Budget Analyst Projects Deficits, Contradicting Sanders

San Diego's Independent Budget Analyst on Monday projected deficits for the city over the next several years, conflicting with figures from Mayor Jerry Sanders that sees nothing but surpluses ahead.

Sanders' five-year budget outlook, released last month, called for a $4.9 million surplus for the next fiscal year, growing annually to $94.2 million by the 2018 fiscal year. It did not include general wage hikes for employees or increases in service levels, but financial officials acknowledged that uncertainties could unravel their estimates.

The IBA report listed several concerns that cut into the projected surpluses, including changes to redevelopment that could put the city's general fund on the hook for Petco Park and Convention Center debt service, investment losses by the San Diego City Employees Retirement System, initial costs of implementing voter-approved changes to retirement benefits, doubling of support for arts and culture, and more moderate growth of sales and property tax revenues.

According to city officials, it is unknown whether the state will stick San Diego with the redevelopment costs, but the retirement system losses and Proposition B implementation expenses were expected. Also, the City Council agreed to increase arts and culture support over the next several years, with Sanders' blessing.

"While the city's financial position has improved substantially over the past several years due to numerous reforms, it is far too early to celebrate," the authors of the report said. They said city officials still needed to be "fiscally cautious."

The worst case scenario from the IBA turns next year's surplus into a deficit of as much as $84.2 million. The biggest bites would be from spending an extra $30.1 million on capital maintenance and $21.6 million to implement Proposition B, passed by voters in June.

Instead of a huge surplus in five years, there would be a deficit of $43.1 million, according to the report.

"The mayor has said all along that these issues, which are largely out of the city's control, could pose financial challenges in the future," said Darren Pudgil, a spokesman for Sanders. "That's why he has built up the city's reserves to $166 million, which is 14 percent of the city's budget—well above the city's 8 percent reserve policy."

Mayor-elect Bob Filner and the City Council will be able to tap these funds should they need to, Pudgil said.

-City News Service