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DATE: |
February 25, 2025 |
10 |
SUBJECT
Title
CONTINUED ITEM FROM 02/11/2025 (12):
EVALUATING SUSTAINABLE FUNDING OPTIONS TO SUPPORT THE CONTINUED IMPLEMENTATION OF THE STRATEGIC PLAN (DISTRICTS: ALL)
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OVERVIEW
This item was continued to February 25, 2025 at the request of Vice-Chair Lawson-Remer.
The County of San Diego has a long track record of responsible fiscal stewardship and efficient use of taxpayer dollars through results-oriented service delivery. As a custodian of public funds, the County has maintained a focus on providing vital services while avoiding waste and inefficiency.
Forecasts by the County Office of Financial Planning project shifts in the fiscal environment due to declining State and Federal tax revenues. Nearly half of the County’s budget depends on State and Federal revenue sources, emphasizing the need for thoughtful, proactive planning to sustain County services. This proposal equips the Board and the County’s leadership team with an analysis of potential tools to help the County navigate these headwinds while ensuring continued progress on core service delivery and the adopted Strategic Plan.
In accordance with Board direction, the County has worked to strengthen service delivery in areas outlined in the Strategic Plan such as public safety, mental health and substance use disorder, homelessness, and attainable housing while maintaining top-tier credit ratings and effectively leveraging state and federal resources. Recent accomplishments include:
• Fire Safety: Doubling the size of the County’s fire response system, improving call response times, increasing firefighter and first responder staffing, expanding fire response infrastructure including Mt. Laguna, Valley Center, and Deer Springs, and investing in advanced tools like fire helicopters that can prevent catastrophic wildfires and assist in remote rescues.
• Public Safety: Strengthening law enforcement through expanded staffing, including the addition of over 300 new positions in recent years, and targeted recruitment and retention efforts to address workforce needs. The County has invested in new Sheriff facilities, crime lab, and advanced tools like upgraded body-worn cameras and digital evidence systems to enhance accountability and efficiency.
• Behavioral Health: Expanding regional capacity with 6 new crisis stabilization units already serving over 14,000 admissions, supporting additional sober living homes, and adding 200 long-term mental health beds, nearly doubling the region’s capacity. Additionally, the launch of mobile crisis response teams (MCRT) staffed by trained clinicians has diverted over 13,000 calls from law enforcement, allowing deputies to focus on crime prevention and community safety.
• Housing: The County has recently funded the creation of over 2,000 affordable housing units through the Innovative Housing Trust Fund, while streamlining building codes to encourage senior and assisted living housing and reducing regulatory barriers to construction. The County is on track to exceed regional housing construction goals by over 50%.
• Homelessness: Expanding shelter capacity with the creation of over 900 new shelter spaces, including safe parking lots and supportive housing options. The County has also launched targeted prevention initiatives like the Diversion Program and the Senior Shallow Rent Subsidy program, which has kept over 400 at-risk seniors in their homes with a 100% success rate in avoiding homelessness. Outreach teams have provided services to thousands of individuals living in encampments, connecting them with housing, shelter, and behavioral health resources.
• Unincorporated Service Delivery: As the primary governmental entity responsible for providing essential services to the 500,000+ residents of San Diego County’s unincorporated communities, the County continues to deliver high-quality public safety, road maintenance, emergency response, planning, and environmental health services. With no municipal government in these areas, the County has committed to ensuring efficient service delivery, maintaining infrastructure, and addressing community needs while upholding high standards of customer service and responsiveness.
This progress has been achieved while maintaining the County's strong financial position, including a top-tier credit rating. However, the ability to continue to meet these commitments in the face of a changing fiscal outlook requires proactive financial analysis and planning. This item proposes an in-depth analysis of available municipal finance tools to ensure the County remains fiscally secure and capable of sustaining its commitments amid shifting economic conditions. This analysis will help the County evaluate options for maintaining critical services and infrastructure while continuing to implement the Strategic Plan.
This approach mirrors the Board-approved process requested by the Sheriff’s Office in November 2023, which authorized a similar analysis of revenue options to support the public safety and facility modernization called for in the Detention Facilities Strategic Framework Plan. Today’s proposal builds on the thoughtful and transparent methodology applied by the Sheriff’s Office in November 2023, reflecting the County’s tradition of proactive fiscal planning.
This analysis will provide the Board with the information needed to evaluate potential revenue tools thoughtfully and ensure the County is positioned to sustain its commitments responsibly, with a commitment to efficiency, accountability, and the responsible use of taxpayer dollars.
This analysis does not commit the County to pursuing any specific or general strategies or approaches. Rather, it equips the Chief Financial Officer and the Board with data to explore viable options and make informed decisions that align with the Strategic Plan. By conducting this analysis now, we can ensure the County remains financially secure, capable of meeting its current commitments, and adaptable to the challenges of tomorrow.
