
- $3.3B Estimated Total Pension Unfunded Liability
- 65% Rise in City Overtime Pay, 2019–2024
- $1.03B Projected Cumulative Deficit 2026–2030
The Pension Vise: Half a Billion Before Lunch
No single number captures San Diego's fiscal predicament more starkly than $563.2 million. That is the record annual pension payment the San Diego City Employees Retirement System (SDCERS) board voted unanimously to require the city to make in July 2026—a figure $30 million higher than last year's payment and $23 million above what city planners had projected even weeks before the board acted. The SDCERS actuary, Gene Kalwarski of Cheiron, delivered the sobering assessment in early 2026, and the board approved the new contribution level without dissent in March.
The trajectory is unrelenting. Pension contributions climbed from $365.6 million in 2021 to $414.9 million in fiscal year 2022, to $533.2 million last year, and now $563.2 million for fiscal year 2027. The Reason Foundation, a nonpartisan fiscal policy research organization, warned in a February 2025 analysis that San Diego's Department of Finance projects cumulative deficits from 2026 to 2030 could reach $1.03 billion if the structural drivers—chiefly pension obligations—are not reformed. The system's funded ratio has declined from 82 percent in 2021 to just 75 percent in 2025, meaning the gap between assets and liabilities is widening even as payments mount.
The pension system's structure guarantees upward pressure. Public safety employees—police officers and firefighters—retire under formulas allowing up to 90 percent of final average compensation after sufficient years of service. Retirement ages are as young as 50 for some classifications. Transparent California's pension database, which aggregates public records from SDCERS covering the period 2013–2023, documents cumulative pension payouts that would be unimaginable in private-sector retirement plans: a Fire Battalion Chief received total lifetime pension distributions approaching $886,000; a Fire Captain received more than $871,000; an Assistant Police Chief topped $854,000. These figures represent cumulative payouts over the years covered, but they illustrate the long-tail cost of defined-benefit formulas for employees who retire in their fifties.
Equally troubling is the DROP program—the Deferred Retirement Option Plan—which allows employees to begin collecting pension benefits while continuing to work and draw a full salary. Critics, including California Assemblymember Carl DeMaio (R-San Diego), have called the practice a form of institutionalized "double dipping." In November 2024, San Diego voters approved Proposition H, lowering the minimum retirement age for full firefighter pension benefits from 58 back to 55—reversing a 2011 reform—at an actuarially estimated cost of $3.9 million in fiscal year 2025–26 alone, with annual costs expected to grow each year thereafter.
The Overtime Machine: Staffing Shortages as Budget Strategy
The second driver of San Diego's fiscal deterioration is a structural dependence on overtime that has become so deeply embedded in departmental operations that it now functions as a shadow compensation system—one that inflates pensions, exhausts workers, and costs taxpayers far more than hiring adequate staff would require.
The numbers are stunning. Citywide, overtime pay surged 65 percent between 2019 and 2024, according to the San Diego County Taxpayers Association's April 2026 Financial Health Analysis. The Center Square's investigation found that 208 of the 211 city employees who earned more than $100,000 in overtime in 2024 were first responders. Among those, the top five overtime earners each collected more than $250,000 in overtime pay alone in a single year—on top of their base salaries, benefits, and pension-enhancing special pays.
"If they actually did proper staffing and cracked down on overtime abuse, you'd have fresher, more well rested police and fire, and we'd have more police and fire personnel, not fewer."— Assemblymember Carl DeMaio (R-San Diego), interview with The Center Square, 2025
Times of San Diego's May 2026 investigation into SDPD overtime records obtained through public disclosure found that Officer Jason Costanza earned $285,741 in overtime pay in 2025 alone—144 percent more than his annual salary. Over five years (2021–2025), Costanza collected more than $1.28 million in overtime pay, more than any other city employee. Officers Anthony Bueno and Stephen Rocha each surpassed $200,000 in overtime in 2025, with five-year overtime totals approaching or exceeding $900,000 each. Three officers and two sergeants broke the $200,000 overtime threshold in 2025; another 35 officers exceeded $100,000 in overtime each.
The total SDPD overtime bill reached $47.7 million in 2025 according to the state's annual compensation report—and this after SDPD had exceeded its budgeted overtime of $46 million by more than $9 million. The department is projecting over $48 million in overtime in 2026. That trend has repeated for twelve consecutive fiscal years, according to NBC 7 San Diego's reporting. An SDPD spokesperson attributed the pattern to staffing shortages and acknowledged that "SDPD continues to be one of the lowest-staffed big-city police departments relative to population." The city acknowledges using overtime to offset a workforce gap equivalent to roughly 25 officers per day.
