San Diego, California faces $179 million deficit

Thu Oct 1, 2009 7:52pm EDT

SAN FRANCISCO (Reuters) - A $179 million budget shortfall awaits San Diego next year, putting California's second-largest city on track for yet more spending cuts, Mayor Jerry Sanders said on Thursday.

Cuts would follow $175 million slashed from the city's budget over the past 15 months as the housing slump and recession battered San Diego's economy.

"A deficit this size is so significant that we can no longer shield the public from its impacts," Sanders said in a statement.

"As we begin putting together a solution to close our budget gap, we will examine every responsible alternative to cutting services. But make no mistake about it, there will be cuts and the public will feel them."

California's other large cities -- including Los Angeles, San Jose and San Francisco -- also face difficult financial situations as the state copes with double-digit unemployment, an uncertain housing market and downturns in consumers spending and personal income.

Sanders noted that San Diego's deficit will be fueled by a $67 million decline in revenues, $57 million in investment losses by the city's pension fund and a $32 million legal settlement.

(Reporting by Jim Christie; editing by Andre Grenon)

http://www.reuters.com/article/domestic ... L720091001