San Diego County Board Chair Terra Lawson-Remer and Vice Chair Monica Montgomery Steppe, who serve as members of the Board’s Sustainable Fiscal Planning Subcommittee, released the following statements today after the County released its recommended Fiscal Year 2026–27 budget.

San Diego Board of Supervisors Chair Terra Lawson-Remer:

“This balanced budget did not happen by accident. It is the result of hard work, hard decisions, and a clear commitment to protect the services San Diegans rely on,” said Chair Terra Lawson-Remer. “We looked under every rock before asking families to absorb service cuts. We modernized outdated systems, tightened spending, unlocked reserves responsibly, and prepared for the first wave of federal impacts. This budget shows residents they can trust us to do the hard fiscal work first: find savings, protect services, and prepare for what’s coming.”

San Diego Board of Supervisors Vice Chair Monica Montgomery Steppe:

“This budget is balanced because we made disciplined choices and protected our priorities,” said Vice Chair Monica Montgomery Steppe. “Families are facing uncertainty, and counties across California are waiting for key federal and state decisions that could dramatically increase costs in future years. Our job is to be honest about that reality and prepare now, not panic later.”

Budget Highlights

The proposed $9.15 billion budget:

·        Is balanced

·        Avoids layoffs

·        Protects core County services, with no reductions in library hours, park access, or emergency response

·        Maintains service levels amid new state and federal mandates, namely Prop 36 and H.R 1

·        Adds a modest net 108 staff positions to maintain service capacity and respond to growing workload

The budget protects the safety-net services residents expect from the County while absorbing new costs created by federal spending cuts and state mandates. It maintains major funding for:

·        behavioral health 

·        public safety

·        homelessness response 

·        food assistance 

·        veterans services 

·        fire and medical services 

·        environmental protection 

·        roads, and infrastructure

That includes approximately $23 million and 56 new staff positions to implement the Homelessness, Drug Addiction, and Theft Reduction Act, also known as Proposition 36, across the Sheriff, Public Defender, and Probation departments. The measure created new responsibilities for counties while providing limited dedicated state funding.

H.R. 1 Budget Response

The proposed budget includes a $68.4 million budgeted response to H.R. 1, addressing the first wave of known federal impacts while setting aside resources for costs that may emerge as federal and state implementation continue.

The $68.4 million H.R. 1 response includes:

·        $23.7 million in known FY 2026–27 H.R. 1 impacts, including:

o   $7.9 million for 122 new staff to manage CalFresh workload and implementation

o   $15.8 million from CalFresh administrative cost shifts

·        $44.7 million in funds available to address mid-year H.R. 1 implementation costs, emerging federal impacts that are not yet fully quantified, and other safety net needs

County officials continue to anticipate larger H.R. 1 budget impacts as major provisions are implemented over multiple years. The latest public estimates for FY 2027–28 range from $44.7 million to more than $241.1 million, depending on future state and federal decisions. That includes potential Medi-Cal staffing and implementation costs and up to $150 million in possible CalFresh benefit cost-sharing exposure beginning in FY 2027–28. H.R. 1 requires California to begin paying a share of food assistance benefits that have historically been federally funded. The County’s final exposure will depend on whether the State absorbs those costs or passes them down to counties, and whether California can significantly reduce its statewide payment error rate.

These estimates do not fully include downstream impacts such as behavioral health revenue losses, County Medical Services, and safety-net healthcare pressure, or increased demand on hospitals, clinics, emergency rooms, food assistance, housing, and behavioral health services.

The balanced budget follows a series of proposals advanced by Lawson-Remer and Montgomery Steppe through the Sustainable Fiscal Planning Subcommittee to cut avoidable costs, modernize County operations, and protect frontline services.

Fiscal Subcommittee actions to cut costs, reduce waste, and protect services include:

·        Putting excess reserves to work — proposed by Lawson-Remer and Montgomery Steppe on Aug. 26, 2025; adopted Sept. 9, 2025. Lawson-Remer and Montgomery Steppe proposed modernizing the County’s reserve policy to align with Government Finance Officers Association best practices, keep required emergency reserves intact, and identify approximately $381 million in Unlocked Reserves available for responsible, one-time use. The adopted policy limits spending to one-time needs tied to federal or state cuts or a recognized recession, with no more than 25% of Unlocked Reserves available in a single fiscal year. 

·        Modernizing outdated phones and communications systems — proposed Jan. 28, 2026. Lawson-Remer and Montgomery Steppe proposed phasing out duplicative desk phones, unused devices, analog lines, and fax hardware while standardizing modern communications tools. County staff estimated the action could save taxpayers $1.5 million to $7 million annually without reducing public access to services. 

 Reducing unnecessary lease and office costs — proposed March 3, 2026. Lawson-Remer and Montgomery Steppe proposed stronger oversight before the County enters new long-term leases, part of a broader effort to better use County-owned space and avoid unnecessary real estate costs. The County currently spends about $59 million annually across more than 70 active leases. Similar consolidation work allowed the County to house 800 employees without building another office facility, avoiding an estimated $150 million in capital costs. 

·        Right-sizing the County vehicle fleet — proposed March 24, 2026. Lawson-Remer and Montgomery Steppe proposed GPS-based utilization tracking, stronger vehicle-sharing and pooling, and turn-in standards for underused light-duty vehicles. County staff identified 444 underutilized vehicles in FY 2024–25, including an estimated 104 vehicles that may be reducible from the fleet, creating roughly $5 million to $5.3 million in avoided replacement and maintenance costs over five years. 

·        Bringing in new reimbursement for homeless services — scheduled for Board consideration on May 19th. Lawson-Remer and Montgomery Steppe are advancing a proposal to expand the County’s CalAIM homeless services pilot and allow the County to seek Medi-Cal reimbursement for housing navigation, case management, and tenancy support services already being provided. County projections estimate a $3.5 million state grant during ramp-up and up to $5.6 million in ongoing annual Medi-Cal revenue beginning in 2027, potentially offsetting up to 78% of Regional Homeless Services costs depending on final service design and population mix. 

The recommended budget also reflects extensive work by County staff, led by Chief Administrative Officer Ebony Shelton, to identify operational efficiencies, reduce duplication, maximize outside revenue, and keep services moving during a difficult budget year.

·        Centralizing shared administrative functions. The County is bringing Administration, Communications, Finance Directors, Human Resources personnel, and related support functions under the Finance and General Government Group, rather than siloing those roles within individual departments and business groups. This change is designed to better use flexible staffing capacity, reduce duplication, strengthen coordination, and allow the County to shift administrative support where it is needed most. 

·        Maximizing state and federal revenue. County staff worked to bring in more outside revenue for services already being provided, reducing pressure on the County’s General Fund. Intergovernmental revenue overall is increasing by $129 million, which is driven primarily by revenue growth in Behavioral Health Services, helping sustain and grow mental health and substance use treatment while limiting pressure on local taxpayer dollars. 

·        Restructuring General Services to increase flexibility and reduce costs. The Department of General Services consolidated and streamlined project management teams to increase flexibility and reduce $1.6 million in costs for the County’s facilities and fleet.

·        Modernizing operations: The County plans to strengthen support for local small businesses and launch a new Records Management System to modernize information management and improve contract compliance countywide.  The District Attorney’s 30-year-old case management system will be upgraded using Proposition 172 funds.

“The standard we set was simple: work as hard as the taxpayers that we represent,” said Lawson-Remer. “This budget shows our work. We protected core services, avoided layoffs, made taxpayer dollars work harder, and prepared for the federal impacts still ahead.”