Report: City to Have Budget Surpluses for Next 5 Years

The city of San Diego will have budget surpluses over the next five fiscal years, but some uncertainties cloud the picture, according to a report to be presented Wednesday to the City Council's Budget Committee.

The five-year budget outlook prepared by Mayor Jerry Sanders' financial staff projects a surplus of $4.9 million in the next fiscal year, growing to $94.2 million by fiscal year 2018.

The report projects moderate growth in sales, property and hotel room tax income.

However, several problems exist that could negate the expected surpluses, by amounts not yet determined, according to the report.

The biggest impact could be the poor recent performance of the San Diego City Employees Retirement System's investment portfolio, which might cause the city to increase contributions to its pension system. Combined with the initial costs of implementing retirement benefit changes called for in Proposition B -- passed by voters in June -- the city might be faced with a new expense of up to $37 million next year, the report says.

SDCERS is scheduled to determine the amount of the city's contribution in January, following an actuarial analysis.

The report notes that the dissolution of redevelopment agencies by the state could leave the city's general fund on the hook for debt service for the construction of Petco Park and a prior expansion of the convention center. That would be a $14 million hit to the budget, according to the report.

However, the mayor's staff expects the current system, in which revenues still being generated by former redevelopment agency activities cover the debt payments, to continue for those projects.

The other worry expressed in the report is the potential for the overall economy to dip back into recession.

-City News Service