Fire-Rescue's overtime problem is even more acute. The department spent $62.4 million in overtime in fiscal year 2025 alone, according to the state compensation report reviewed by Times of San Diego. Over the five-year period ending in fiscal year 2024, Fire-Rescue ran $71 million over its budgeted overtime appropriation. The department operates on mandatory-overtime dispatch scheduling that requires firefighters and paramedics to be held over beyond their shifts on short notice. Yet rather than address the root cause—inadequate authorized staffing relative to 52 stations and more than 183,000 annual calls—the city's proposed FY2027 budget channels the $27 million Fire-Rescue increase primarily into overtime and operational costs, while actually restructuring the bomb squad's dedicated staffing to produce a $1.65 million savings.
Fire union leadership at IAFF Local 145 has been blunt about response time consequences. First responders are arriving at scenes within 6:30 from original dispatch at only 72 percent of incidents—well short of the 90 percent goal and even below the city's own 74 percent baseline. "Fewer resources on the street means fewer individuals ready to respond when the emergencies come in," Local 145 Vice President Morrison told 10News in April 2026. The city's answer is more overtime, not more hires.
The reason for this seemingly irrational choice is pension arithmetic. Every additional full-time hire creates decades of pension obligation. Overtime, by contrast, is a cash expense that does not automatically trigger additional defined-benefit pension accrual in the same way base salary does (though some overtime is pensionable under San Diego's formulas). City managers and finance officials have thus tacitly accepted perpetual overtime as the cost of not creating permanent pension liabilities—while simultaneously allowing individual officers and firefighters to accumulate lifetime compensation that dwarfs what any private-sector worker at a comparable salary level would receive.
The Bureaucracy Explosion: 461 Percent and Counting
The Taxpayers Association's April 7, 2026 Financial Health Analysis, reported extensively by the San Diego Union-Tribune and KPBS, documents a pattern of institutional expansion that defies any conventional notion of public sector austerity. From 2011 to 2026, the city's workforce grew at an average annual rate of 2.2 percent—nearly four times faster than San Diego's population growth rate of less than 0.5 percent annually. But the most arresting finding is not the overall headcount growth; it is what happened at the management level.
Middle-management positions at San Diego City Hall increased from 70 in 2011 to 393 by 2026. That is a 461 percent increase—twenty-three times the growth rate of frontline workers over the same period. "The city of San Diego is spending more every year to grow its bureaucracy while its roads, pipes and facilities fall apart underneath it," said Mark Kersey, president and CEO of the Taxpayers Association, upon releasing the report. The infrastructure numbers support the charge: capital-improvement needs across the city have reached $7.8 billion, and deferred maintenance costs are estimated at no less than $1 billion.
A Times of San Diego opinion analysis from April 21, 2026 placed the staffing explosion in stark relief: in 2020, the city budget authorized 11,820 full-time-equivalent positions. By fiscal year 2026, the count stood at 13,062—roughly 1,200 additional positions added while city population held essentially flat. The mayor's proposed fiscal 2027 budget eliminates approximately 40 positions—less than 3.5 percent of the 1,200 added since 2020—while eliminating nearly the entire arts funding program that costs $13.8 million and employs thousands of San Diegans indirectly through the cultural economy.
The arithmetic of personnel costs is unforgiving. As the Times analysis noted, fringe benefits—pension contributions, retiree health care, other post-employment obligations—add roughly 50 to 60 percent on top of base salary. A manager compensated at $200,000 costs the city approximately $320,000 in fully loaded annual cost. That cost then generates decades of defined-benefit pension liability. The regressive character of this distribution is explicit: the services being cut—libraries, recreation centers, arts programs—are used disproportionately by lower-income residents. The services being protected and expanded are compensation structures that place recipients in the top income brackets of San Diego County, funded by the taxes of residents who earn far less.
City officials pushed back on the management-bloat characterization in April, noting that many newly created management positions were funded through specific grants and that some positions had since been eliminated. But the Taxpayers Association's data covers all funded positions regardless of funding source—and grant-funded positions that create permanent institutional structures still accumulate pension obligations that outlive the grants that created them.
