San Diego Faces $120M Budget Shortfall for FY2027

City officials say balancing the budget is legally required and are approaching the process with 'fiscal prudence and discipline'.

Published on Feb. 23, 2026

Got story updates? Submit your updates here. ›

San Diego is facing a projected $120 million shortfall in its General Fund for the upcoming fiscal year, according to the Fiscal Year 2027 – 2031 Five-Year Financial Outlook. The shortfall is attributed to a reduction in one-time revenue sources and increasing costs for city services. Despite the challenges, the city remains committed to core priorities like fixing roads, public safety, housing, and addressing homelessness.

Why it matters

Addressing a significant budget shortfall requires difficult decisions about resource allocation. San Diego's approach suggests a focus on prioritizing essential functions and finding efficiencies, which could impact various city services and programs.

The details

The shortfall is attributed to a reduction in one-time revenue sources that supported the FY 2026 Adopted Budget, alongside increasing costs for city services and slowing revenue growth. Despite these challenges, the city remains committed to core priorities including fixing roads and infrastructure, public safety, housing development, and addressing homelessness.

  • The City Charter mandates that the Mayor release the Draft Budget to the City Council and the public no later than April 15th, 2026.
  • The City Council will review a Mid-Year Budget Monitoring Report on February 23, 2026, and the FY 2027-2031 Five-Year Capital Infrastructure Planning Outlook on March 10, 2026.
  • Budget Review Committee (BRC) budget presentation hearings will be held from May 4 - May 8, 2026.
  • The IBA will release reports on May 13, 2026.
  • The City Council will review the FY 2027 May Revision on May 18, 2026.

The players

City of San Diego

The local government of San Diego, California, facing a projected $120 million shortfall in its General Fund for the upcoming fiscal year.

Got photos? Submit your photos here. ›

What’s next

The budget process will involve multiple stages of review and public input, including a Budget Review Committee hearing for public input on May 6, 2026, and City Council approval of the FY 2027 Budget on June 9, 2026.

The takeaway

San Diego's approach to addressing the significant budget shortfall suggests a focus on prioritizing essential city functions and finding efficiencies, which could impact various services and programs. The public will have opportunities to participate in the budget process, and their involvement may shape the final budget decisions.