San Diego Mayor Todd Gloria presented a $6.4 billion fiscal 2026 budget proposal that cuts funding for arts, libraries, and recreation centers to close a $146 million deficit. The plan prioritizes public safety, homelessness response, road repair, and traffic safety while reducing other services.

"Difficult decisions now have to be made, including targeted reductions in personnel and support functions, to protect the services San Diegans depend on and keep the city in a strong position." Gloria said. City officials estimate it would cost an additional $118 million to $120 million to maintain municipal services at the same level as last year, with another $26 million projected for legal obligations, settlements, Federal Emergency Management Agency accreditation, and other fixed expenses.

Slow growth in local sales, property, and hotel taxes has added pressure on the budget. San Diego Chief Financial Officer Rolando Charvel said costs have outpaced revenues across city operations. "What we have observed in recent years, after the COVID-19 pandemic and inflationary pressures, is that this has affected prices throughout the country and around the world. Costs are rising faster than our revenues." Charvel said.

According to Charvel, prices have climbed for replacement parts for municipal vehicle fleets and for asphalt used in street repairs, raising maintenance and operating costs. He said inflation has also slowed consumer spending, tourism, and home sales, all important sources of local tax revenue.

Property tax growth in San Diego is projected to slow in fiscal 2026 because of a decline in home sales, according to Charvel, and sales tax receipts are expected to grow at half the rate of the previous year. Hotel taxes will grow only 1.5 percent this year, compared with 6 percent the previous year, as group travel and international visits decline, he said. In 2024, San Diego voters rejected a one-cent sales tax measure by less than a percentage point.

Arts and culture advocates protested the mayor's plan, arguing it would eliminate nearly all funding for the arts and reduce 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 will end up with." said Patrick Stewart, executive director of the San Diego Library Foundation.