One line in Supervisor Terra Lawson-Remer’s State of the County speech Wednesday earned a standing ovation from San Diego Mayor Todd Gloria.
She called the county’s fiscal policy “too conservative” amid a $138 million budget shortfall, likely federal cuts and a recent $40 million hit to the county’s public health agency.
“We have more than $100 million in excess reserves, just sitting in an , above what’s recommended by best fiscal practices,” she said.
“So today, I’m calling for immediate reform of our county’s reserve policy,” she said, to a particularly enthusiastic round of applause from her audience.
For years, the County of San Diego has been good at stashing away money for a rainy day to protect against economic uncertainties — too good, critics say.
Gloria has argued this point. In his State of the City speech in January, he urged the county — the region’s primary provider of health and human services — to do more to combat serious mental illness and addiction.
“When will they step up to provide the services needed to end this crisis?” he said.
Gloria told The San Diego Union-Tribune that he “was moved to stand and cheer” for Lawson-Remer’s proposal to free up reserves “because, as she knows, I have been continually pushing for our county to do more.”
“I appreciate her courage to finally tap into the county’s expansive reserve s to do more for our shared constituents,” he added, “especially those living with addiction and mental illness on our streets.”
According to budget documents, the county has roughly $700 million categorized as reserves and a fund balance of nearly $3 billion.
Roughly $1.1 billion of the $3 billion is restricted, set aside for specific programs. The rest of the fund balance — not including reserves — of $1.2 billion is described as “earmarked,” though the board can vote to redirect that money if more pressing needs arise.
Lawson-Remer believes she can free up $100 million with the of two other supervisors.
The usually five-person board is currently short one member, leaving it divided with two Democrats — Lawson-Remer and Monica Montgomery Steppe — and two Republicans, Jim Desmond and Joel Anderson. Democrat Nora Vargas left early this year, opting not to serve a second term due to “personal safety and security reasons.”
After an April 8 special election, Chula Vista Mayor John McCann and Imperial Beach Mayor Paloma Aguirre will compete in a July runoff. Aguirre is a Democrat, McCann a Republican.
Aguirre told the Union-Tribune she believes the county should be spending more of its reserves.
“It’s irresponsible to hoard that much of our taxpayers’ money when our communities desperately need the county to step up on homelessness, on infrastructure and on the sewage crisis,” she said.
McCann feels much differently.
“The county is facing a financial train wreck with a $138 million annual deficit,” he said. “It’s irresponsible to remove over $100 million from the county’s rainy day fund to spend on politicians’ pet projects.”
Anderson, also a Republican, did not respond to an email asking about Lawson-Remer’s proposal, but Desmond said he doesn’t it.
“Over the past few years, the county workforce has grown by 2,500 new positions, and several new departments have been created — departments we simply cannot afford,” he said. “Just like any family tightening their belt during tough times, the government must rein in spending and stop funding programs that don’t directly serve our residents, not spend more money.”
Montgomery Steppe’s office did not respond to an email asking for her response to Lawson-Remer’s proposal, though the supervisor attended Wednesday’s speech.
The county overhauled its reserves policy in the mid-1990s after clawing its way back from near bankruptcy, requiring set-asides for “unforeseen catastrophic events,” a carve-out to cover revenue shortfalls and an additional cushion “to be prepared for broader levels of economic uncertainty.”
In 2021, the Board of Supervisors — with a Democratic majority for the first time — voted to create a subcommittee tasked with exploring, among other things, an overhaul to the reserves policy. The subcommittee included Lawson-Remer, then-Supervisor Nathan Fletcher and county staff.
A board letter calling for the subcommittee’s creation described the reserves policy as “based on conservative ideologies that centered on risk aversion.”
“Such practices led to a decrease in the role of government delivering services … (while) maintaining questionably massive levels of reserves,” the letter says. “Over time, this approach became more and more conservative, in some instances beyond best fiscal practices.”
The subcommittee’s work stalled after Fletcher resigned from the board in May 2023. A proposal for a new reserves policy was scheduled for a vote in February but was pulled from the agenda.
Current guidelines recommend that the county have on hand a minimum of two months of general fund operating expenditures, an approach recommended by the Government Finance Officers Association.
County budget documents show that it’s currently about $280 million short of the recommended minimum reserve of $973 million.
It’s unclear whether Lawson-Remer is looking to free up some of $1.2 billion that can be reallocated with a board vote. Her office declined to share more details last week but said they would be available in the coming days.
Omar ons, who led the county’s Office of Homeless Solutions before departing for a job as San Jose’s deputy city manager, said he s freeing up additional funding amid the region’s ongoing homelessness crisis.
“One hundred million dollars is not chump change,” he said. “I mean, it’s been raining, right? If there’s a rainy-day fund to be used, the region needs it.”
