City officials blame the pandemic and say a slower approach to increasing reserves is more achievable and realistic.
San Diego is planning to soften the city’s financial reserves policy so it can spend millions on other priorities such as increasing worker salaries and fighting homelessness and climate change.
The city is facing more than $350 million in deficits over the next five years, despite annual revenues projected to surpass $2 billion for the first time A crucial part of the city’s long-term payoff plan is significant growth in the value of pension system investments. When those investments shrink in value, the city must contribute more money to make up the difference.
The 16.7 percent figure is recommended by the Government Finance Officers Association. San Diego committed in 2017 to slowly building its reserves up to that level. But the COVID-19 pandemic prompted San Diego to cancel scheduled reserve contributions in fiscal years 2021 and 2022 and to make a minimal contribution of $1.5 million during the ongoing fiscal year — leaving the city way behind schedule.
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