Tax revenue in San Diego has fully recovered from its pandemic plunge, thanks to a surge in home prices boosting property tax, extraordinary inflation elevating sales tax and the recovery of local tourism helping hotel tax rise.
Despite surging overall revenues, which city officials now expect to rise past $2 billion a year for the first time in fiscal 2026, San Diego is still projected to face deficits totaling more than $300 million over the next five fiscal years. San Diego relied on that aid to avoid budget cuts despite shrinking revenues during the pandemic, but the city is projected to have only $52 million in aid left this summer.
In fall 2019, before the pandemic hit, city officials had been predicting revenue would climb $57 million in fiscal 2020 to $1.549 billion and then would climb another $47 million in fiscal 2021 to $1.596 billion. But hotel tax surged back in fiscal 2022 to $136 million, more than the city had collected before the pandemic in fiscal 2019. And it is projected to climb to $156 million during the ongoing fiscal year.