The Union Political Machine: Endorsements, Raises, and Reciprocal Protection
The political economy of San Diego's labor crisis is not subtle. It is documented in endorsement records, campaign finance disclosures, and the structural outcomes of the budgetary process itself.
In October 2024, the San Diego Police Officers Association—representing more than 1,850 law enforcement professionals—endorsed Mayor Todd Gloria's re-election bid despite Gloria's challenger, Larry Turner, being an active police officer. SDPOA President Jared Wilson said in the endorsement announcement that "Mayor Gloria understands the needs of a large police department and the officers who serve our city." Gloria is also endorsed by the city's firefighters (IAFF Local 145) and lifeguards. Turner's campaign responded caustically: "Every city union received raises from the Mayor and has paid him back by endorsing him, including the political police union," Turner spokesperson Kavieff told Fox 5 San Diego.
The charge has documentary support. San Diego's MEA General Manager Mike Zucchet—whose Municipal Employees Association represents the city's white-collar workforce—endorsed Gloria's proposed budget even while acknowledging its painful dimensions. "While there are painful personnel cuts in this proposed budget, it is a responsible budget that makes meaningful progress toward closing the city's structural deficit, which is in everyone's interest," Zucchet said in April 2026. What the MEA general manager did not publicly quantify is the degree to which the "structural deficit" he invoked is itself a product of the labor contracts his organization has negotiated with the mayor over the past four years.
"The city of San Diego is spending more every year to grow its bureaucracy while its roads, pipes and facilities fall apart underneath it."— Mark Kersey, President & CEO, San Diego County Taxpayers Association, April 2026
The union-political nexus operates through multiple channels beyond formal endorsements. California's Meyers-Milias-Brown Act requires cities to bargain in good faith with recognized labor organizations and prohibits unilateral changes to wages, hours, and working conditions. This legal framework is not inherently problematic; collective bargaining is a legitimate form of labor market organization. But in San Diego's case, it has produced a structural dynamic in which the officials who negotiate labor contracts are the same officials whose campaigns the unions fund and whose re-elections the unions deliver through ground-level political operations. The result is a feedback loop: generous contracts produce union political resources; union political resources produce elected officials willing to approve generous contracts.
The Proposition B debacle is instructive. Voters passed the 2012 pension reform measure by a wide margin, only to have courts overturn it on procedural grounds—because the city failed to negotiate with unions before placing the initiative on the ballot. The multi-year legal aftermath has cost taxpayers tens of millions in retroactive pension adjustments. The lesson absorbed by the political class was not to pursue pension reform more skillfully; it was to not pursue pension reform at all.
What Reform Would Actually Look Like—and Why It Won't Happen
The structural remedies available to San Diego are well understood by fiscal policy analysts and have been implemented, in varying degrees, in other California municipalities. The Reason Foundation's May 2025 analysis outlined three primary levers: transitioning new hires to defined-contribution plans (which California's Public Employees' Pension Reform Act of 2013 enabled for new hires at reduced benefit levels), restructuring overtime compensation so it no longer drives pension spiking, and conducting a genuine reduction-in-force focused on the management classifications that have grown most explosively.
The city's own Independent Budget Analyst, in a 312-page report released in late April 2026 and discussed over a thirteen-hour council hearing, acknowledged that "a different combination of resources and mitigations could be considered, although service level reductions are unavoidable." The IBA's framing notably placed all available choices on roughly equal footing, declining to identify the personnel cost structure as the dominant driver of the deficit. That institutional caution reflects the political reality: the IBA advises the City Council, whose members are elected in cycles where union support is often decisive.
The five-year deficit projection tells the outcome story in advance: the San Diego Department of Finance estimates cumulative budget gaps of $1.03 billion from 2026 to 2030. The FY2027 pension payment of $563 million—which exceeds the annual budget of any other city department by a wide margin—will grow further if investment returns disappoint or if labor contracts negotiated in coming years continue the pattern of compounding annual increases. The SDCERS board noted in March 2026 that a stock market downturn could sharply raise the annual pension payment for multiple consecutive years.
Meanwhile, San Diego's average private-sector worker earns approximately $71,648 per year in total wages, according to ZipRecruiter's April 2026 compilation of local salary data—and that worker has no defined-benefit pension, no pensionable overtime, and no DROP program. The Bureau of Labor Statistics reports the mean hourly wage in the San Diego–Chula Vista–Carlsbad Metropolitan Statistical Area at $37.85, or approximately $78,700 annually, as of May 2024. Against those benchmarks, the fully-loaded compensation packages of San Diego city employees—particularly in public safety classifications—represent not just a premium for government service but a structurally separate economic tier, sustained by taxes paid predominantly by those in the tier below.