RECOMMENDATION(S)
VICE-CHAIR TERRA LAWSON-REMER
1. In accordance with Section 401(c) of the County Administrative Code, authorize the Director of the Department of Purchasing and Contracting to solicit quotations, and upon successful negotiations and determination of a fair and reasonable price, award contract(s) for consulting services to evaluate the feasibility of local revenue-generation and funding options that support the continued delivery of core services in alignment with the Strategic Plan, with a contract option to support the implementation of any such initiatives selected by the Board, and to amend the contract(s) as needed to reflect changes to services and funding. The solicitation shall include selection criteria to ensure the consultant team possesses extensive experience in public opinion research, stakeholder engagement, revenue measure design, ballot measure planning and strategic implementation. The team should have a proven track record in San Diego County, particularly in collaboration with public agencies, non-governmental organizations, and local governments on similar projects, with a strong preference for recent experience working with the County of San Diego specifically on similar projects. Additionally, the consultant team must demonstrate a history of successfully guiding revenue measures through public approval processes. The consultant should evaluate implementation considerations and voter attitudes for potential revenue streams, including but not limited to, a Documentary Transfer Tax, Transaction and Use Tax, a Sales Tax, and a Stormwater District. The analysis should focus on identifying revenue mechanisms that yield the highest potential return while having the greatest likelihood of successful adoption and implementation, including consideration of voter thresholds. The analysis will also consider community values, stakeholder input, Board Member input, County priorities, and strategies that have the potential to leverage State and Federal resources. The analysis may potentially also examine the feasibility of partnerships with other municipalities to pursue joint revenue strategies or coordinated funding initiatives.
2. Direct the Chief Administrative Officer (CAO) to provide a preliminary memo to the Board by July 1, 2025, summarizing progress to date and any early insights. The CAO should return to the Board by the August 26, 2025, Board Meeting to present the consultant’s initial report, findings, and recommendations. The CAO’s return to the Board should include options for possible next steps, including but not limited to, implementation strategies and potential public education and outreach that could support and build on the consultant’s recommendations.
EQUITY IMPACT STATEMENT
This proposal directly supports the County’s commitment to aligning services with community priorities and ensuring that taxpayer resources are used effectively and transparently. By identifying responsible funding solutions, this initiative aims to ensure that essential services remain accessible to all residents while promoting fairness and opportunity across the County. By identifying sustainable solutions for critical service areas such as behavioral health, public safety, and infrastructure, this initiative aims to support the Board’s recent efforts to close service gaps that have disproportionately affected marginalized and underserved communities across San Diego County.
SUSTAINABILITY IMPACT STATEMENT
This proposal advances the County’s commitment to environmental sustainability by exploring fiscally responsible funding solutions to support programs such as those that protect natural resources, improve stormwater infrastructure, reduce pollution, and enhance climate resilience. By aligning these efforts with the Board’s adopted sustainability goals, this analysis will allow this Board to ensure the County is poised to meet regulatory requirements and maintain critical environmental services without compromising its financial health or future obligations
FISCAL IMPACT
Funds for this request are not included in the Fiscal Year 2024-25 Operational Plan in the Finance and General Government Group Executive Office, Office of Financial Planning. If approved by the Board, funding of $400,000, could be provided redirecting budgeted appropriations of General Purpose Revenue currently allocated to the Office of Financial Planning for information technology costs, and would not impact service delivery. There will be no change in net General Fund cost and no additional staff years.
BUSINESS IMPACT STATEMENT
N/A
THIS ITEM HAS BEEN WITHDRAWN AT THE REQUEST OF VICE-CHAIR TERRA
LAWSON-REMER
Details
ADVISORY BOARD STATEMENT
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BACKGROUND
The County of San Diego has consistently prioritized responsible financial management to meet the needs of its residents while maintaining one of the strongest fiscal positions in the state. By focusing on core services, maximizing the efficient use of taxpayer dollars, and leveraging State and Federal funding, the County has achieved significant progress in service delivery while maintaining top-tier credit ratings.
Nearly half of the County’s revenue is sourced from State and Federal funding streams. However, economic forecasts project significant reductions in State and Federal tax revenues, driven by factors such as slowing economic growth, inflationary pressures, and declining federal emergency funding streams. These budgetary concerns are further compounded by ongoing uncertainty surrounding federal policy, including potential cuts to domestic funding programs. If enacted, these policies could reduce critical financial support to local governments, disrupt key industries, and weaken the County’s ability to sustain core services.
Potential impacts of these fiscal constraints include delays or reductions in public safety investments, housing and homelessness initiatives, and behavioral health services-all of which are critical to maintaining community well-being. Increased economic instability could result in job losses and housing displacement, while reductions in federal and state assistance programs could undermine access to healthcare, mental health services, and emergency support systems. Public safety programs that depend on federal support could face staffing shortages, delays in technology upgrades, or deferred infrastructure improvements. Additionally, disruptions to cross-border trade and San Diego’s regional economy-particularly in manufacturing, life sciences, and logistics-could directly impact the County’s General Fund, which relies on revenues from a thriving local economy.
