San Diego Cuts Arts Funding to Fill Budget Hole; he is not alone

from Deborah BrennanCalMatters

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San Diego is slashing funding for arts, libraries and recreation centers as it runs a $146 million budget deficit that forces unpopular spending cuts.

He is not alone. Other California cities face similar shortfalls, including Los Angeles with a $200 million deficit, Sacramento with a $66 million deficit and San Francisco facing a $643 million deficit over the next two years.

The cities’ financial woes reflect a projected state deficit of $3 billion to $18 billion as inflation collides with cuts in federal aid. In San Diego, weak growth in local sales, property taxes and hotels are adding pressure.

“What we’ve been seeing over the last couple of years since COVID and the inflationary pressures is that it’s affected prices across the nation, across the globe,” said Rolando Charvel, chief financial officer for San Diego. “Costs are growing faster than our revenue growth”

San Diego Mayor Todd Gloria released a $6.4 billion budget proposal last week, unveiling a minimal spending plan that boosted public safety, homelessness and road repair and traffic safety, but cut other services.

“I’m making the tough decisions now — including targeted cuts to staff and support functions — to protect the services San Diegans rely on and keep the city on a solid foundation,” Gloria said in a statement.

That infuriated arts and culture advocates, who protested that the mayor’s plan would eliminate nearly all arts funding and limit hours and programs at libraries, parks and recreation centers.

“When we cut the things that make San Diego or any city great, the things that bring us together as a community … I shudder to think what we end up with,” said Patrick Stewart, CEO of the San Diego Library Foundation.

San Diego City Council members were pleased to see strong funding for public safety, but were uncomfortable with dramatic cuts to the arts, said Council President Joe LaCava. “People are going to get their pencils out and start digging through the mayor’s budget to see if we can handle this going forward.”

How California Cities Fail

Amid budget woes across the state, San Diego offers a case study of how city spending can slip into the red.

“We’re getting hit on both the spending side and the revenue side,” said Alan Ginn, an associate professor of economics at the University of San Diego.

Costs are rising for everything from auto parts for city vehicles to asphalt for street repairs, making maintenance and operations more expensive, Charvel said. Meanwhile, inflation dampens consumer spending, tourism and home sales—all key sources of local taxes.

This is partly due to forces beyond local control.

“Federal immigration policy, tariffs and other dimensions of trade policies are putting cost pressures on service providers in all sectors, and state and local governments are no stranger to this,” said Jeffrey Clemens, an economist at UC San Diego.

Report of November of National League of Cities said most cities are preparing to tighten their belts as they grapple with rising costs, infrastructure demands, rates and other challenges.

Its survey of local governments found that 55% of cities find it more difficult to balance their budgets in 2025 than the previous year, compared to just 11% in 2022.

Pandemic aid is running out as cities face new budget crunches, said Ben Triffo, legislative advocate for the League of California Cities.

“I think we’re seeing a slow transition from recovery to restraint,” he said. “Our cities’ revenues are falling; they’re not keeping up with spending.”

In San Diego, property tax growth is expected to slow this year as the number of home sales declines, Charvel said. The region has a severe housing shortage, and limited inventory with high mortgage rates means fewer homes are selling.

Federal cuts to housing assistance and inconsistent state funding to combat homelessness have also cost San Diego, LaCava said.

Continued inflation, fueled by tariffs and rising gas prices from the Iran war, is suppressing consumer spending. In San Diego, sales taxes are projected to rise by half from last year, Charvel said. In 2024, San Diego voters rejected a one-cent sales tax by less than one percentage point.

“Consumers are generally unhappy, especially in the housing market, and that’s putting pressure statewide and nationally on property tax and sales tax revenue,” Clemens said.

San Diego’s tourism industry is also bracing for a downturn; hotel taxes will rise just 1.5 percent this year, down from 6 percent last year, as group travel and international visits decline, Charvel said.

“For example, Canadians are boycotting the U.S.,” Jin said. “We’re affected by this in San Diego because we’re a big tourist destination.”

As revenues stagnate, expenses pile up. The city estimates it will cost $118 to $120 million more to run city services at the same level as last year, plus another $26 million for legal mandates, settlements, FEMA accreditation and other fixed costs. San Diego has a backlog in maintaining sidewalks and other facilities and needs to meet state mandates to upgrade its stormwater system, Charvel said.

Some critics say San Diego’s spending priorities are wrong, pointing to bloated middle management and inadequate investment in infrastructure. A report published this month by San Diego Taxpayers Association said the city’s workforce has grown about four times faster than population growth over the past 15 years.

During this period, middle management positions increased by 461% from 70 to 393, the report stated. San Diego officials pushed back, saying many of those positions were funded with specific grants and some have since been cut.

Other major California cities are also in dire straits. San Francisco’s government spending is far outpacing local tax growth, and the city is grappling with federal cuts to food stamps and Medicaid.

Last week Workers in San Francisco protested the first wave of layoff notices since Mayor Daniel Lurie’s budget office warned departments to prepare to cut 500 jobs. The city also plans to cut disability benefits, environmental programs and legal aid.

In February, Los Angeles City Comptroller Kenneth Mejia wrote that the city is expected to exceed costs by $200 millionas it battles last year’s Palisades and Eaton fires, “tariff levels not seen since the Great Depression, and aggressive federal immigration enforcement.” In a separate report for the last fiscal year Mejia warned that overspending, rising liability costs and stagnant revenues had led to “crumbling infrastructure and deteriorating services”.

Who bears the brunt of the layoffs?

As cities try to plug their budget holes, state officials and advocates should think carefully about who will fall through the cracks, Clemens said.

“We have to worry that when cuts are being considered, the cuts will be to things that don’t have a voice among well-organized stakeholder groups that are the easiest, politically, to pull back,” he said.

San Diego plans to close its budget hole by eliminating 101 jobs, putting employees on leave for one week a year and making drastic cuts in select departments.

San Diego’s 37 library branches will have to cut $2.5 million in hours of service, Stewart said, along with programming, books and materials. The city is also ending a matching grant fund that helped libraries raise private donations. The municipal council will decide when and where to limit the library’s opening hours.

The most profound blow was the near elimination of arts funding. The mayor’s budget proposes to eliminate an $11.8 million arts and culture grant program, leaving just $2 million in a separate account.

“The mayor is proposing to destroy a long-standing, critical source of revenue for San Diego’s current nearly 200 organizations,” said Jessica Henson York, executive director of the Mingei Museum and president of the Balboa Park Cultural Partnership, which represents museums in the city’s historic cultural center.

Many provide free events, performances and educational programs, she said. In what York called a “double whammy,” San Diego forced controversial parking fees in Balboa Park earlier this year. Since then, museum directors have reported a drop in museum visits, while parking fees are bringing in less money than originally planned.

York questioned whether the $11.8 million in savings would provide significant relief to the city’s multibillion-dollar budget, but said the collateral damage could spread to other sectors and reduce spending on entertainment and tourism.

“When you cut quality of life services, you completely undermine future economic opportunity, income, development opportunities and investment,” Stewart said.

At a packed hearing earlier this week, hundreds of residents spoke out against eliminating the arts program, and the City Council plans to hold additional public hearings to refine the city’s spending plan. LaCava hopes to cushion the blow from the deepest layoffs, but acknowledged there will be tough choices.

“No one will be happy with the budget as it is passed in June,” he said. “My job as council president is to make it an open and transparent process. I hope that at the end of the day people will feel like they’ve had a fair chance to make their case.”

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.