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Tourists, sales tax help erase $52 million city of San Diego shortfall

Posted at 5:06 PM, Oct 12, 2021
and last updated 2021-10-12 20:49:04-04

SAN DIEGO (KGTV) — An influx of tourists and a surge in tax revenue helped the city of San Diego turn a $52 million projected shortfall into a surplus.

The city relies on property tax, sales tax, and the tourist tax to maintain life as locals know it. But COVID reduced restaurants to takeout only, shuttered retail stores, and led to the cancellation of travel plans and massive conventions

That's why the city finance department projected a $52 million budget shortfall in the fiscal year that ended June 30. That's despite $148 million of federal coronavirus funds filling the gap.

But a new city financial report credits a surge in property tax, sales tax, and tourist tax to erase the deficit and leave the city with $27 million in extra cash it can use for future years.

The biggest boosts came in April, May, and June, when vaccination rates increased and leisure travel rebounded.

"I've been through multiple recessions here in San Diego and we are the most recession-proof, relatively speaking to other markets, because we can get people who drive here from Arizona, from the LA metro area, even Northern California," said Bob Rauch, CEO of RAR Hospitality, which owns and operates three hotels in the region.

But this doesn't mean the city's financial woes are over.

The city needs tens of millions of dollars to reinstate pensions after 2012's Measure B was invalidated -- and concerns remain over a slow of return conventions hitting the budget in future years.

The city's budget committee will hear a presentation on the report at its meeting Wednesday.