Given the scope of these challenges, the County must act now to assess potential revenue options and identify sustainable funding mechanisms that will enable it to continue meeting its operational goals and strategic priorities. Exploring opportunities to maximize external financial resources, such as leveraging additional State and Federal matching funds, will be essential to mitigating the effects of declining revenues. Additionally, the County must evaluate whether strategic partnerships with other municipalities could provide opportunities for joint revenue strategies or coordinated funding initiatives that maximize efficiencies and resources. This evaluation should consider both policy feasibility and public opinion perspectives, ensuring that any proposed collaboration aligns with legal frameworks, governance structures, and opinion research feasibility.
In November 2023, the Board unanimously approved a similar financial analysis proposed by the Sheriff’s Office to explore revenue options to modernize detention facilities and strengthen public safety services. Today’s proposal builds on this precedent by taking a broader, enterprise-wide approach to evaluate the tools available to sustain critical services while preserving the County’s fiscal health.
To address these challenges, the proposed analysis could follow a phased approach to explore potential revenue options and assess their feasibility. For example, an initial phase could focus on an opinion research viability assessment to establish a baseline understanding of public attitudes towards potential revenue mechanisms. Subsequent phases could refine policy options through additional opinion research and community engagement, such as focus groups, to provide a deeper understanding of public priorities and potential trade-offs. The final phase could culminate in a comprehensive benchmark survey to assess the viability of specific revenue mechanisms, voter attitudes at various passage thresholds, and actionable insights to guide next steps.
The consultant’s analysis should specifically include an evaluation of the implementation considerations and voter attitudes for potential revenue streams, including a Documentary Transfer Tax, Transaction and Use Tax, a Sales Tax, and a Stormwater District. The analysis should focus on identifying revenue mechanisms that yield the highest potential return while having the greatest likelihood of successful adoption and implementation, including consideration of voter thresholds. The consultant should be empowered to work collaboratively with appropriate County staff and leverage existing consultant expertise to ensure that relevant funding mechanisms are thoroughly analyzed and well understood. This collaboration will ensure alignment with the County’s fiscal policies, legal considerations, and operational priorities, allowing for a comprehensive assessment of revenue options and their implementation feasibility. The analysis should also consider community values, stakeholder input, Board member input, County priorities, and strategies that have the potential to leverage State and federal resources. The analysis may potentially also examine the feasibility of partnerships with other municipalities to pursue joint revenue strategies or coordinated funding initiatives. The consultant is encouraged to leverage existing data resources and analysis to efficiently and effectively complete the assessment.
The CAO shall return to the Board by August 26, 2025, to present the initial report, ensuring the Board receives a detailed analysis of potential funding options. To assist with stakeholder engagement, the consultant shall have the flexibility to share preliminary findings throughout the process, ensuring that decision-making is informed by real-time insights and community feedback. The initial report should be shared with stakeholders upon completion.
The initial report shall provide the Board and the public with the full materials (polling, stakeholder outreach, etc.) that informed the analysis, as well as present the Board with a variety of potential revenue packages, each incorporating different combinations of fiscal tools and policy alignments based on feasibility, public support, coalition and messaging considerations at relevant voter passage thresholds. The consultant will assess the political viability, stakeholder landscape, and implementation pathways for each package, providing strategic recommendations for alignment with County and community priorities and potential coalition-building efforts.
This phased approach ensures that each step of the process builds on the findings of the previous phase, allowing for adjustments based on data and community input, while providing the Board with actionable insights at every stage. By initiating this work now, the County can plan responsibly to sustain its commitments and adapt to evolving fiscal challenges.
The procurement of this consultant contract should evaluate the consultant’s experience in public opinion research, stakeholder engagement, tax policy, revenue measure design, ballot measure planning and strategic implementation, and municipal finance. The consultant should have a proven track record of success in San Diego County, particularly in collaboration with public agencies, non-governmental organizations, and local governments on similar projects, and with an strong emphasis on recent experience working with the County of San Diego specifically on similar projects. Additionally, the successful consultant should be able to demonstrate a history of successfully guiding revenue measures through public approval processes.
The challenges in our communities are significant. The County has made historic investments in public safety, behavioral health, and housing-adding new fire stations, expanding crisis stabilization units, and developing innovative housing programs. However, rising demand for services, aging infrastructure, and the unpredictability of State and Federal support necessitate a proactive process to evaluate long-term funding solutions.
This proposal ensures the County remains positioned to meet these challenges by initiating a thoughtful analysis of available municipal finance tools. By taking this step now, the County can plan responsibly, sustain critical commitments, and continue serving its residents with the efficiency and accountability they expect.
LINKAGE TO THE COUNTY OF SAN DIEGO STRATEGIC PLAN
This proposal aligns with the County of San Diego’s 2025-2030 Strategic Plan by advancing the goals of the Health, Sustainability, and Community pillars. By exploring fiscally responsible funding mechanisms for the priorities outlined in the Strategic Plan this proposal supports the County’s commitment to the "Live Well San Diego" vision of building better health, living safely, and thriving in sustainable, equitable communities. By conducting this analysis, the Board can ensure that critical services remain aligned with the County’s strategic goals while maintaining long-term fiscal health.
Respectfully submitted,
TERRA LAWSON-REMER
Supervisor, Third District
ATTACHMENT(S)
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