As the county faces a budget deficit and potential federal cuts, Democratic Supervisors Terra Lawson-Remer and Monica Montgomery Steppe want to change the county’s reserve policy to supply an estimated $355 million windfall to preserve county services.
The success of the Democrats’ pitch, which they expect to make at a Board of Supervisors meeting next month, is far from certain with the current politically divided board. Its fate likely rests on the outcome of the District 1 county supervisors race between Republican John McCann and Democrat Paloma Aguirre, who has called for the county to spend more of its reserves. The new South Bay supervisor is set to be seated in late July – after the Democrats’ initial planned board vote next month.
For years, the county has built up a large bank account that as of last June, had grown to nearly $3 billion, according to the county’s latest comprehensive annual finance report. But much of that cash hasn’t been easily accessible.
Lawson-Remer and Montgomery Steppe propose that fellow supervisors take a closer look at that big bank account as the county confronts a projected $138.5 million budget deficit and the potential for harder hits to come.
Under the county’s current reserve policy, about $1.1 billion is considered essentially off limits or restricted by law or formal pledges to provide housing-related loans or pension payments. Another $570 million is committed to line items such as capital project and affordable housing.
Lawson-Remer and Montgomery Steppe are zeroing in on two other accounts: the county’s nearly $692 million unassigned account which county officials have long said is essentially its available rainy-day fund and its nearly $635 million assigned fund. Lawson-Remer said the assigned fund is made of line items the county expects to cover in the future such as contracts and maintenance.
A county windfall relies on two policy changes focused on the latter two accounts.
Current county policy – based on guidance from the Government Finance Officers Association – calls for the county to hold at least two months of operating cash in its unassigned account to safeguard the county from major budget hits. County officials say this now equates to $973 million, more than the $692 million the county had in the bank as of last June.
Lawson-Remer and Montgomery Steppe want to eliminate capital costs now incorporated into the county’s calculations, increasing the funding that needs to stay in the bank. Lawson-Remer says this change would reduce the county’s required rainy-day total to about $945 million.
The two Democrats also want to combine the county’s unassigned and assigned accounts, making them a collective rainy-day fund.
If the county had done this last June, its rainy-day fund would have grown to about $1.3 billion.
Lawson-Remer estimates those two changes would free up about $355 million that could be used to address one-time county budget gaps.
Lawson-Remer emphasizes that the proposal was inspired by recommended Government Finance Officers Association practices and that making more of the county’s bank account available for tough times could shield San Diegans from harsh cuts.
“We should use our money to buffer those shocks in our community and make sure that people who are going through tough times actually continue to get the services they need and use that space created by the reserve windfall to make a plan that doesn’t leave us in three years falling off a cliff,” Lawson-Remer said.
Montgomery Steppe struck a similar tone in a Monday statement.
“Right now, we face the threat of people struggling with their critical needs going unmet,” Montgomery Steppe wrote. “There is no better time than this to use our resources to help those suffering the most.”
Montgomery Steppe argued the reserves policy changes are needed to help the county respond better to ongoing budget crises.
Lawson-Remer argues the next step should be a county revenue measure that could come in the form of a new real estate transfer tax on the top 1 percent of transactions or another yet-to-be-detailed possibility to secure county programs and priorities over the long haul.
Republican Supervisors Joel Anderson and Jim Desmond are unlikely to support tax hikes.
Desmond has already criticized Lawson-Remer’s revenue increasing proposal and signaled in a statement he’s shared with Voice of San Diego and the Union-Tribune that he’ll be hostile to Lawson-Remer and Montgomery Steppe’s pitch to change the reserve policy.
“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 wrote. “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.”
Anderson’s office didn’t immediately comment on Monday, but he recently expressed concerns about the impact of increased county spending in an April 15 post on X.
“This deficit crisis stems from rising costs for existing programs and new funding requests,” Anderson wrote.
The county’s largest labor union, however, has been clamoring for changes to the county’s reserve policy for years – and more so recently.
SEIU 221 members now negotiating a new contract recently held a rally urging county leaders to dip into their reserves and approached Desmond, Lawson-Remer and Montgomery Steppe with large keys with large “reserve” key chains to symbolize their push to unlock county reserves.
“At this uncertain moment, it is time for the county to right-size its budgeting and change its reserves policy to maintain and strategically invest in the critical services that San Diegans rely on,” SEIU 221 President Crystal Irving wrote in a statement this week.
In a Monday interview, Lawson-Remer told Voice she’d caution against the county raiding its reserves to pay for ongoing employee salaries and raises but believes it would be fiscally prudent to use them to temporarily prevent layoffs if the county loses crucial federal grants or revenues.
Debates about the county’s reserve account – and how to use it – are far from new. Progressives and labor leaders have long argued the county should change its policies.
The board has also increasingly dipped into its rainy-day fund in recent years.
In recent history, county spokesperson Tammy Glenn said four supervisors voted to pull $125.9 million from the unassigned pot to back what the county deemed crucial capital and maintenance projects. The county expects to receive reimbursements from the Federal Emergency Management Administration tied to the pandemic and last January’s floods to help refill the county.
The county has also repeatedly dipped into its reserve account to fund affordable housing, money that now resides in the county’s committed account as developers prepare to move forward with their projects.
I am questioning the word “raid” in the title instead of “access”. Is there supposed to so blatant a bias on this platform? And do all the Democrats identify as progressives? Just curious.
Lawson-Remer argues the next step should be a county revenue measure that could come in the form of a new real estate transfer tax on the top 1 percent of transactions or another yet-to-be-detailed possibility to secure county programs and priorities over the long haul.
No, stop taxing prosperity. Second, meet the deficit with reserve funding. You are servicing taxpayers, not devotion to non-taxpaying welfare services. I predict this can will be kicked until the election.
It seems silly to be like I don’t have enough money to pay my bills because I have a rule not to touch my savings account. A hundred million deficit vs $3400 million saved seems like a no brainer. Would a reasonable person decide not to pay a $134 bill because they can’t touch their $3400 savings account? Less money from the feds is a possible issue until 2029. You got four years to roll back expenses that way instead of defaulting on your obligations to the public. I expect my tax dollars to be spend on what needs to be done and not hoarded.
Can dishonorable Fletcher pay back for the security detail he wasted?
Government Programs Rarely Shrink: Once a program is created (especially if it’s popular or union-backed), it becomes politically difficult to cut, even if it was funded as a “one-time” expense.
“One-Time” Often Becomes “Bridge Funding”: Emergency use of reserves often leads to arguments like, “We just need more time, let’s raise taxes or borrow.” So the spending continues.
Debt or Reserve Use Feels Abstract: Unlike households, governments don’t “run out of money”; they borrow, print, or reallocate. But that hides the pain until inflation, interest rates, or credit ratings catch up.
Short-Term Political Gains: Politicians in office for 4 years may prioritize wins now over long-term discipline. That’s why balanced-budget amendments or spending caps exist in many states.