By Jose Navarro, MBA | The Navarro Report
September 2026
SAN DIEGO. In June, the City Council adopted a $6.4 billion budget by a unanimous vote, and City Hall called it a rescue. Libraries in three council districts got their hours back. Nine recreation centers were funded. Arts programs recovered most of what the mayor’s April proposal would have removed. Then the analyst who advises the council said what the vote had not fixed.
Independent Budget Analyst Charles Modica warned of “enormous unfunded structural needs” and urged the city to “right-size the organization in order to avoid the perpetuating cycle of annual budget cuts.” He also said the settlement ending Balboa Park paid parking and lowering trash fees will add to future budget deficits. The council had just closed a gap of about $118 million. The next one is already forming.
Start with how the restorations were paid for. The arts money came from $6 million in hotel tax revenue, $1.3 million in grants, and $3 million from the Prebys Foundation. Golf course rent recovery added $4.3 million. Those are real dollars, and several are one-time. A controller calls that patching, not repair. Restoring a service for one year and funding it for the next are different acts, and residents deserve to know which one the council performed.
The settlement is the clearest example. According to Times of San Diego, it lowers the trash fee to $38.75 a month for typical single-family homes starting in July 2027, and ends paid parking in Balboa Park by the start of 2027. Parking revenue of about $2.2 million a year goes away, and the fee reduction is reported to cost about $10 million in fiscal years 2028 and 2029. Mayor Todd Gloria said the deal “resolves multiple existing threats that could have forced more than $150 million in additional cuts.” That may be a fair trade. It is still a trade, and the bill arrives in later years.
Now look at the pressure underneath. Chief Financial Officer Rolando Charvel put it plainly: “Costs are going up faster than our revenue growth.” Hotel tax growth has slowed to 1.5 percent from 6 percent, CalMatters reported, and sales tax is growing at about half of last year’s pace.
Pensions are the largest fixed cost. Hoodline’s account of the January retirement board meeting reports a record actuarially determined contribution of $563.2 million, about $410 million of it from the general fund, with an unfunded liability near $3.46 billion. Actuary Gene Kalwarski told the board that salary increases above what the system’s models assumed are doing most of the damage. The raises were earned under agreements the city signed. The problem is that the models did not anticipate them, and the public never saw the long-term price before the votes were taken.
The trash fee shows the same weakness in miniature. Voters were told to expect $23 to $29 a month. The 95-gallon rate reached $43.60. The city projected 285,000 billing addresses and has about 222,000, and customers are choosing smaller bins than the cost study assumed. A fee built on the wrong customer count will disappoint, and residents then pay for the error twice, first in the rate and then in the repeal.
Police funding rose by about $15 million, to $726 million, and fire-rescue by about $27 million, to $547 million, according to inewsource. Public safety is a core duty, and those increases are defensible. They also show why discretionary services absorb the cuts. Contracts, pensions, and expectations claim the largest categories first.
None of this is a scandal. It is a structure, and structures can be repaired in daylight. Three reforms are feasible without waiting for another emergency.
First, publish a plain-language “where the new dollar goes” page each year. Residents should see on one screen how much of each added dollar is claimed by pension contributions, salaries, debt service, and everything else.
Second, require a public actuarial cost statement, covering the effect on long-term pension liability, before the council votes on any raise. Members already vote on the annual price. They should also vote on the twenty-year price.
Third, test any new fee against verified customer data before rates are set, and write a true-up clause and a scheduled review into the ordinance.
The strongest objection is that transparency does not close a deficit. That is correct. It will not raise revenue or cut costs. But residents are being asked to accept fees, cuts, and possibly new taxes without a clear view of the cost drivers. Trust is a fiscal asset, and it rebuilds slowly.
I have spent more than two decades as a financial controller, and I have not seen an organization escape a structural deficit through one-time fixes and popular restorations. The council deserves credit for a unanimous vote. It should now earn the next one by showing the books first.
Sources
Times of San Diego, City slashes trash fees, ends paid parking in Balboa Park
KPBS, City Council unanimously votes to repeal Balboa Park parking fees, reduce trash fees
NBC 7 San Diego, San Diego City Council FY2027 budget vote
inewsource, How San Diego’s deal on Balboa Park, trash fees came together
Jose Navarro is a financial controller at Navarro Consulting and lives in Linda Vista, San Diego. He is the founder of The Navarro Report, a public finance and government accountability publication.
Contact: jose@navarro-report.com | 850-291-3175