In response to sweeping federal budget cuts under H.R. 1, Board of Supervisors Chair Terra Lawson-Remer and Vice Chair Monica Montgomery Steppe today proposed modernizing the County’s outdated reserve policy to ensure San Diego can protect critical services when vulnerable residents need them most.

Along with cuts to critical grants and funding streams, the Trump Administration has gutted the social safety net and shifted hundreds of millions of dollars in costs onto local governments. Trump’s One Big Beautiful Bill Act is projected to cost the County more than $300 million each year in additional costs or lost revenue. Nearly 400,000 San Diegans risk losing healthcare, and 100,000 could lose food assistance—affecting families, seniors, and veterans, as well as hospitals, healthcare workers, grocery stores, farmers, and the broader regional economy.

“We can’t let San Diego be dragged into a fiscal storm by Washington,” said Chair Lawson-Remer. “This reform is our bridge - protecting healthcare, food, and public safety now, while we work toward long-term solutions to keep San Diegans healthy, fed, and safe.”

Chair Lawson-Remer and Vice Chair Montgomery Steppe’s proposal makes two key updates to the County’s reserve policy:

1. Aligning Reserve Targets with National Best Practices

Under the current policy, reserve targets are based on two months of total expenditures, including large, one-time capital projects. The reform would modify the reserve target calculation to be based on operating expenses only, reducing the target from $973 million to $945 million. This update aligns with recommendations from the Government Finance Officers Association (GFOA) and ensures the County sets aside a responsible level of funds to maintain essential services during disruptions.

2. Recognizing All Locally Controlled Reserves

The current reserve policy recognizes only “unassigned” funds, or dollars not allocated to any specific use. The proposed update would also include “assigned” funds, which remain under full Board control and are available in emergencies. This update would increase the amount categorized as available emergency reserves from $692 million to $1.327 billion.

Together, these changes would unlock approximately $380 million in flexible, Board-controlled reserves that could help stabilize services in the face of federal or state cuts, or during an economic recession over the next four fiscal years.

The proposal does not authorize automatic spending. Instead, it establishes strict guardrails and directs the Chief Administrative Officer to draft a framework of funding recommendations. Any use of the newly recognized reserves would still require a public vote by the Board of Supervisors and must be tied to a formally recognized recession or federal or state funding cuts that reduce County revenue. Even then, no more than 25% of the unlocked reserves could be used in any single fiscal year, preserving stability across multiple years of fiscal strain.

“This is about smart fiscal governance,” said Vice-Chair Montgomery Steppe. “We’re not touching long-term savings for frivolous expenses; we’re making sure that when families need us most, we have the tools to respond.”

The County’s existing reserve policy, last updated in 2017, is outdated and unnecessarily restrictive. By modernizing how reserves are defined and reported, San Diego County is strengthening its ability to weather economic shocks, protect core services, and uphold its responsibility to residents during uncertain times.

This proposal will be presented on August 26, 2025.