The June 9 budget deadline will produce a negotiated outcome. Councilmembers' budget priority memos were due to the IBA on May 20, 2026. The Budget Review Committee will consider modifications on June 5. Some of the arts cuts may be softened; some library hours may be partially restored. But the pension payment is not negotiable—the SDCERS board's authority is separate from the council's appropriations process. The overtime trajectory is not negotiable—it flows from staffing levels set in labor contracts that have years remaining. The management bloat is not negotiable—eliminating a classified position requires either a layoff triggering bumping rights under civil service rules or a negotiated buyout. The unions that created these dynamics will be at every table where decisions are made, and the officials who sit across from them were elected with union support.
San Diego is not uniquely captured. San Francisco, Los Angeles, Chicago, and New York City exhibit the same structural dynamic at larger scales. But San Diego's predicament is particularly acute because the city lacks the tax base diversity that allows larger municipalities to sustain rising personnel costs through robust commercial property or income tax receipts. When hotel tax revenues fall—as they did sharply in fiscal year 2025–26—and sales tax receipts disappoint, the only adjustable variable in a budget dominated by personnel obligations is the discretionary services that ordinary residents actually use. The libraries close early. The recreation centers cut hours. The arts grants disappear. The pension payment goes out on time, in full, every year.
Verified Sources & Formal Citations
- inewsource / Jenna Ramiscal — "San Diego's brutal budget cuts, explained." May 19, 2026. https://inewsource.org/2026/05/19/san-diego-budget-explained/
- inewsource / Crystal Niebla — "San Diego officials weigh fairness of budget cuts more publicly now." May 5, 2026. https://inewsource.org/2026/05/05/san-diego-budget-cuts-equity-implications/
- Times of San Diego / Drew Sitton & Jennifer Vigil — "Mayor's budget proposal protects police, fire spending, but cuts arts, parks, libraries to plug $118 million gap." April 15, 2026. https://timesofsandiego.com/politics/2026/04/15/san-diego-budget-deficit-police-fire-arts-parks/
- KPBS Public Media — "San Diego faces budget cuts amid $118M deficit, Mayor Gloria says." April 16, 2026. https://www.kpbs.org/news/economy/2026/04/15/san-diego-faces-budget-cuts-amid-118m-deficit-mayor-gloria-ssays
- Axios San Diego — "San Diego draft budget slashes arts, boosts police and fire spending." April 15, 2026. https://www.axios.com/local/san-diego/2026/04/15/san-diego-mayor-gloria-draft-city-budget-2027-arts-police-fire-spending
- San Diego County Taxpayers Association — "2026 Financial Health Analysis of the City of San Diego." April 7, 2026. https://www.sdcta.org/studies-feed/2026/4/7/fiscal-analysis-of-the-city-of-san-diego & press release: https://www.sdcta.org/in-the-news/2026/4/7/press-release
- OB Rag / Jeff McDonald (San Diego Union-Tribune) — "Independent Review Exposes San Diego's 'Bloated Bureaucracy' of Middle Managers." April 13, 2026. https://obrag.org/2026/04/independent-review-exposes-san-diegos-bloated-bureaucracy-of-middle-managers-and-insufficient-spending-on-infrastructure/
- Times of San Diego — Opinion — "To ease the deficit, cut the city bureaucracy — not the arts." April 21, 2026. https://timesofsandiego.com/opinion/2026/04/21/opinion-to-ease-the-deficit-cut-the-city-bureaucracy-not-the-arts/
- Times of San Diego — "Dozens of San Diego police officers topped $100,000 in overtime; one collected $1.28 million over five years." May 10, 2026. https://timesofsandiego.com/politics/2026/05/10/san-diego-officer-1-28-million-overtime-sdpd-payout/
- NBC 7 San Diego — "San Diego Police, Fire-Rescue face job eliminations in proposed city budget." May 2026. https://www.nbcsandiego.com/news/local/san-diego-police-fire-rescue-face-job-eliminations-in-proposed-city-budget/4021610/
