An effort to free up hundreds of millions of dollars in county emergency reserves to deflect potential federal budget cuts failed to garner enough votes to at Tuesday’s Board of Supervisors meeting.
The usually five-person board is currently short one member, leaving it divided between Democrats Terra Lawson-Remer and Monica Montgomery Steppe, who introduced the reserves policy changes, and two Republicans, Jim Desmond and Joel Anderson.
Desmond voted against the proposal, and Anderson abstained, arguing that Lawson-Remer and Montgomery Steppe didn’t give San Diegans enough time to weigh in when they added it to the docket on Friday.
Lawson-Remer said Tuesday that she fast-tracked the proposal after seeing President Trump’s proposed budget, released May 2. The federal spending plan calls for significant reductions to low-income housing programs, public health services and treatment for people struggling with addiction, among other cuts.
“These are not just theoretical cuts,” she said. “We’ve already seen $40 million cut from our public health budget. This was money we were and are relying on to do really critical services in our community.”
The current reserves policy requires the county to set aside enough money to cover at least two months of expenses. Lawson-Remer and Montgomery Steppe described it as “outdated and overly restrictive.”
“Today, the county calculates emergency reserves based on all spending, including major one-time capital projects,” they wrote in a letter to their colleagues. “Such spending could easily be delayed in a crisis. That’s like saving for a rainy day by budgeting for a future kitchen remodel.”
The policy they proposed would calculate reserves based on what it costs to cover the county’s day-to-day operations. It would also expand the definition of what counts toward reserves.
Currently only money that’s readily available — known as “unassigned” funds — counts. The proposal would add “assigned” dollars — money intended for a specific purpose that could be reallocated if needed — to the fund.
If such a formula were applied to the proposed 2025-2026 budget, the county would have an excess of $380 million available to spend.
Lawson-Remer emphasized the money would be considered one-time funding to be used only to offset federal or state cuts or respond to an economic recession. No more than 25% could be spent annually.
She emphasized that the proposal adheres to guidelines established by the Government Finance Officers Association and was the result of a multi-year deep dive into how other California jurisdictions calculate reserves.
“What we are recommending is to bring our county in alignment with the GFOA’s best fiscal practices,” she said at Tuesday’s meeting.
Desmond described the proposal as “fear-mongering” and argued that freeing up reserves would lock the county into more spending.
“If we do use the reserves, it’s only going to perpetuate an internal problem that we are spending more than we have,” he said.
In a t statement after the vote, Lawson-Remer and Montgomery Steppe said they’ll re-introduce the proposal at a future meeting, raising the stakes in the race to fill the empty District 1 board seat. Democrat Paloma Aguirre, who s freeing up reserves, faces Republican Jim McCann — who doesn’t — on July 1.
McCann issued his own statement after the vote, echoing many of Desmond’s criticisms.
“If my opponent wins a seat on the Board of Supervisors, San Diegans can expect higher taxes, more reckless spending, and depleted reserves that should be protecting us in a real crisis,” he said.
The post-vote statement from Lawson-Remer and Montgomery Steppe pushed back against that argument.
“The blocked ordinance would not have authorized any new spending,” they said. “It simply revised how the county calculates reserves — basing targets on ongoing expenses, not one-time capital projects, to better reflect real fiscal needs.”
