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Mayor Proactively Prepares for Budget Impacts from COVID-19

Mayor Faulconer Cites Work To Build Reserves, Need For Fiscal Discipline

Thursday, Mach 26, 2020 - NEWS RELEASE 

San Diego – In a proactive move to keep the public informed during the COVID-19 pandemic, Mayor Kevin L. Faulconer was joined today by City Councilmember and Audit Committee Chair Scott Sherman, Chief Operating Officer Kris Michell and Finance Director Matt Vespi to discuss how City finances are being affected by the coronavirus, as well as the latest on San Diego’s efforts to move homeless individuals into larger shelter spaces.

“The global pandemic is taking a toll on everyone, and the City of San Diego is no exception. I want to be upfront with San Diegans, because the only way to get through this is as a community,” Mayor Faulconer said. “I’ve worked to make sure San Diego is a leader when it comes to fiscal discipline and we’re not going to stop now. Neighborhood services are a priority for San Diegans, and they will remain a priority for me as we work on the budget."

The Mayor shared preliminary figures on two of the City’s largest revenue sources, sales tax and tourism occupancy tax. Prior to the COVID-19 pandemic, the City of San Diego was projected to bring in around $300 million in sales taxes during the fiscal year. Projections now indicate those revenues to be $26 million lower in the next four months. The transient occupancy tax, which tourists pay when they stay in San Diego hotels, has also been impacted by the pandemic as tourism grinds to a halt. Early projections indicate a loss of approximately $83 million by the end of the current fiscal year. In total, the City of San Diego expects to lose approximately $109 million through June 30 due to COVID-19 – an amount that could fund the entire Park and Recreation Department for nearly a year.

Graph of City of San Diego Sales Tax and Transient Occupancy Tax Revenue


"During this unprecedented crisis and economic uncertainty, it is important for the City Council to come together and fund core city services first," said Councilmember Scott Sherman. "Now is not the time for political agendas and special interests. Right now, small businesses and citizens are taking the brunt of economic hits, but soon, the city and city workers will be feeling it too. It is time to face realities and prepare for the difficult times ahead."

Mayor Faulconer highlighted his work with the City Council to build up the City’s reserves. For example, San Diego’s first pension stabilization reserve was created under Mayor Faulconer’s watch. These funds can help offset some of the falling tax revenue, but the impacts from the widespread closure of hotels, restaurants and small businesses are expected to have significant economic repercussions. “We’ve been saving for a rainy day. This is a hurricane,” Mayor Faulconer said.

"These are unprecedented times. As our city faces difficult budget decisions, it is imperative that we operate transparently and hold public hearings in which residents can participate,” Council President Pro Tem Barbara Bry said. “The format of these hearings will depend on the status of the COVID-19 emergency."

Mandated closures to stop the spread of COVID-19 have led to an increase in unemployment filings as small businesses struggle to stay afloat. Yesterday, at Mayor Faulconer’s strong urging, the City Council unanimously passed his Small Business Relief Fund aimed at helping local businesses survive in a time of uncertainty. More than 90 percent of businesses in San Diego are small businesses of 100 employees or fewer.

The fund was created to help local employers sustain operations, retain employees and address the unforeseen reduction in production and consumer demand. The City will use it to make micro loans available to small businesses impacted by the COVID-19 pandemic. Financial assistance will range from $10,000 to $20,000 and will be allocated to eligible small businesses based on the availability of funds and program guidelines. To be eligible, businesses must meet the following requirements:

  • Employ less than 100 Full-Time Equivalent employees
  • Have a City of San Diego Business Tax Certificate
  • Provide documentation that shows the business has been operational for at least 6 months
  • Provide proof of economic hardship due to COVID-19
  • Not have engaged in any illegal activity per local, state or federal regulations

A temporary moratorium on residential and commercial evictions backed by Mayor Faulconer and Council President Georgette Gómez went into effect Wednesday.

On the homelessness front, this week Mayor Faulconer and regional leaders announced a system-wide, coordinated approach to help homeless individuals by opening up the lower level of Golden Hall and parts of the Convention Center to individuals currently in our shelters and those on the streets.

On Tuesday 55 families from the City’s bridge shelter located on the upper level of Golden Hall operated by Father Joe’s Villages were moved to two motels using some of the 200 rooms that were secured by San Diego County for the Regional Task Force on the Homeless. Yesterday nearly 100 women from the Father Joe’s Village interim shelter and the PATH Connections interim shelter were moved to the lower level of Golden Hall. These moves are part of an effort to create adequate spacing for individuals in shelters to meet physical distancing guidelines. 

More information on the State of California “Stay At Home” order, including what’s closed, what’s open and which industries are exempted by the state can be found on the California Covid-19 response website.

For information regarding COVID-19 cases and directives from the County of San Diego public health officials, please visit www.coronavirus-sd.com.

For the latest City operational updates and steps the public can take to help reduce the spread of the disease, please visit sandiego.gov/coronavirus.

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