- 10News ABC San Diego — "'We have to be very careful': San Diego Fire-Rescue union leaders warn budget cuts could impact public safety." April 2026. https://www.10news.com/news/local-news/we-have-to-be-very-careful-san-diego-fire-rescue-union-leaders-warn-budget-cuts-could-impact-public-safety
- CBS 8 San Diego — "San Diego mayor's budget cuts face union backlash over fire department safety concerns." April 17, 2026. https://www.cbs8.com/article/news/local/mayor-todd-glorias-budget-plan-fire-layoffs-120m-deficit/509-fc5519ef-1570-4b0f-acf5-6b5782750fd7
- San Diego Today / Hoodline — "San Diego Pension Board Approves Record $563M Annual Payment." March 14, 2026. https://nationaltoday.com/us/ca/san-diego/news/2026/03/13/san-diego-pension-board-approves-record-563m-annual-payment/
- Hoodline — "San Diego Reels As Record Pension Bill Slams City Budget." January 18, 2026. https://hoodline.com/2026/01/san-diego-reels-as-record-pension-bill-slams-city-budget/
- Reason Foundation / Marc Joffe — "Why Are So Many of San Diego's Needs Going Unmet? Extreme Pension Costs." February 17, 2025. https://reason.org/commentary/why-are-so-many-of-san-diegos-needs-going-unmet-extreme-pension-costs/
- Reason Foundation — "San Diego doesn't have to accept spiraling public pension costs." May 6, 2025. https://reason.org/commentary/san-diego-doesnt-have-to-accept-spiraling-public-pension-costs/
- The Center Square / Kenneth Schrupp — "San Diego city overtime increased 65% between 2019 and 2024." 2025. https://www.aol.com/articles/san-diego-city-overtime-increased-150000977.html
- Police1 / San Diego Union-Tribune — "San Diego required to pay $7.5M into officers' pensions in legal fallout over ill-fated voter proposition." July 14, 2025. https://www.police1.com/retirement-planning-resources/san-diego-required-to-pay-7-5m-into-officers-pensions-in-legal-fallout-over-ill-fated-voter-proposition
- Times of San Diego / Chris Jennewein — "San Diego Police Officers' Union Endorses Re-Election of Todd Gloria in Mayor's Race." October 10, 2024. https://timesofsandiego.com/politics/2024/10/10/san-diego-police-officers-union-endorses-re-election-of-todd-gloria-in-mayors-race/
- Fox 5 San Diego / KUSI — "San Diego Police Officers Association endorses Gloria for mayor." October 2024. https://fox5sandiego.com/election/election-headquarters-2024/san-diego-police-officers-association-endorses-gloria-for-mayor/
- San Diego City Ethics Commission — "Major Funding of Campaign Committees — 2024 Election Cycle." Updated May 18, 2026. https://www.sandiego.gov/ethics/documents/donors
- UCSD Guardian — "Mayor Gloria's new budget proposes cuts to all departments except police and fire." April 20, 2026. https://ucsdguardian.org/2026/04/20/mayor-glorias-new-budget-proposes-cuts-to-all-departments-except-police-and-fire/
- Transparent California — SDCERS Pension Database, 2013–2023. Public records database. https://transparentcalifornia.com/pensions/san-diego-city-employees-retirement-system-sdcers
- San Diego City Employees Retirement System (SDCERS) — Official COLA announcement and system actuarial information. https://www.sdcers.gov/
- U.S. Bureau of Labor Statistics — "Occupational Employment and Wages in San Diego-Chula Vista-Carlsbad, May 2024." Western Information Office. https://www.bls.gov/regions/west/news-release/occupationalemploymentandwages_sandiego.htm
- ZipRecruiter — "Average Salary in San Diego, California." April 26, 2026. https://www.ziprecruiter.com/Salaries/-in-San-Diego,CA
- CalMatters — "CHP and Cal Fire unions push for new deferred retirement plan" (including context on San Diego double-dipping practices). March 6, 2026. https://calmatters.org/digital-democracy/2026/03/chp-deferred-retirement-2/
- SPUR — "Balancing Trade-Offs: How police and fire labor negotiations will impact San [Francisco's] budget." March 2026. (Comparative context on public safety labor costs in California cities.) https://www.spur.org/sites/default/files/2026-03/SPUR_Balancing_Trade-Offs_0.pdf
- City-Data.com / U.S. Census Bureau ACS — San Diego, CA income and wage data, 2024. https://www.city-data.com/income/income-San-Diego-California.html
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