City Councilmember Todd Gloria addressed next year’s city budget deficit at a community forum at the San Diego LGBT Community Center, last Friday.

“What I want to do is sort of inform and educate, give you information on where we stand and how we got here, because what I find when I talk about this issue is that there a lot of misinformation,” Gloria said, addressing 30 to 40 people in attendance.

Two weeks ago, the mayor’s office released its five-year financial outlook and projected a $179 million budget deficit for the 2010/2011 fiscal year. Other officials, including Andrea Tevlin, the city’s independent budget analyst, have suggested a shortfall closer to $200 million.

Gloria said the city’s budget deficit is the result of both the recession and the city’s continuing “structural budget deficit,” which means that the city is spending more money than it has.

“Every year since 2003, the city has not had enough revenue to pay its bills,” Gloria said.

About one-fourth of next year’s budget deficit comes from the city’s structural budget deficit, while three-fourths can be attributed to the recession, he said.

“All our major revenue sources are down because of the recession. We are off by about $65 million. If you look at the poor performance on Wall Street, that direct impact on the lack of return on our investments is [another] $50-plus million hit. That represents about $120 million of my overall $179 million problem,” Gloria said.

The Councilmember said the city was able to close this year’s budget deficit of $84 million by implementing several cost reduction measures, including updating the city’s service fees, increasing the city’s efficiency in providing its services and cutting the city’s employee payroll by six percent.

Having already implemented those cost reductions, the city is left with fewer options to fix next year’s budget deficit, he said.

Options that are still on the table include not refilling city positions that become open through retirement, replacing public employees with private employees to provide nonpublic safety services, or what is called “managed competition,” and tax increases.

The city currently has 800 vacant positions.

“Those vacancies mean we are not paying payroll on them, which means we’re saving cash. But while it will probably help us in our overall situation, it will not be enough to fix the immediate problem,” Gloria said.

The money gained in “managed competition” would also be limited, he said.

“When you talk to most experts on these things, they generally say that it’s about a five percent savings, 10 percent savings if you get a really good deal,” Gloria said, which could reduce the deficit by $60 million.

But how much is my problem again?” Gloria asked.

“$200 million,” the audience rejoined.

“We’re not there yet. This is not a panacea. This is not going to solve the problem,” Gloria said.

On the issue of increasing taxes, the councilmember said there is little to no support.

“People are understandably skeptical about giving government more money. You saw that with the state special election,” he said.

“And even if there was support, any tax increase would have to go to a public vote, and the soonest it could get on the ballot would be November 2010,” Gloria said. “But I got to balance your budget by July 1, 2010.”

The limited options leave government officials with no other way to fix next year’s budget deficit than to make cuts to the city’s general fund, the only area of the city’s budget that is unrestricted and available to be modified. The city’s general fund pays for core community services including police, fire, parks and recreation and represents 40 percent ($1.1 billion) of the city’s overall budget of $2.8 billion.

“Because we don’t have a lot of great options – a tax increase isn’t necessarily a viable thing, managed competition won’t get us where we need to be and vacancy savings are limited – we’re left looking at service cuts and personnel reductions,” Gloria said.

Last week, the mayor requested that the following departments make the following cuts to their budgets:

• Police: $73 million

• Fire: $34 million

• Parks and recreation: $14 million

• Libraries: $7 million.

The City Council will hold community forums to discuss the proposed budget cuts this November and December, as it did last year.